Archive for February 2016


This is my crappy blog

Commenter sejanus had the following suggestion:

you should start a separate blog for the political fighting and commenting; maybe move your china devaluation posts there too. this was a much better blog when limited to monetary policy.

There are a few misconceptions here.  First, China devaluation posts are monetary policy posts.  Second, there was never a time where all my money illusion posts were about money.  Most importantly, sejanus doesn’t seem to understand that I already have two blogs, and this is the crappy one. I have warned readers on numerous occasions that my political posts are dumb, so skip them. How could a post discussing Trump not be dumb? I do them because I enjoy writing them.

Over at Econlog I am a guest.  One doesn’t track mud into a guest’s house, and I’m not going to defile that excellent website with Trump bashing.  I try to put my best posts over there, and indeed just did a post over there that I happen to think is my best post in the past year or so.  So if it’s quality you want then stop reading this blog, and go over to Econlog.

Nonetheless, I welcome the suggestion, and will try to do more money posts.  It’s just getting hard to find new things to say.  Right now the US seems to have settled into a low growth/low inflation/low interest rate phase, and posts are usually easiest to write when something dramatic happens.  Some commenters criticized me a month ago when I suggested that TIPS spreads may be underestimating actual inflation expectations.  However recent data suggests that inflation is likely to pick up a bit over the next year or so (but maybe not next month, given the recent fall in oil prices.)  The Fed is falling short, but maybe not as much as the bears believe.

HT:  Tyler Cowen

Christie is deeply insulted. And will the military obey orders from Trump?

No Hollywood film has even come close to portraying the insanity of politics.  Here is the latest headline:

Christie Deeply Insulted by Rubio Voicemail

Wow, why would Rubio deeply insult Christie, when he needs his support?  So I read on:

And after losing the race, the call came from Rubio.

In his voicemail, the junior Florida senator sought Christie’s support and assured him that he still had a bright future in public service — and Christie didn’t appreciate the words, sources close to the governor said.

Instead, Christie, 53, took the message to be patronizing and deeply disrespectful, and wanted to know why 44-year-old Rubio would be telling him about his future, and he two politicians never held a direct conversation.

Shame on Rubio.  I don’t think I’ve ever been that deeply insulted, not even by my most vicious commenters.  I can’t even imagine the stress that Christie has to go through being a public figure.  No wonder he put his ego ahead of the well-being of America.  Who wouldn’t, if in his shoes?

Meanwhile, as always occurs in Presidential campaigns, the former head of the CIA is now speculating that the military would refuse to obey orders from one of the two leading Presidential candidates:

Michael Hayden, the former head of the NSA and CIA, thinks some of presidential candidate Donald Trump‘s campaign promises are so unlawful that the U.S. Armed Forces could not follow them as orders.

These include Trump’s claim that people deserve to be waterboarded even if it doesn’t work and that he would target the families of terrorists. The internationally recognized Geneva Conventions bars such action.

“If he were to order that once in government, the American armed forces would refuse to act,” Hayden said Friday during an appearance on “Real Time with Bill Maher.” “You are required not to follow an unlawful order that would be in violation of all the international laws of armed conflict.”

So I guess we can cross our fingers and hope for a mutiny by the armed forces and the CIA against the Commander in Chief.  (And for God’s sake make sure the White House is well stocked with strawberries.)

When reading the following quote from Megan McArdle, my heart soared as I read “continuous loop on every television screen”, and then plunged when I finished that sentence:

Rubio, and also Ted Cruz, who attacked him very successfully on electability, showed Donald Trump some things I’m not sure he realized: that bullies can be bullied; that being the frontrunner means everyone’s going to come at you; and that there is a reason that those boring, low-energy experienced politicians take care not to say things that they will have to answer for in the media, or which can be used against them in attack ads. (Highlights from Trump’s lengthy remarks include praising Mommar Gadhafi, who accepted Libya’s responsibility for the Lockerbie bombing that killed almost 200 Americans; explaining his reluctance to release his tax returns on the grounds that he gets audited all the time; and saying that he hired foreign workers for his Palm Beach club because Americans won’t do those jobs. If these are not soon running in a continuous loop on every television screen in a primary state, then the Republican Party is fielding presidential candidates too stupid to govern.

Putin, Gadhafi, are there any murderous dictators that Trump doesn’t like?

And here’s Jonah Goldberg (I used to think “liberal fascism” was an oxymoron, but it does sort of fit Trump):

Before he ran for president, if you played the word-association game with 100,000 Americans, I’d venture that not one of them would have said “Christian!” when asked, “What first comes to mind when you think of Donald Trump?”

Apparently, according to Trump, that’s only true of normal Americans. The IRS is different. It’s like the eye of Sauron searching the land for “strong Christians.” When its cruel gaze landed upon the failed casino magnate, beauty-pageant impresario, thrice-married and confessed adulterer who’s talked about how his own daughter is so hot he’d date her if she wasn’t his daughter and bragged about how it doesn’t matter what critics say about you so long as “you’ve got a young and beautiful piece of ass,” and who told Howard Stern that his ability to avoid getting the clap while sleeping around was his “personal Vietnam” the IRS immediately saw the truth of the matter.

Suddenly, the alarms at the IRS Christian persecution squad started flashing. Over the P.A. system came: “Code Red! We’ve got a ‘strong Christian’ in sector 7!”

Now don’t get me wrong, I’m not making light of the IRS’s well-earned reputation for inappropriately scrutinizing conservative Christian groups. (But let’s not forget, they target them because they are conservative. And for most of Donald Trump’s audit period he was a major Democratic donor.)

What I am doing is unapologetically mocking the idea that Donald Trump, a bankruptcy impresario and formerly mob-tied businessman, who likes to mock the disabled at that, was singled out by the IRS for his tendency to ask “What would Jesus do?”

Oh, and keep in mind, according to Trump, this potential Christian persecution started on George W. Bush’s watch.

I could go on for hours listing everything ludicrous about Trump’s attempt to claim he is being crucified on a cross of shady tax shelters.

But what is so dismaying is the way Trump supporters took the bait instantaneously. I won’t bore you with my Twitter feed, but I was amazed by how many people (1) immediately bought Trump’s explanation as plausible, (2) claimed I was defending the IRS’s persecution of Christians, (3) actually believe that Trump gives a ton to Christian causes. (I mean in the past. I’m sure he’s written a lot of checks this year. I personally can’t wait to see the Trump Student Center and Hall of Greatness at Liberty University.)

So Trump has paranoid delusions of being persecuted by America’s tiny non-Christian minority.  Heh, what could go wrong?

Seriously, I see the same thing as Goldberg’s twitter feed.  I have commenters who are smart enough to discuss the nuances of monetary policy, and yet also believe that Trump’s being persecuted by “the Jews” who run the IRS.  There are “books” proving all this stuff.  If we have learned anything over the past few months it is that there is no “g”, no general intelligence; within each cranium there coexists amazingly diverse types and levels of intelligence.

There is literally nothing Trump could say, no matter how mindbogglingly stupid, that would drive his poll numbers below 30%.  America faces 8 more months of insanity, if not 5 more years, or God forbid 9 more years.  And if the forces of sanity do somehow cobble together enough delegates to deny Trump the nomination, he’ll cry foul and tell his supporters to stay at home, giving the House, Senate and Presidency to the Dems.  And that nightmare is the best outcome!

Have a nice day.

Romer and Romer on Sanders and monetary offset

Christina and David Romer are both Keynesian economists with impeccable credentials.  Thus I thought you might be interested in their views on monetary offset:

Massive demand-side stimulus in an economy closing in on its productive capacity would have one of two effects. First—and most likely—it would lead the Federal Reserve to raise interest rates, offsetting as well as it could the expansionary effects of the stimulus. Output would rise little, and the main effects would be on interest rates and on the composition of output between the components stimulated by the fiscal expansion and the components restrained by higher interest rates. Second, if the Federal Reserve did not respond, the result would be inflation. And if the stimulus were large enough to try to push the economy 10%, 20%, or more above its productive capacity, the inflation would be substantial.

This is from a report criticizing the Sanders economic plan, which suggested that the US growth rate could be raised to 5.3%/year.  Since October 2009, growth has averaged a bit over 2%, as unemployment has fallen from 10% to 4.9%.  Even progressives like Matt Yglesias admit that Sanders proposals would reduce the labor force participation for many groups:

Friedman assumes there will be no growth-slowing supply-side impacts of any of Sanders’s policies initiatives. You don’t need to be hostile to Sanders’s goals or policies to see that this isn’t the case. For example, if you make Social Security more generous while also giving people free health care and raising taxes, some people are going to retire earlier. This is a feature of Sanders’ agenda (early retirement is nice), not a bug. But by reducing the number of people in the labor force, it will slow the rate of GDP growth.

Sanders’s plan to make college free has the same feature. Reducing the price will increase the number of young people who go to school and decrease the amount of part-time work that college students do.

As an aside, Yglesias is still a bit too soft on Sanders, and way too soft on Trump.

And Sanders also has some interesting views on monetary policy:

Mr Sanders has bold plans for monetary policy and banking, too. He supports a movement headed by Rand Paul, an erstwhile Republican runner, to get politicians more involved in decisions on interest rates, because he thinks Fed policy is too tight. To loosen it, he would bar the Fed from raising rates when unemployment is above 4%.

In other words, hyperinflation!!  Have I changed my mind that Trump is even worse?  No, but this should help you to better understand just how much I despise Trump.


Donald Trump: Crusher of Pussy

[Trigger warning:  Those who have good taste will want to skip right ahead to my latest post, or better yet yesterday’s Econlog post.]

Here’s what I don’t get.  People can clearly see what other people are like, when they are average people.  But when they are celebrities, it seems like people are unable to perceive even the most obvious character traits.  I recently banned my first commenter in 7 years, a crude and obnoxious guy named “Shmebulock, Crusher of Pussy”.  Almost all my other commenters, even Trump supporters, were glad to get rid of him.  So why can’t they see that Trump: Crusher of Pussy, is also a juvenile troll?  Here is

The idea that Donald Trump will reverse the “pussification” of America has been one commonly repeated by his supporters during the presidential campaign. Monday night at a rally in Manchester, New Hampshire, Trump made this theme literally explicit by calling Ted Cruz a pussy.

Here’s New York magazine quoting the remark, which involved Trump repeating something that an audience member was shouting while Trump complained that Cruz apparently isn’t aggressive enough about torture policy:

Screen Shot 2016-02-26 at 10.49.50 PM

Here he mocks Rubio for (like me) needing to drink water when he speaks.  In the grand scheme of things this doesn’t matter, nor does it matter that he routinely enjoys behaving like an 8th grade bully.

But again, why this double standard? Why are we all so contemptuous of Shmebulock: Crusher the Pussy, but not Trump: Crusher of Pussy? And it’s not just Trump.  I know people who defend Clinton’s sexual escapades, but are puritanical scolds when it comes to similar behavior by people in their social circle.  I just don’t get it.  I can understand why we wouldn’t want to hold politicians to a higher standard, but I really have trouble understanding why we insist on holding them to a lower standard.  Recall the old saying; Kill one man and you get executed, kill 100,000 and they put up statues to you (even in Washington DC.)  Throughout history, it’s always been this way.

I guess there are actually two questions here.  Why don’t Trump supporters see that he’s a jerk?  And why doesn’t it matter to those who do?  And don’t tell me they don’t care because they care more about stuff like “jobs”.  I’m pretty sure that if the politician in question were mocking them they would feel differently.  Suppose someone caught Trump backstage making fun of the (supposedly) low IQs of many of his supporters.  Would they say, “That doesn’t matter, all I care about is jobs?”

If Trump is elected President, there will eventually be statues of Trump erected in our nation’s capitol.  Take that any way you please.

Screen Shot 2016-02-27 at 10.36.08 AM

I never took a course in psych, so I can’t say what that white rock is supposed to symbolize.  But I am pretty sure it’s not a pussy.

Reply to Tim Worstall (and more political nonsense)

Update:  if you only have time for one post today, read my Econlog post instead.

Here’s Tim Worstall in Forbes, discussing my skepticism about the existence of bubbles:

His example at one point was the housing market. You can go long housing: go buy a house. You can be neither long nor short housing: don’t buy one. But it’s very difficult indeed to go short housing.

And here’s Wikipedia:

John Alfred Paulson (born December 14, 1955) is an Americanhedge fund manager and billionaire[4] who headsPaulson & Co., a New York-based investment management firm he founded in 1994. He has been called “one of the most prominent names in high finance”[5] and “a man who made one of the biggest fortunes in Wall Street history”.[6]

His prominence and fortune were made in 2007 when he earned “almost $4 billion” personally and was transformed “from an obscure money manager into a financial legend”[6] by using credit default swaps to effectively bet against the U.S. subprime mortgage lending market.

So why didn’t lots of wealthy investors short the market like Paulson?  Because no one knew if it really was a bubble. If you look around the world you’ll see lots of countries where house prices soared between 2000 and 2006.  In some cases they leveled off, in some cases they then fell, in other cases they went still higher.  It’s a crap shoot.

And now for some red meat for Trump haters.  It turns out that yesterday I was too kind to Chris Christie, he was not too cowardly to attack Trump.  Today he endorsed him, as the GOP train wreck spirals ever further out of control.  Some Republicans say Trump must be stopped because he can’t win.  (I made that mistake earlier).  That’s exactly wrong.  Trump must be stopped because the betting markets say he can win, indeed he has a 30% chance of winning, conditional on getting the nomination.

Ezra Klein says the GOP tried to stop Trump and failed.  If they did try, it was a pretty pathetic attempt.  In the future, people are going to look at this in much the way they looked at the Joe McCarthy fiasco—who had the guts to oppose him? (In fairness, Trump’s not as bad as McCarthy, he’s far worse.  Anti-communism is actually an honorable cause, far more honorable than anti-McCarthyism. McCarthy’s sins were recklessness and dishonesty in a good case.  In contrast, Trump is recklessly and dishonestly promoting evil causes like xenophobia.)

In 1964, lots of top Republicans endorsed Johnson.  In 1972, lots of top Democrats endorsed Nixon.  Both Goldwater and McGovern were seen as unacceptable.  Yet they were each paragons of virtue compared to Trump.  If the GOP establishment had truly wanted to stop Trump (instead of just being worried about losing) they would have taken a similar position to the pro-Nixon Dems, and done it months ago.  Congressmen and Senators, Governors, conservative media and pundits, etc., etc., should have almost unanimously indicated that they would vote for Hillary over Trump.  But that assumes these are honorable men and women, which is obviously not the case, as you can tell by Christie’s pathetic attempt to angle for the VP spot.  I will give the National Review credit for criticizing Trump, but that’s not enough, you need to say that the GOP Establishment will vote for Hillary over Trump.  And say it loud.

Some say that doesn’t matter, as the GOP voters hate the Establishment.  Yes, but Trump only gets about 50% in head to head polls against people like Rubio.  He can’t win in the general election without the Establishment voters.

The betting markets say that both Trump and Rubio have a chance of winning in a general election, with Rubio at over 40%.  I believe in the EMH, but I admit to being mystified by this.  When was the last time that a political party won an election after self-immolating just months before?  (Or as Senator Graham puts it; “My party has gone batshit crazy.”)  I can’t imagine any Republican with half a brain voting for a guy that Rubio correctly calls a con man, nor can I imagine Trump telling his people to vote for Rubio, if he somehow got the nomination. This looks like a complete train wreck to me, and yet perhaps I’m missing something.  After all, Berlusconi was elected in Italy, and I’m not sure American voters are any more sensible than Italians.

Some say that Trump’s not that bad on some of the issues, indeed in some cases better than the mainstream candidates.  Talk about missing the point!  This isn’t about what Trump says he favors, it’s about what he is.  It’s comical that people actually believe that Trump’s positions on the issues are anything more than negotiating tactics to “close the deal.”  I actually have commenters telling me to defend my claim that Trump is a demagogue.  I don’t know how to do that.  Nor do I know how to convince you that the sky is blue. If you don’t see it, and apparently tens of millions do not, then there is really nothing to say.  Does he need to sport a little black mustache?

I know what how are thinking, Sumner’s unhinged, next thing you know he’ll compare Trump to Hitler.  No, I have no plans to compare him to “Hitler”, who is the ultimate symbol of evil, due to WWII and the Holocaust.  Instead I’d like to compare him to Mr. Hitler, just another nationalist politician participating in democratic elections in Germany during the early 1930s. This Hitler was a politician that (according to the NYT at the time) would certainly moderate his positions as he got closer to power, in the opinion of most experts.  But (you are thinking) this comparison is absurd, because that politician was contemptuous of democractic principles, like freedom of the press.  In contrast. . . . oh wait, this is hot off the press:

Republican presidential front-runner Donald Trump said on Friday that if elected he would “open up” libel laws to make suing the media easier.

Speaking at a rally in Fort Worth, Texas, Trump said the change was necessary to combat what he described as the “dishonesty” of major American newspapers.

No, Trump’s nothing like the “Hitler” we know and hate.  But he’s a lot like the hundreds of nationalists who started out like Mr. Hitler the politician, asking for your votes, and never ended up becoming “Hitler”.  Like a Juan Peron.  Or perhaps his good buddy Putin (who recently grabbed the Sudetenland, err, I mean Crimea), and even that’s perhaps an overstatement—libel suits are not as bad as being assassinated.

Oh wait, just like Putin he does like jokes about killing journalists :

At a Dec. 23 appearance in Grand Rapids, Michigan, he joked about killing journalists as the crowd thundered applause.

But he certainly doesn’t excuse Putin’s actions. Well, not very much:

After Russian President Vladimir Putin called Donald Trump “very talented,” the GOP frontrunner has defended Putin against suspicions that Putin kills journalists who don’t agree him.

It started on MSNBC’s Morning Joe last month when host Joe Scarborough asked about it.

Trump responded, “He’s running his country, and at least he’s a leader, unlike what we have on this country. I think our country does plenty of killing also, Joe, so you know.”

Yes, we know. But at least he doesn’t favor concentration camps, he’s undecided:

Republican presidential frontrunner Donald Trump told TIME that he does not know whether he would have supported or opposed the internment of Japanese Americans during World War II.

But at least he doesn’t think the IRS favors Jews over Christians.  Or does he?

I’m always audited by the IRS, which I think is very unfair — I don’t know, maybe because of religion, maybe because of something else, maybe because I’m doing this, although this is just recently,” Trump said in an interview with CNN’s Chris Cuomo immediately following the 10th GOP debate on Thursday night.

Cuomo cut in: “What do you mean religion?”

“Well, maybe because of the fact that I’m a strong Christian, and I feel strongly about it and maybe there’s a bias,” Trump said.

Cuomo cut in again: “You think you can get audited for being a strong Christian?”

“Well, you see what’s happened,” Trump said. “You have many religious groups that are complaining about that. They’ve been complaining about it for a long time.

Perhaps the IRS is controlled by “the Jews”.

But at least . . . oh I give up, I’m just persuading more and more people to vote for Trump.  The worse he gets, the more they like him.