I’m certainly no Nostradamus, having incorrectly forecast both the 2016 and 2020 elections. But it seems to me that I have made a number of more general claims that are looking increasingly plausible:

1. I’ve consistently said that Biden is a senile old guy, not fit to be president. (I’ve said the same about Trump, but that’s neither here nor there.) Anyone still doubt me on Biden?

2. In late 2020, I told you that we’d have 12 years of Trump, and most of you thought I was crazy. Indeed most of our so-called expert pundits completely wrote him off after January 6th. I recall people saying there was no need to impeach him because he was so obviously discredited that his career was over. Where are these pundits today?

3. Unlike most Americans, I pay a lot of attention to politics in other countries. I noticed that as the nationalist right gains strength, their views on economics moved sharply to the left, away from free markets. I predicted that this would eventually happen to the GOP. And now we have Vance–the future face of the party. I said that billionaires supporting Trump were making a pact with the devil, and it would come back to haunt them. Most of those guys have no understanding of history, and don’t recall past examples of business leaders supporting authoritarian nationalists as a way of stopping the “Marxists”. How’d that turn out for business? Oh wait, I’m not allowed to play the Nazi card, only people like Vance are allowed to compare Trump to Hitler. Nevermind.

4. You right wingers babble on about “liberty”, but no one believes you. As soon as people like Vance sniff power, they want to use the awesome power of government to crush their opponents. Vance has actually praised the Biden administration’s economic policies. He’s an American Viktor Orban. Here’s Reason:

And he told The American Conservative in 2021 that his voters “hate the right people.”

Lovely.

I never thought I’d look back fondly on Pence, but at least he had the guts to certify the election. Vance is such a disgusting toady that he was willing to say that he would have refused to do so, in order to suck up to Trump. Vance has also said that Trump should disregard Supreme Court rulings. What could go wrong?

5. I’ve said that the Trump/Biden tariffs would not reduce our trade deficit nor would they provide a boost to domestic manufacturing, and they haven’t done either.

6. As far back as the late 2010s, I was saying that our fiscal policy was moving in an unsustainable direction. Even during Covid, most conventional economists were cheering for more fiscal stimulus. Now it’s almost universally viewed as a big mistake, and neither party has a plan to stabilize our public finances. Reckless fiscal policy and protectionism—sounds like Argentina.

7. For years, I’ve been saying that Russia, not China, is the biggest threat to world peace. After the Ukraine invasion, it’s pretty hard to argue I was wrong. No one is happier with the Vance pick than Vladimir Putin. (Vance doesn’t care about Ukraine, and views China as the bigger threat.)

8. A consensus of economists predicted a recession in 2023. I said recessions are unforecastable. I said don’t be fooled by the sharply higher interest rates, it doesn’t mean money is tight.

9. Yes, I did not predict the big inflation surge. That was a failure. But I said the FAIT policy should be symmetrical. The Fed opted for asymmetrical. How’d that work out?

10. I said the UK should not leave the EU. Now the British people have come around to this view, and the Conservative Party has been discredited.

11. I said that high housing prices (2006), high tech stock prices (2000), and high Bitcoin prices (2013) don’t indicate a bubble. Now people realize that supply restrictions are driving house prices, the dynamism of America’s high tech sector is driving tech stock prices, and cryptocurrencies are here to stay. That’s not to say there aren’t ups and downs—but ups and downs are part of an efficient market.

PS. That’s right. As far back as 2013, when Bitcoin had soared to $32, I was pushing back against claims that it was a bubble.

You’re welcome!

PPS. Vance is wrong about Trump voters:

Vance, author of best-selling memoir-turned-movie “Hillbilly Elegy,” said that Trump is a “cynical a**hole” who is “America’s Hitler” that only an “idiot” would vote to the highest office in the country.

Lots of smart people voted for Trump, indeed I know some. I’ve never, ever, ever said all Trump voters were stupid. Vance is such an elitist snob.

Trump has done so many awful things that it’s hard to single out any one example. But for my money, picking Vance as his VP is his single worst decision. Vance is my least favorite US senator. Picking Vance confirms what I already suspected. The traditional Republican Party is dead—it’s officially the party of nationalism from now on.

PS. Here’s Politico:

“I’m a Never Trump guy,” Vance said in an interview with Charlie Rose in 2016, a clip used in both the new ads. “I never liked him.”

Both ads also feature a screenshot of a Vance tweet from October 2016. “My god what an idiot,” he wrote, referring to Trump.

Vance expressed a similar sentiment in other interviews and since-deleted tweets from that time, including publicly mulling the idea of supporting Hillary Clinton, calling Trump “noxious” and “reprehensible.”

And you guys think I’m deranged. Perhaps Vance’s “reckless rhetoric” motivated that young man in Pennsylvania that shot Trump.

Although Vance is deeply evil, he is a smart guy. I have have no doubt at all that these continue to be his private views of Trump. Vance is no “idiot”.

So here we are. Biden is surrounded by staff that privately think he’s senile, and Trump is surrounded by staff that privately think he’s an idiot:

Update: Here’s Reason:

Vance, a former U.S. Marine and graduate of Yale Law School, has a troubling history of engaging in illiberal rhetoric. He argued on the Senate campaign trail that conservatives should “seize the administrative state” and use it “for our own purposes” rather than trying to roll it back. He floated the idea that a Republican president could simply ignore court rulings he doesn’t like. He called for seizing the assets of nonprofits that promote “woke” ideology and redistributing them to politically favored groups. And he told The American Conservative in 2021 that his voters “hate the right people.”

And here’s that famous Hitler reference that keeps popping up:

“I go back and forth between thinking Trump is a cynical asshole like Nixon who wouldn’t be that bad (and might even prove useful) or that he’s America’s Hitler,” he wrote to a friend in February 2016. He ended up voting for independent Evan McMullin.

And here he channels Neville Chamberlain:

“I got to be honest with you, I don’t really care what happens to Ukraine one way or another,” Vance told Steve Bannon in an interview in 2022.

But then you find pearls of wisdom:

“Trump is cultural heroin,” he wrote in a story in The Atlantic. “I think that he’s noxious and is leading the white working class to a very dark place,” he said on NPR.

On September 5, 1975, Lynette “Squeaky” Fromme attempted to assassinate Gerald Ford, but was stopped by a Secret service agent as she was pulling the trigger.

On September 22, 1975, Sara Jane Moore, shot at Ford and missed his head by a few inches.

Neither of these assassination attempts were major news stories, at least to the extent you might expect. Both events were quickly forgotten, and did not impact the upcoming campaign for president. They occurred during a time of very low intensity in politics, and (perhaps more importantly) during a period of much worse political violence. These are very different times—much less physically violent and much more verbally violent. This explains why yesterday felt like a much more shocking event than the two attempts on Ford.

Looking at the 1963-81 period more broadly, one notices a high rate of assassinations or attempted assassinations: Kennedy (1963), Malcolm X (1965), Martin Luther King (1968), Bobby Kennedy (1968), George Wallace (1972), Ford (1975, twice), Reagan (1981.) Since then, the US political scene has been relatively peaceful—not much different from Europe. That’s actually kind of odd, given our well known reputation for having a violent gun culture and overheated rhetoric.

Most of the 1963-81 period was not politically polarized, with the partial exception of 1968, when Vietnam and race riots somewhat divided the country. Polarization doesn’t seem to cause violence.

Soon after the recent assassination attempt, a commenter was already blaming me for the outrage. (I couldn’t help wondering why this commenter uses the sort of reckless rhetoric that he condemns, when he is attacking the Dems.)

Fortunately, there is no evidence that reckless words leads to violence. But people are going to believe what they want to believe, despite the lack of empirical evidence. No evidence that porn causes sexual assault? That won’t stop people from believing the theory. Ditto for violent films and crime, and 100 other hot button issues. People believe what they want to believe.

Assassination attempts shock our sensibilities. We don’t wish to believe that they are random occurrences, so we seek out any possible explanation that makes sense. Sometimes, there is no explanation.

PS. Ford won New Jersey, Illinois, and California, and yet lost the 1976 election.

PPS. Who knew this?

PPPS. Yes, the two 1975 assassination attempts did achieve headline status in the NYT. But look how little interest there was a few days after even the second attempt in 17 days. It was headlines news on September 23rd, but by the 26th a crucial revelation (that federal agents tried to help the assassin buy her firearm) was treated as a minor news story, less important than the ongoing investigation of Patty Hearst:

Tyler Cowen directed me to a Greg Mankiw essay on inflation:

And as a textbook author, I sometimes get the suggestion that the whole discussion of the Phillips curve be removed from my books on the grounds that the idea is hopelessly out-of-date. By contrast, my own thinking is closer to that of George Akerlof (2002), who in his Nobel prize lecture called the Phillips curve “probably the single most important macroeconomic relationship.”

I have a hypothesis about the source of this disconnect. In the original paper by Phillips (1958) and the famous follow-up by Samuelson and Solow (1960), the Phillips curve was presented as an unconditional relationship—a negative correlation between inflation and unemployment. Some periods, most notably the 1960s, do exhibit a simple downward-sloping scatterplot of points. But that unconditional relationship is long gone. Using data for the past several decades, the scatterplot of inflation and unemployment is now a cloud of points.

My perspective, however, is that the Phillips curve is best considered a conditional relationship. If you think (as most economists do) that monetary shocks—or aggregate-demand shocks more generally—push inflation and unemployment in opposite directions in the short run, then there is a short-run Phillips curve. But this downward-sloping curve is conditional on what shock is hitting the economy.

Mankiw understands the problems with the traditional Phillips Curve, but would like to keep the basic concept, always keeping in mind the distinction between supply and demand shocks. My preference would be to mostly remove inflation from macroeconomics, and instead directly focus on the relationship between nominal GDP shocks and unemployment.

Mankiw identifies one problem with the traditional Keynesian approach:

Whenever inflation moves away from the Fed target, as it dramatically did in 2022, observers are tempted to attribute the change to a shock to aggregate supply or aggregate demand. That might provide some clue as to how transitory the change is likely to be and how much corrective action the central bank needs to take. The problem is that because we don’t know the natural rate of unemployment with much precision, it is hard to disentangle supply and demand. That is true even with the benefit of hindsight, but the task is even more formidable in real time when data are preliminary and incomplete. And it is in real time that policymakers need to respond. . . .

The 2022 inflation surge is a case in point. Even now, I don’t think we can say for sure what happened. The surge could have resulted from pandemic-related interruptions in supply chains. It could have resulted from excess demand, as the 3.6 percent rate unemployment rate was plausibly below the NAIRU, which may well have been altered by the pandemic experience as workers rethought their relationship with the labor market.

From an NGDP perspective, we know exactly what happened. Although there were supply problems in 2022, those have resolved over time. The cumulative excess 11% NGDP growth over the past 4 1/4 years fully explains the excess 9% in PCE inflation. It was essentially all demand side for the period as a whole, despite a portion of the 2021-22 inflation being supply side.

In contrast, if you look at unemployment as a way of ascertaining whether the economy is experiencing excess inflation, you run into exactly the problem identified by Mankiw, we don’t know what the natural rate of unemployment is at any given moment in time—even retrospectively.

To be clear, I am not saying the Phillips Curve model is wrong, at least in the sophisticated version preferred by Mankiw. Rather it is not useful to policymakers.

Mankiw is correct that inflation caused by demand shocks is associated with movements in unemployment that correspond to the basic logic of the Phillips Curve. It is quite plausible that there was a period of time during 2022-23 when unemployment was below the natural rate. The real problem is that it is not a useful tool for policymakers—they are better off trying to stabilize NGDP growth at 4% and avoid trying to guesstimate the natural rate of unemployment.

For similar reasons, I’d prefer the Fed try to stabilize NGDP futures contract prices along a 4% growth path, and not try to guesstimate the natural rate of interest, which is just as unobservable as the natural rate of unemployment.

PS. A few weeks back, Michael Sandifer developed a Chatbot trained on my money illusion blog posts from 2009-24. Eventually, I plan to do something with this, but I have not gotten around to it yet. If you scroll way down in the right column of this blog, you’ll find the link. If I’m hit by a truck, this Chatbot will take over my commentary on current events and do future movie reviews. (Let’s hope it doesn’t endorse Trump!) I guess that means I’m roughly 5% or 10% immortal.

There are times when it’s cruel to be kind.

At some point in the not too distant future, the quality of my blogging will drop below a certain threshold. (Maybe it already has.) At that point, I hope my best commenters will tell me so. You won’t be doing me any favors by hiding my senility from me—it would merely cause me to suffer even more from the indignities of old age, and to lose whatever meager reputation I might have once had.

I see reports that top Dems are suggesting that conversations about Biden’s obvious incapacity to govern be kept private. Maybe that will work, but I doubt it. If you care about Biden’s long-term interests, you will go public with your misgivings. Despite Biden’s claims that he’s staying in the race, I still believe that a large enough critical mass of Democrats could nudge him out.

Ordinary Democrats also have an important role to play. Next time you are contacted by a pollster, don’t blow them off. Take the poll and indicate that you would support Trump over Biden, but any other Democrat over Trump. Would that be lying? Probably, but in this case it’s your patriotic duty to lie, in the same way as if you were called upon by the secret police when hiding refugees in your basement.

Yes, Harris would probably lose, but at least it would no longer be a humiliating defeat. She could campaign on the (truthful) argument that Trump is clearly too old and senile to be president. Wouldn’t that be ironic?

PS. Soviet commenters Sara/Ricardo/Edward have already informed me of my senility. But given that their combined IQ is below that of a turnip, I don’t put a great deal of weight on their opinion.

PPS. How about George Clooney? He looks presidential. Or how about the first Congressional Democrat to have the guts to publicly say that the emperor had no clothes?