In 2022, a proposed abortion ban failed by 18 points in conservative Kansas. So what happened after Republican voters realized that anti-abortion politics threatened their electoral prospects?

So what do you really care about? The lives of unborn babies, or tax cuts for the rich?

What is the one common feature of all recessions? The answer is easy. During every single recession, the media is full of reports that this recession is utterly unlike anything in the past. I discussed this point in my book The Money Illusion, but I might as well have been spitting into the wind.

Here’s Bloomberg:

These are strange times, which means the last 30 years of data — maybe even the last 50 years — don’t offer much insight. The normal indicators may not tell us much of anything at all. Even the reliable inverted yield curve that’s supposed to predict recession may be less reliable after years of quantitative easing followed by quantitative tightening.

Perhaps there will be no inflection point when a recession hits. Maybe inflation falls and then we just recover. That’s not unprecedented, but we are entering this period from a different place than we’ve ever been before.

To me, the economic situation seems utterly normal. There was too much demand stimulus, NGDP rose too fast, inflation increased, and policymakers are finally beginning to contemplate steps that would bring inflation down. So what’s new?

In my book, I cited a Time magazine article from 1991 explaining how the recession at that time (which was utterly normal) was supposedly nothing like anything we’d seen before. Today, the article seems almost comical.

Much of the confusion comes from the fact that most journalists and economists are working with the wrong model. The business cycle is actually quite simple. Monetary policy drives NGDP and NGDP drives fluctuations in RGDP. And interest rates do not tell us anything useful about the stance of monetary policy. For that you need to look at NGDP and NGDP expectations.

If you think the Fed has been tightening monetary policy for a year, you might wonder why the economy keeps chugging along with rapid NGDP growth. But what makes you think the Fed’s been tightening monetary policy for the past year? Interest rates?

Here are interest rates in Argentina:

Wow, those sharply rising interest rates must be driving inflation much lower!

Oh wait:

PS. Slightly off topic, but commenters used to be surprised when I told them that easy money wouldn’t improve real wages. The whole point of stimulus is to lower real wages so that firms hire more workers:

When it comes to political analysis, a common mistake is to focus on leaders. I suppose this is hardwired into us, as in ancient times when people lived in small tribes it was true that leaders actually mattered a lot. Today, not so much.

Truss? Sunak? Who cares when you have a dysfunctional Conservative Party. Here’s Reason:

Truss u-turned on several tax pledges to restore market confidence, as Tory M.P.s made clear they would not tolerate any major offsetting spending cuts.

Read that again. Britain’s “conservative” party won’t even consider significant spending cuts in its bloated budget, which is much larger as a share of GDP (43%) than after Labour PM Tony Blair had led the country for three years (35%). This is what I keep telling you; there is no small government party. In the US, government spending grows just as fast under GOP presidents as under Democratic presidents.

Here’s the Financial Times:

“Brexit was based on an act of immense stupidity,” says one European leader (on the condition of anonymity). “It was sold by politicians who promised a sort of great Singapore but voted for by people who were unhappy about globalisation.” As the leader went on to spell out, this is an impossible mandate to deliver on.

I love that quote—it perfectly encapsulates everything wrong with Brexit.

OK, but how about supply side reforms? No luck there either. Conservative MPs strongly opposed Truss’s proposed deregulation to make it easier to build housing, or to allow for fracking to produce energy. And a lack of housing is far and away Britain’s primary economic problem.

You might wonder why I’m so pessimistic about Britain. Actually, in a relative sense I’m optimistic. The whole world is becoming more nationalistic, more statist, more stupid. Rishi Sunak is not ideal, but as world leaders go he’s well above average. The political situation in the US is much worse than in the UK. In China it’s far worse than in the US. And in Russia it’s far worse than in China.

Here’s the FT:

Olaf Scholz, Germany’s chancellor, has just firmly restated his belief in globalisation — in what felt like a rebuke to the US.

Belief in globalization is a rebuke to the US? Yikes.

I miss the 1990s. There’s only one endpoint for nationalism. Get ready for WWIII, regardless of whether Biden or (more likely) Trump wins in 2024.

Here’s the Financial Times:

Three weeks ago, Sanna Marin, Finland’s prime minister, retweeted a link to an article by a Finnish academic together with the following quote: “There is something seriously wrong with the prevailing ideas of monetary policy when central banks protect their credibility by driving economies into recession.”

Defenders of those prevailing ideas predictably pushed back, warning against second-guessing independent central banks or not valuing their credibility. But defensiveness is the wrong response. Not just because Marin didn’t actually criticise any central bank actions. But, more profoundly, because avoiding a debate over whether our macroeconomic regime is fit for purpose is more perilous than having one. . . .

Like in the 1980s, in time bright economists will suggest better ways of designing monetary policy against energy price shocks.

Wouldn’t it be nice if there was some sort of alternative to inflation targeting, which was able to account for energy price shocks.

Got any ideas?

PS. This sentence had me scratching my head:

In 2020 and 2021, the Federal Reserve and the European Central Bank vowed to tolerate a period of higher inflation if employment had further to rise or there would be little room to loosen policy in case of a downturn. But this new attitude fell at the first hurdle.

Umm, where to begin . . .

This caught my eye:

China has delayed at the last minute the release of eagerly anticipated third quarter economic data, including its closely watched gross domestic product growth rate, which were due to be issued in the middle of the 20th communist party conference.

No explanation for the postponement was given in an update to an official statistics calendar and no new dates were provided. . . .

The latest figures were originally set to be published on Tuesday at a politically sensitive time, with China’s president Xi Jinping expected to use the party congress to extend his powers for a third term and outline the country’s overarching policy approach.

The economic data were expected to highlight China’s continued economic weaknesses, including a worsening property crisis and the impact of strict zero-Covid policies that this year locked down dozens of big cities, stifled consumption and effectively closed the country off from the rest of the world.

Cover-up?

Here’s another story:

Research at Boston University that involved testing a lab-made hybrid version of the SARS-CoV-2 virus is garnering heated headlines alleging the scientists involved could have unleashed a new pathogen.

There is no evidence the work, performed under biosecurity level 3 precautions in BU’s National Emerging Infectious Diseases Laboratories, was conducted improperly or unsafely. In fact, it was approved by an internal biosafety review committee and Boston’s Public Health Commission, the university said Monday night.

But it has become apparent that the research team did not clear the work with the National Institute of Allergy and Infectious Diseases, which was one of the funders of the project. The agency indicated it is going to be looking for some answers as to why it first learned of the work through media reports.

I find the media response to both stories to be quite revealing. For years, the media has been telling us that China fakes its GDP figures to make the government look good. In that case, why weren’t these figures also faked? Why withhold the data? It makes no sense to me . . . unless . . . perhaps China’s National Statistics Bureau doesn’t fake the data. That would explain why the data was withheld at a sensitive time.

The BU gain of function story is also confusing. For several years, we’ve been bombarded with stories that the Chinese were doing risky gain-of-function research on the Covid virus. After all of this negative publicity, we find that the US is doing the same sort of research? And yet it doesn’t seem to be a major story. Why?

Am I drawing a moral equivalence between the US and China? No, we don’t have the sort of wild animal markets that the Chinese have. And these animal markets have produced two epidemics since 2002. That is how we differ from China.