I often argue that the Trump administration is nothing more than a clown show. But that’s actually unfair to clowns, as they know what they are doing. They know that they are trying to look foolish, to entertain the public.

When Trump encourages the Russians to sabotage the Clinton campaign, or when he suggests looking into nuking hurricanes, or when he says things like this:

I asked Bill a question that probably some of you are thinking of, if you’re totally into that world, which I find to be very interesting. So, supposing we hit the body with a tremendous—whether it’s ultraviolet or just very powerful light—and I think you said that that hasn’t been checked, but you’re going to test it. And then I said, supposing you brought the light inside the body, which you can do either through the skin or in some other way, and I think you said you’re going to test that too. It sounds interesting…

And then I see the disinfectant, where it knocks it out in a minute. One minute. And is there a way we can do something like that, by injection inside or almost a cleaning. Because you see it gets in the lungs and it does a tremendous number on the lungs. So it would be interesting to check that. So, that, you’re going to have to use medical doctors with. But it sounds—it sounds interesting to me.

He’s not aware that he’s acting like a clown.  His aides will later tell him (politely) that he made a fool of himself, and in desperation they’ll invent the “clown show defense”, the claim that Trump was just joking.

But in this case the cover-up is almost worse than the crime.  Trump’s statement was obviously not a joke.  The fact that they need to make that claim is tacit admission that this president is so deranged than his statements can only be defended by pretending that he was just joking.

Trump has the mind of a 7-year old boy, where it makes perfect sense that one might want to kill a virus in the body with disinfectant, and that this idea was something that doctors had never stopped to consider.

Trump’s right that people are surprised about how much he knows about medical science.  But I don’t think they are surprised in the direction that he assumes.

Here’s the Financial Times:

Rick Bright, who headed the Biomedical Advanced Research and Development Authority, or Barda, said he would file a whistleblower complaint after he was demoted on Tuesday, in the first big departure from the Trump administration’s team of officials working on Covid-19.

Mr Bright said he clashed with the political leadership at the health and human services department, which oversees Barda, and resisted efforts to fund the “potentially dangerous drugs” hydroxychloroquine and chloroquine, promoted by “those with political connections”.

“Rushing blindly towards unproven drugs can be disastrous and result in countless more deaths. Science, in service to the health and safety of the American people, must always trump politics,” he said.

Mr Bright said he and other scientists were pressured to fund companies “with political connections” and “efforts that lack scientific merit”. His demotion was first reported by The New York Times.

I know nothing about Rick Bright, but it will be interesting to see how this story plays out.

PS.  I’m amused to see the differing way that the press treats Vietnam and China.  China says more than that 4600 of its citizens have died of coronavirus, and the Western media accuses it of lying.  How could the figure possibly be so low?  Vietnam received a number of coronavirus cases very early in the epidemic, and now reports (officially) a grand total of zero fatalities, in a country with 97 million people.  That’s fewer than British Virgin Islands or Turks and Caicos.

Yes, Vietnam is somewhat more “tropical” than China, but then so is Singapore.  In Singapore, new cases are running at 1000/day, whereas in Vietnam there are zero new cases over 7 consecutive days.

The media is gushing with praise for Vietnam (here, here, and here) with nary a word of doubt expressed as to the accuracy of the figures.  (BTW, I don’t have any reason to suspect Vietnam of lying.)  Why is the media coverage so different for China?

I know what you are thinking.  China’s governed by a brutal, authoritarian communist dictatorship, whereas Vietnam’s ruled by a  .  .  .  oh wait.

Maybe the difference is that it started in China.  But we know it spreads like wildfire.  In mid-February, Vietnam had as many cases as the US.  And the policies adopted in Vietnam and China are somewhat similar.  So why do Westerners believe the Vietnamese draconian policies succeeded in holding deaths to zero, but discount the possibility that similar Chinese draconian policies could have held their death total down to 4600?

BTW, obviously more than 4600 died in China, just as the death totals in Western countries (other than Belgium) are considerably higher than official reports.  But why assume that 4600 couldn’t be as accurate as the Italian or Spanish or American figures, which are also somewhat understated?

I suspect the difference is that China is China, and Vietnam is the small country that America brutalized during the 1960s.  People don’t think with the logic centers of their brains; they think with their emotions.  They hate “China” and they don’t hate Vietnam, and this colors their perception of reality.

This theory unites the left (who feel guilty about Vietnam) and the right (who are championing a new cold war with China.)

Some of my commenters have been touting Trump’s miracle drug. So how’s it doing so far:

Researchers analyzed medical records of 368 male veterans hospitalized with confirmed coronavirus infection at Veterans Health Administration medical centers who died or were discharged by April 11.

About 28% who were given hydroxychloroquine plus usual care died, versus 11% of those getting routine care alone. About 22% of those getting the drug plus azithromycin died too, but the difference between that group and usual care was not considered large enough to rule out other factors that could have affected survival.

Hydroxychloroquine made no difference in the need for a breathing machine, either.

Researchers did not track side effects, but noted a hint that hydroxychloroquine might have damaged other organs. The drug has long been known to have potentially serious side effects, including altering the heartbeat in a way that could lead to sudden death.

This study is certainly not definitive, but I seriously doubt this drug will be a game changer.

Trump said he plans to end immigration.  So how’d Fox News react:

I won’t even comment on that screenshot, as I’d probably get myself into hot water.

Tyler Cowen also weighed in on immigration:

First, there is no guarantee that a good vaccine will be ready quickly, even within two years. There is still no vaccine, for instance, for the common cold or HIV-AIDS. Even if the U.S. has Covid-19 under control, there might be persistent if small pockets of Covid-19 in other countries, including populous, poor countries such as India, Pakistan and Nigeria. The U.S. may be reluctant to take new migrants from those parts of the world.

Whether or not that reaction is rational, it is easy to imagine the public being fearful about the potential of immigration to contribute to a pandemic resurgence.

Tyler is much more polite than I am, and I suspect he knows that such a response is not “rational”.  If the US still has coronavirus cases in 2 years, then presumably immigrants could be tested for coronavirus before being allowed in.  If through some miracle we’ve eliminated coronavirus, then immigrants would probably be tested and then quarantined for 14 days.  The much bigger issue is tourism, for which a 14 day quarantine is not feasible.  But then American tourists like me vote, and immigrants shut out of the country do not.

If Trump did end immigration, then the trend growth rate in America would fall even further.  Obviously I don’t expect Trump to end immigration.  Why not?  Because he said he would end it, and he usually lies.

On a lighter note, David Levey sent me some poetry, found on the internet:

There isn’t any iceberg; the iceberg is a hoax; the iceberg is fake news.

There is an iceberg, but it’s in a totally different ocean.

The iceberg is in this ocean, but it will melt very soon

We didn’t hit the iceberg.

We hit the iceberg, but the damage will be repaired very shortly.

I saw the iceberg before anyone else. 

The iceberg is a Chinese iceberg.

Nobody could have foreseen the iceberg.

*

We are taking on water, but the ship will not sink and there is no need for lifeboats.

We have lifeboats, and they are beautiful lifeboats. 

Look, passengers need to ask nicely for the lifeboats if they want them.

We don’t have any lifeboats, we’re not lifeboat distributors.

The lifeboats were left on shore by the last captain of this ship.

I knew we needed lifeboats before anyone else.

Passengers should have planned for icebergs and brought their own lifeboats.

Nobody could have foreseen the need for lifeboats.

*

I’m the best captain ever.

Truman:  The buck stops here.

Trump:  The buck stops there.

Just a few letters apart.

I am currently working on a paper analyzing the Keynesian/NeoFisherian debate. As you may know, I accuse both sides of engaging in “reasoning from a price change”. That is, they both talk about the effect of a change in interest rates as if interest rates were monetary policy.

In fact, interest rates are not monetary policy; they are the price of credit. And it makes no sense to talk about the effect of the change in any price, for standard “never reason from a price change” reasons.

Most economists understand NRFPC, so why do they get monetary policy wrong? This is the question with which I’ve been wrestling.

If we see rising oil prices we don’t know if that portends more or less oil consumption, because we don’t know if the price increase reflects increased demand or decreased supply. But suppose we do know why oil prices increase. Suppose we know that the oil price increase was caused by a higher tax on oil. In that case we could infer that the price increase is likely to lead to less oil consumption.

I suspect that many economists believe that something similar is going on with interest rates.  At a theoretical level, they may acknowledge that higher nominal interest rates could be the liquidity effect from tight money or the inflationary effect of easy money.  But when the central bank changes their interest rate target, they believe they know why interest rates have changed, and believe that they can then take a shortcut in analyzing the effect of this change in rates.  But that’s wrong, because money is special.

Here’s an analogy.  Suppose Jeff Bezos decides to buy $50 billion in Treasury bonds.  In that case, we can infer that the impact is likely to be higher bond prices and lower bond yields.  Now suppose that the Fed buys $50 billion in T-bonds.  (And to make things simple, let’s assume we are back in the 1990s, before the zero bound issue.)  Will the Fed’s bond purchase raise bond prices and reduce yields?  Maybe, but it might also reduce bond prices and raise yields, especially if it leads to higher inflation expectations.

Why is the Fed different from Jeff Bezos?  Because a purchase by Bezos does not change the money supply, and hence has no first order effects on the value of money.  In contrast, a Fed purchase will increase the money supply, and this may well boost inflation.  A Fed open market purchase impacts both sides of the market.  Indeed the big Fed bond purchase of the 1960s and 1970s caused inflation expectations to rise, and this reduced bond prices.  In contrast when you or I spend money, the market for the good we buy is affected much more than the market for money (where the effects are trivial.)

Keynesians correctly assume that a rise in interest rates relative to the equilibrium interest rate will tend to reduce inflation.  But they wrongly assume that when the Fed raises its target interest rate this is causing the market rate to rise relative to the equilibrium rate.  That might be true, but it also might be false.  Keynesians underestimate how much central banks impact the equilibrium interest rate through their policy decisions.

NeoFisherians correctly assume that if both the Fed’s interest rate target and the equilibrium rate rise at the same time, then inflation is likely to rise.  They also correctly assume that in the longer run, the target interest rate and the equilibrium interest rate tend to move together.  So far, so good.  But they underestimate how often a given Fed rate increase will increase the interest rate gap (target rate minus the equilibrium rate), and thus tighten monetary policy.

What matters is the target rate minus the equilibrium rate.  Keynesians are too inclined to see any move in the target rate as affecting that gap, whereas NeoFisherians are too inclined to ignore that distinction, and assume the target interest rate is moving with the equilibrium interest rate.

The NeoFisherians are right that the Fed can move the equilibrium interest rate.  But the Fed does not do so by moving the target rate in the desired direction, indeed just the opposite.  If the Fed wants the equilibrium interest rate to rise, then they need to reduce the target interest rate faster than the equilibrium rate is falling.

If the Fed can’t cut the target rate any further (zero bound), then they need to raise the equilibrium interest rate via the “expectations fairy” channel.

I’ve already explained this in regard to monetary policy, but like Sisyphus I’ll have to do so over and over again. It makes no sense to discuss the question about whether Trump is “right” about interest rates, coronavirus lockdowns or almost any other subject. Trump doesn’t have opinions on the state of the world; Trump makes statements that he believes are advantageous to his political career. That’s all. They are not opinions on various topics; they are campaign commercials.

Trump has made it very clear that the coronavirus lockdowns are his policy. Trump and only Trump gets to decide when the lockdowns will be lifted. First he said Easter and then he changed that to the end of April.

At the same time, Trump is strongly opposed to the lockdowns. He tweets in support of lockdown protesters in electorally key states.

Some of my commenters don’t know how to interpret Trump. They analyze his comments like he’s a normal human being, where you’d try to ascertain the truth-value of a particular statement. But that’s not what Trump’s about, he’s not normal.

Trump’s support for the lockdown is aimed at voters who support the lockdown. Trump’s simultaneous opposition to the lockdown is aimed at voters who oppose the lockdown. Trump can’t possibly be right or wrong about the lockdown because he doesn’t ever express an actual opinion on the subject.

Similarly, Trump used to complain about low interest rates when he thought it helped the Democrats, and expressed support for low rates when he thought it would help him politically. But Trump’s never, ever, ever, expressed an opinion on whether low interest rates are actually good for the country. Not once.  Indeed I don’t think Trump would even understand what that statement means. “Good for the country?” “You mean good for me?” “I don’t understand the question.”

Whenever I read people discuss whether Trump is right about this or that aspect of reality, I feel sorry for them. They think Trump’s a normal human being, and he isn’t.  Imagine a parrot taught to say “lower interest rates” or “higher interest rates”.  Is the bird right about Fed policy?  What does that question even mean?