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Quote:Truly, Donald Trump knows nothing. He is more ignorant about policy than you can possibly imagine, even when you take into account the fact that he is more ignorant than you can possibly imagine. But his ignorance isn’t as unique as it may seem: In many ways, he’s just doing a clumsy job of channeling nonsense widely popular in his party, and to some extent in the chattering classes more generally.
Last week the presumptive Republican presidential nominee — hard to believe, but there it is — finally revealed his plan to make America great again. Basically, it involves running the country like a failing casino: he could, he asserted, “make a deal” with creditors that would reduce the debt burden if his outlandish promises of economic growth don’t work out.
The reaction from everyone who knows anything about finance or economics was a mix of amazed horror and horrified amazement. One does not casually suggest throwing away America’s carefully cultivated reputation as the world’s most scrupulous debtor — a reputation that dates all the way back to Alexander Hamilton.
The Trump solution would, among other things, deprive the world economy of its most crucial safe asset, U.S. debt, at a time when safe assets are already in short supply.
Of course, we can be sure that Mr. Trump knows none of this, and nobody in his entourage is likely to tell him. But before we simply ridicule him — or, actually, at the same time that we’re ridiculing him — let’s ask where his bad ideas really come from.
First of all, Mr. Trump obviously believes that America could easily find itself facing a debt crisis. But why? After all, investors, who are willing to lend to America at incredibly low interest rates, are evidently not worried by our debt. And there’s good reason for their calmness: federal interest payments are only 1.3 percent of G.D.P., or 6 percent of total outlays.
These numbers mean both that the burden of the debt is fairly small and that even complete repudiation of that debt would have only a minor impact on the government’s cash flow.
So why is Mr. Trump even talking about this subject? Well, one possible answer is that lots of supposedly serious people have been hyping the alleged threat posed by federal debt for years. For example, Paul Ryan, the speaker of the House, has warned repeatedly about a “looming debt crisis.” Indeed, until not long ago the whole Beltway elite seemed to be in the grip of BowlesSimpsonism, with its assertion that debt was the greatest threat facing the nation.
A lot of this debt hysteria was really about trying to bully us into cutting Social Security and Medicare, which is why so many self-proclaimed fiscal hawks were also eager to cut taxes on the rich. But Mr. Trump apparently wasn’t in on that particular con, and takes the phony debt scare seriously. Sad!
Still, even if he misunderstands the fiscal situation, how can he imagine that it would be O.K. for America to default? One answer is that he’s extrapolating from his own business career, in which he has done very well by running up debts, then walking away from them.
But it’s also true that much of the Republican Party shares his insouciance about default. Remember, the party’s congressional wing deliberately set about extracting concessions from President Obama, using the threat of gratuitous default via a refusal to raise the debt ceiling.
And quite a few Republican lawmakers defended that strategy of extortion by arguing that default wouldn’t be that bad, that even with its access to funds cut off the U.S. government could “prioritize” payments, and that the financial disruption would be no big deal.
Given that history, it’s not too hard to understand why candidate Trump thinks not paying debts in full makes sense.
The important thing to realize, then, is that when Mr. Trump talks nonsense, he’s usually just offering a bombastic version of a position that’s widespread in his party. In fact, it’s remarkable how many ridiculous Trumpisms were previously espoused by Mitt Romney in 2012, from his claim that the true unemployment rate vastly exceeds official figures to his claim that he can bring prosperity by starting a trade war with China.
None of this should be taken as an excuse for Mr. Trump. He really is frighteningly uninformed; worse, he doesn’t appear to know what he doesn’t know. The point, instead, is that his blithe lack of knowledge largely follows from the know-nothing attitudes of the party he now leads.
Oh, and just for the record: No, it’s not the same on the other side of the aisle. You may dislike Hillary Clinton, you may disagree sharply with her policies, but she and the people around her do know their facts. Nobody has a monopoly on wisdom, but in this election, one party has largely cornered the market in raw ignorance.
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As an antidote to the idiocy of Krugman I suggest a podcast by Tom Woods and Bob Murphy. It is a good way to learn economics by dissecting the mistakes of Krugman.
Democracy is the theory that the common people know what they want, and deserve to get it good and hard. -- H.L. Mencken
If one rejects laissez faire on account of man's fallibility and moral weakness, one must for the same reason also reject every kind of government action. -- Ludwig von Mises
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05-13-2016, 04:24 PM
(This post was last modified: 05-13-2016, 04:25 PM by Kinser79.)
Well here's the thing. To a degree both are right. Using MMT one can indeed spend like a drunken sailor (if they are the currency issuer) and provided their debt is denominated in the currency they issue can never go bankrupt. However, when over used, others may just decide that they don't want that debt because they will just be paid off with inflated paper.
In the case of Greece the US can't become Greece because we issue debt in our own currency and pay for it in our own currency. At the same time, should the ability to buy oil ever switch to a different currency, or basket of currencies, or a different commodity then there is no reason to take on US dollars.
More likely, would be blowing up a huge bubble which will implode.
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To use a football analogy, Trump's economics are still at least two touchdowns better than that of any of the Republican candidates he defeated.
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05-16-2016, 01:35 AM
(This post was last modified: 05-16-2016, 01:35 AM by Cynic Hero '86.)
Trump is gaining large popular support on the right (and converting many on the left for that matter) because he is the only GOP candidate who is against unlimited free-trade, unlimited globalism and against open borders.
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But the American right is being redefined - just like its left was redefined in the 1960s. The new American right is a lot like the "Deutschland Den Deutschen" ("Germany is for Germans") right in Germany, which emphasizes nationalism (arguably xenophobia), not William Graham Sumner/Friedrich Hayek/Ayn Rand economics.
Ted Cruz, Paul Ryan etc. are still stuck in the latter mold - which is why they lost, just like the labor-dominated, white-ethnic "hardhats" lost to George McGovern and his "Acid, Amnesty and Abortion" in the Democratic Party in 1972.
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(05-16-2016, 08:58 AM)Anthony Wrote: But the American right is being redefined - just like its left was redefined in the 1960s. The new American right is a lot like the "Deutschland Den Deutschen" ("Germany is for Germans") right in Germany, which emphasizes nationalism (arguably xenophobia), not William Graham Sumner/Friedrich Hayek/Ayn Rand economics.
Ted Cruz, Paul Ryan etc. are still stuck in the latter mold - which is why they lost, just like the labor-dominated, white-ethnic "hardhats" lost to George McGovern and his "Acid, Amnesty and Abortion" in the Democratic Party in 1972.
The GOP needs to be redefined to be viable as a major party. I doubt that the American right as you described can establish a viable new party.
… whatever is true, whatever is honorable, whatever is just, whatever is pure, whatever is lovely, whatever is commendable, if there is any excellence, if there is anything worthy of praise, think about these things. Phil 4:8 (ESV)
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(05-16-2016, 02:35 PM)radind Wrote: (05-16-2016, 08:58 AM)Anthony Wrote: But the American right is being redefined - just like its left was redefined in the 1960s. The new American right is a lot like the "Deutschland Den Deutschen" ("Germany is for Germans") right in Germany, which emphasizes nationalism (arguably xenophobia), not William Graham Sumner/Friedrich Hayek/Ayn Rand economics.
Ted Cruz, Paul Ryan etc. are still stuck in the latter mold - which is why they lost, just like the labor-dominated, white-ethnic "hardhats" lost to George McGovern and his "Acid, Amnesty and Abortion" in the Democratic Party in 1972.
The GOP needs to be redefined to be viable as a major party. I doubt that the American right as you described can establish a viable new party.
I think you underestimate the popularity of Nationalism, Protectionism and Isolationism. That's okay though, it is one of the reasons why people underestimate Trump when they aren't trying to manipulate the narrative...looks like the Regressive Left has skipped stage 2 and hit stage three immediately.
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(05-16-2016, 07:59 PM)Kinser79 Wrote: (05-16-2016, 02:35 PM)radind Wrote: (05-16-2016, 08:58 AM)Anthony Wrote: But the American right is being redefined - just like its left was redefined in the 1960s. The new American right is a lot like the "Deutschland Den Deutschen" ("Germany is for Germans") right in Germany, which emphasizes nationalism (arguably xenophobia), not William Graham Sumner/Friedrich Hayek/Ayn Rand economics.
Ted Cruz, Paul Ryan etc. are still stuck in the latter mold - which is why they lost, just like the labor-dominated, white-ethnic "hardhats" lost to George McGovern and his "Acid, Amnesty and Abortion" in the Democratic Party in 1972.
The GOP needs to be redefined to be viable as a major party. I doubt that the American right as you described can establish a viable new party.
I think you underestimate the popularity of Nationalism, Protectionism and Isolationism. That's okay though, it is one of the reasons why people underestimate Trump when they aren't trying to manipulate the narrative...looks like the Regressive Left has skipped stage 2 and hit stage three immediately.
A lot of people( me included) in both parties are fed up with the insider power brokers. Some in the GOP seem to prefer Clinton over Trump. I see a majority on the progressive(left) side. We will see in Nov.
… whatever is true, whatever is honorable, whatever is just, whatever is pure, whatever is lovely, whatever is commendable, if there is any excellence, if there is anything worthy of praise, think about these things. Phil 4:8 (ESV)
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Quote:The GOP needs to be redefined to be viable as a major party. I doubt that the American right as you described can establish a viable new party.
But the old GOP is certainly not viable, now that it can't even win the primary of its own party.
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(05-17-2016, 09:20 AM)Anthony Wrote: Quote:The GOP needs to be redefined to be viable as a major party. I doubt that the American right as you described can establish a viable new party.
But the old GOP is certainly not viable, now that it can't even win the primary of its own party.
The old GOP is splitting and therefore needs to be redefined or just go away so that a new major party can emerge. I am fed up with the old establishment power brokers.
… whatever is true, whatever is honorable, whatever is just, whatever is pure, whatever is lovely, whatever is commendable, if there is any excellence, if there is anything worthy of praise, think about these things. Phil 4:8 (ESV)
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It's going to be fun to compare your explanations in November with your current analysis here.
Looking forward to it. 
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(05-17-2016, 11:29 AM)playwrite Wrote: It's going to be fun to compare your explanations in November with your current analysis here.
Looking forward to it.
Unless the FBI report takes Clinton out, I expect Clinton to be elected. Then I expect a long period of domination by the Democratic party in presidential elections. After this, I would expect either a totally new and different GOP or a new party to emerge to challenge the Democratic party.
… whatever is true, whatever is honorable, whatever is just, whatever is pure, whatever is lovely, whatever is commendable, if there is any excellence, if there is anything worthy of praise, think about these things. Phil 4:8 (ESV)
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(05-17-2016, 11:40 AM)radind Wrote: (05-17-2016, 11:29 AM)playwrite Wrote: It's going to be fun to compare your explanations in November with your current analysis here.
Looking forward to it.
Unless the FBI report takes Clinton out, I expect Clinton to be elected. Then I expect a long period of domination by the Democratic party in presidential elections. After this, I would expect either a totally new and different GOP or a new party to emerge to challenge the Democratic party.
As I said in another thread, my hope is that repeated presidential losses finally wise the GOP up into making concessions, like other center-right parties have in the world, regarding certain basic government services/regulations like paid family leave, higher minimum wages, and the like. They can win with a typical center-right platform, and the other benefit is that it would push the Democrats further left. 2020's the real key, of course--if the GOP's gerrymandered House can be undone then they're in real trouble.
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You do not get it; the democrats are not going against the neocon, pro-free trade, Randian GOP that we have known since 1980. They will be going against the new populist, economic protectionist GOP that Trump is creating.
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(05-13-2016, 04:24 PM)Kinser79 Wrote: Well here's the thing. To a degree both are right. Using MMT one can indeed spend like a drunken sailor (if they are the currency issuer) and provided their debt is denominated in the currency they issue can never go bankrupt. However, when over used, others may just decide that they don't want that debt because they will just be paid off with inflated paper.
In the case of Greece the US can't become Greece because we issue debt in our own currency and pay for it in our own currency. At the same time, should the ability to buy oil ever switch to a different currency, or basket of currencies, or a different commodity then there is no reason to take on US dollars.
More likely, would be blowing up a huge bubble which will implode.
You're getting closer, but not quite there yet.
There actually is no real monetary or fiscal reason for a monetary sovereign to sell debt. The spending comes first, the debt instrument comes after - it really is just a service of providing an interest-bearing security to those holding the spent money. When there is a real difference between holding non-interest bearing security (e.g. US dollars) and interest-bearing security (e.g. US Treasuries), that can incentivize a holder of currency to put it into Treasuries - it's a way to mitigate spending and thereby inflation. Of course, a much more effective and efficient way to reduce spending/inflation is for the central government to reduce its own spending and/or increase taxes on everyone else - politically, difficult, and that's why we all have such a fixation of the near-joke of monetary policy.
As to the dollar losing its appeal, do you think it's better for oil producers to sit on millions of barrel of black goo held in expensive supertankers off shore just waiting for a natural disaster or ISIS to spill it all over their shores? If you want to sell the stuff and keep your population happy, you're going to have to take somebody's currency one way or another. If you take the Chinese Yuan instead of US dollars, you're just going to have to buy some Chinese stuff or convert it n the FX markets so you can buy some US or Euro stuff. It all works out in the FX market. The "world reserve currency" is just the monetary sovereign who most other monetary sovereigns trade - it's not going to change trading; it's the other way around. As long as we have things to trade, others will take our currency and be happy. And if they don't, who cares? By many measures, the US is nearly a self-contained economy. The trade numbers look big because they are big, but relative to domestic trading within the US, peanuts.
Krugman and other post-Keynesians get pretty close to reality - at least a lot closer than those that believe in fractional reserve lending and laissez faire fantasies.
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(05-17-2016, 12:00 PM)playwrite Wrote: (05-13-2016, 04:24 PM)Kinser79 Wrote: Well here's the thing. To a degree both are right. Using MMT one can indeed spend like a drunken sailor (if they are the currency issuer) and provided their debt is denominated in the currency they issue can never go bankrupt. However, when over used, others may just decide that they don't want that debt because they will just be paid off with inflated paper.
In the case of Greece the US can't become Greece because we issue debt in our own currency and pay for it in our own currency. At the same time, should the ability to buy oil ever switch to a different currency, or basket of currencies, or a different commodity then there is no reason to take on US dollars.
More likely, would be blowing up a huge bubble which will implode.
You're getting closer, but not quite there yet.
There actually is no real monetary or fiscal reason for a monetary sovereign to sell debt. The spending comes first, the debt instrument comes after - it really is just a service of providing an interest-bearing security to those holding the spent money. When there is a real difference between holding non-interest bearing security (e.g. US dollars) and interest-bearing security (e.g. US Treasuries), that can incentivize a holder of currency to put it into Treasuries - it's a way to mitigate spending and thereby inflation. Of course, a much more effective and efficient way to reduce spending/inflation is for the central government to reduce its own spending and/or increase taxes on everyone else - politically, difficult, and that's why we all have such a fixation of the near-joke of monetary policy.
As to the dollar losing its appeal, do you think it's better for oil producers to sit on millions of barrel of black goo held in expensive supertankers off shore just waiting for a natural disaster or ISIS to spill it all over their shores? If you want to sell the stuff and keep your population happy, you're going to have to take somebody's currency one way or another. If you take the Chinese Yuan instead of US dollars, you're just going to have to buy some Chinese stuff or convert it n the FX markets so you can buy some US or Euro stuff. It all works out in the FX market. The "world reserve currency" is just the monetary sovereign who most other monetary sovereigns trade - it's not going to change trading; it's the other way around. As long as we have things to trade, others will take our currency and be happy. And if they don't, who cares? By many measures, the US is nearly a self-contained economy. The trade numbers look big because they are big, but relative to domestic trading within the US, peanuts.
Krugman and other post-Keynesians get pretty close to reality - at least a lot closer than those that believe in fractional reserve lending and laissez faire fantasies.
We need trump because the protectionist policies he proposes is the only way to wean america off the petrodollar before it is too late.
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05-17-2016, 12:14 PM
(This post was last modified: 05-17-2016, 12:19 PM by playwrite.)
(05-17-2016, 11:40 AM)radind Wrote: (05-17-2016, 11:29 AM)playwrite Wrote: It's going to be fun to compare your explanations in November with your current analysis here.
Looking forward to it.
Unless the FBI report takes Clinton out, I expect Clinton to be elected. Then I expect a long period of domination by the Democratic party in presidential elections. After this, I would expect either a totally new and different GOP or a new party to emerge to challenge the Democratic party.
Agree, but I see the Dems splitting into a more populist versus business orientation (I'd say neo-liberal for the latter but that's become more charged than even "liberal"). Many of the GOP folks will glum on to both sides. Hopefully those middle class Whites that are going for Trump will realize a Sanders type candidate will actually care about them for longer than the 6 months of every election cycle. Some of the GOP elites will try to join and persuade the Dem business side toward their old GOP ways, but doing so to any degree will get that side of the Dem split killed by the populist side in the next election so that backward drift will be moderated.
A good size of the GOP will become a regional power in parts of the South, Plains states, and even some MidWest (like Indiana) particularly around social issues (e.g., policing bathrooms) but with demographics they'll be constantly whittled down.
Some will likely take up the offer to move to Greenland, and hopefully take the free one-way ticket offer if they take 10 guns with them.
Oh, and the Libertarians/Austrains/Randians will still not have bought a clue. 
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(05-17-2016, 12:00 PM)playwrite Wrote: As to the dollar losing its appeal, do you think it's better for oil producers to sit on millions of barrel of black goo held in expensive supertankers off shore just waiting for a natural disaster or ISIS to spill it all over their shores? If you want to sell the stuff and keep your population happy, you're going to have to take somebody's currency one way or another. If you take the Chinese Yuan instead of US dollars, you're just going to have to buy some Chinese stuff or convert it n the FX markets so you can buy some US or Euro stuff.
Maybe you haven't noticed but the Chinese sell lots of stuff. As for buying US stuff the chief US exports are grain and lumber...last I checked raw materials. Those can be found elsewhere.
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(05-17-2016, 12:14 PM)playwrite Wrote: (05-17-2016, 11:40 AM)radind Wrote: (05-17-2016, 11:29 AM)playwrite Wrote: It's going to be fun to compare your explanations in November with your current analysis here.
Looking forward to it.
Unless the FBI report takes Clinton out, I expect Clinton to be elected. Then I expect a long period of domination by the Democratic party in presidential elections. After this, I would expect either a totally new and different GOP or a new party to emerge to challenge the Democratic party.
Agree, but I see the Dems splitting into a more populist versus business orientation (I'd say neo-liberal for the latter but that's become more charged than even "liberal"). Many of the GOP folks will glum on to both sides. Hopefully those middle class Whites that are going for Trump will realize a Sanders type candidate will actually care about them for longer than the 6 months of every election cycle. Some of the GOP elites will try to join and persuade the Dem business side toward their old GOP ways, but doing so to any degree will get that side of the Dem split killed by the populist side in the next election so that backward drift will be moderated.
A good size of the GOP will become a regional power in parts of the South, Plains states, and even some MidWest (like Indiana) particularly around social issues (e.g., policing bathrooms) but with demographics they'll be constantly whittled down.
Some will likely take up the offer to move to Greenland, and hopefully take the free one-way ticket offer if they take 10 guns with them.
Oh, and the Libertarians/Austrains/Randians will still not have bought a clue.
Most countries won't take anyone in who is not an asset to that country. So, I doubt that any significant number will be going anywhere. It may be difficult , but we need to find some way to live together in peace.
A regional power does not make a viable national party. I will take a new coalition. If both the Democrats and the GOP split , then it would be easier to form two new national parties.
… whatever is true, whatever is honorable, whatever is just, whatever is pure, whatever is lovely, whatever is commendable, if there is any excellence, if there is anything worthy of praise, think about these things. Phil 4:8 (ESV)
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