Paul Krugman: “The Trump Economic Team Is Shaping up as a Gathering of Gold Bugs”

Paul Krugman tweets:

That tweet is part of a recent series by Prof. Krugman divining glints of gold in the company of Donald Trump. He predominantly focuses on one of Trump’s appointments, Rep. Mick Mulvaney (R-S.C.) for Office of Management and Budget (OMB).

Krugman astutely points out that Mulvaney once observed that the Federal Reserve has “effective devalued the dollar” — hard to argue with when the dollar has lost 85 percent of its buying power since Richard Nixon closed the gold window in 1971 — and “choke[d] off economic growth.” This is also hard to argue with after 16 years of booms and busts that have left the average US growth rate at about half of its historic trend line for that dreary epoch.

Krugman does not furnish evidence that Rep. Mulvaney has endorsed the gold standard. One can but hope his inference is well grounded.

Exhibit B for his tirade is contained in a tweet referencing investor John Paulson, reportedly close both to the treasury secretary designate Steve Mnuchin and Donald Trump himself. Paulson had recently been invested heavily in gold before slashing his position this year.

My research has not revealed any evidence that John Paulson is a gold standard advocate, affectionately known as a “gold bug.” The record shows Paulson to be an active speculator in gold who has, on balance, done well for his fund thereby. Continue Reading

The Real Steve Bannon Revealed!

Steve Bannon (photo credit: Don Irvine via Flickr, CC BY-SA 2.0)

A marvelous interview with Donald Trump’s chief strategist Steve Bannon has suddenly appeared in, no less, The Hollywood Reporter: Ringside With Steve Bannon at Trump Tower as the President-Elect’s Strategist Plots “An Entirely New Political Movement” (Exclusive).” It is a perfect antidote to the McCarthyite insults being heaped on Bannon by the elitist left and its handmaiden, the mainstream media.

Bannon is a provocateur. No sin in that; the left has a plethora of provocateurs.

By every account he is an open-minded, generous (albeit demanding) soul. The media’s efforts to smear him are the most shameful application of “Tailgunner Joe,” guilt-by-association tactics seen since the days of the House Un-American Activities Committee. Wolff quotes Bannon:

“I’m not a white nationalist, I’m a nationalist. I’m an economic nationalist,” he tells me. “The globalists gutted the American working class and created a middle class in Asia. The issue now is about Americans looking to not get f—ed over. If we deliver” — by “we” he means the Trump White House — “we’ll get 60 percent of the white vote, and 40 percent of the black and Hispanic vote and we’ll govern for 50 years. That’s what the Democrats missed.”

Wolff goes on to observe:

Breitbart, with its casual provocations — lists of its varied incitements … were in hot exchange after the election among appalled Democrats — is as opaque to the liberal-donor-globalist class as Lena Dunham might be to the out-of-work workingman class.

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Six Lessons from Donald Trump’s Great Victory

Donald Trump (photo credit: Gage Skidmore)

Congratulations, President-elect Trump. Congratulations to the historic, never-before-seen governing majority he assembled. It’s time to hope I was wrong and work for President Trump’s success — for America’s success.

Here are my first six takeaways from last night’s historic victory:

1.) The RNC’s “Autopsy” from 2012 got it exactly wrong in arguing the key to victory was less social conservatism and more of the standard GOP economic message. One key to Trump’s victory was to combine social conservatism with a new populist economic message. White evangelicals voted for him in record, never-before-seen numbers: 81 percent to 16 percent according to exit polls. That tops George W. Bush’s record of 78 percent in 2004.

2.) Latinos were the dog that didn’t bark. Build a wall, chastise Mexican immigrants as rapists, threaten to deport illegals — despite Trump’s often unusually harsh tone, he actually gained slightly more of the Latino vote than Romney did, 29 percent versus 27 percent. In Florida, he won 33 percent of the Latino vote. Apparently, Hispanic voters care less about immigration than elites think they should.

3.) The biggest loser last night was the donor class. According to OpenSecrets.org, Trump raised $250 million — less than half of the $687 million Clinton raised.  Trump demonstrated that you can lose the money primary and still win the election. Television is no longer king. This is a huge opportunity for social conservatives in particular; as donors recognize giving to super PACs is just padding the pockets of consultants who make money whether they win or lose, they are going to be looking for new more effective political vehicles. Continue Reading

I Did It. I Voted for Donald Trump. Here’s Why.

Donald Trump (photo credit: Gage Skidmore)

Tomorrow is Election Day. Tomorrow, we vote.

I want to talk a little bit about why I am voting for Donald Trump.

Early on in the GOP primary, I did not support Trump. My feelings on Trump were mixed. I thought his debate performances were entertaining. I enjoyed watching him destroy squishy establishment Republicans like Jeb Bush and John Kasich. Unlike many of my peers, I liked his brash demeanor, and I was captivated by his willingness to fight the liberal media.

But I had trust issues, many of which I wrote about here at The Pulse 2016. Was Donald Trump a true conservative? Was he really pro-life? Could he be trusted?

Abortion was my biggest concern with Trump from the very beginning. But Trump, wisely, made committing to the pro-life movement a priority. In his policy platform, Trump went further than any other GOP nominee in history, promising to…

  • …apply a litmus test to judicial appointees and nominate “pro-life” Supreme Court justices.
  • …sign the Pain-Capable Unborn Child Protection Act, a 20-week ban on abortion.
  • …defund Planned Parenthood.
  • …protect the Hyde Amendment and fight against any government effort to commit taxpayer funds to abortion.

It was because of these commitments that I declared I would vote for Donald Trump in an op-ed in The Daily Caller in May:

And as President, [Trump] will promote a culture of life. He will make saving lives a priority.

Does he say stupid things? Absolutely. Trump has evoked every emotion within me.

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High Stakes for 2016: Judy Shelton for Fed Chair to Make America Great Again

The Federal Reserve headquarters in Washington, DC (photo credit: Dan Smith, CC BY-SA 2.5)

In The Daily Caller, freelance writer Johannes Schmidt writes “On November 8th I’m Voting For Our Next Fed Chair.” It’s an especially astute column.

While many commentators correctly have focused on the effect of the election outcome on appointments to the Supreme Court, too few have focused on the next president’s appointments to the Fed. This also is of capital importance. Schmidt writes:

The policies implemented by the Fed are especially important (albeit often insidious) because money is our society’s most basic medium of exchange. The manipulation of its value affects every day citizens both in the short and long terms. Decisions taken by central banks–be it to toy with negative interest rates, engage in endless rounds of quantitative easing, or pay banks to keep loanable funds in sterile depository accounts—inevitably impact the value of the dollars we use to buy groceries today or pay off our mortgages over the next couple of decades.

Perhaps more daunting still is the fact that a lack of rules or central bank predictability makes international trade and cooperation difficult, at best. Without central bank coherency, monetary disorder will continue “to undermine the logic of competitive markets and the notion of free trade,” as was previously noted in The Hill.

But do our candidates understand the gravity of their 2018 Fed chief appointment? Are they satisfied with our current discretionary regime and adherence to the failed dual-mandate, or do they think that a return to a rules-based monetary system is critical?

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Good Monetary Policy Is Too Serious a Matter to Be Left to the Fed

Photo credit: Kurtis Garbutt via Flickr (CC BY 2.0)

US News and World Report‘s Andrew Soergel reports that “With White House in Sight, Trump, Clinton Plan Fed Renovations: No matter who wins the election, times are likely changing at America’s central bank.”

“The Fed” really is a synecdoche for monetary policy. Monetary policy used to be, off and on, a significant factor of presidential campaigns. In this election cycle, the monetary policy issue has only arisen occasionally and has not become a major issue of contention.

Pity. It really deserves to be front and center.

What is widely regarded as the most striking speech in presidential campaign history was William Jennings Bryan’s 1896 convention speech concluding:

If they dare to come out in the open field and defend the gold standard as a good thing, we shall fight them to the uttermost, having behind us the producing masses of the nation and the world. Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.

Read the full speech here. It electrified the Democratic convention and propelled the young Bryan to the 1896 Democratic presidential nomination and two more. He lost all three times — including in 1896.

As economic historian Brian Domitrovic observed, at Forbes.com:

In 1896, Bryan opposed the gold standard because it had coincided with the 1-2% per year deflation that the country had been experiencing since the 1870s.

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Will President Trump or Clinton Evade What Sunk the Ford, Carter, Bush and Obama Economy?

Whoever wins the presidency there is a lurking issue, the most underappreciated issue in politics.  Getting it wrong destroyed the economy (and contributed to ending the presidencies) of Ford and Carter and tarnished the records of George W. Bush and Barack Obama. Reagan and Clinton got it right and went on to handsome re-election.

The political and economic elites are curiously blind to it. An iconic cartoon by Benita Epstein (view it at benitaepstein.com) shows a myopic middle-aged man gazing into a refrigerator full of nothing but butter. It’s captioned “Hon, where’s the butter?” It is the defining image of “Male Refrigerator Blindness.”

Something like — let’s go gender-neutral trendy — Refrigerator Blindness — Obliviousness to the Obvious — is crushing our prosperity. This would be hilarious … except that misery from a lousy economy has driven millions of able-bodied workers into poverty or near poverty.

The death of the American Dream isn’t funny. It’s tragic.

Refrigerator Blindness is not just a comical trope. An inability to see what’s as plain as the nose on your face is a pop culture meme for an actual Thing, one technically called a “negative hallucination.” Per Encyclopedia.com:

The term [negative hallucination] first appeared in “Psychical (or Mental) Treatment” (Freud, 1890), an article relating to hypnosis. Freud wrote that it was possible to suggest to a hypnotized subject that he or she not see a person or thing that would be present to the subject upon awakening; in such cases the object appears to be “thin air” (p.

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Memo to President Trump or President Clinton: The Gold Standard Made America Both Good and Great

Campaign poster for Republican presidential candidate William McKinley, 1900.

Marc Levinson writing recently in The Wall Street Journal provides a very pessimistic view for the American Dream, “Why the Economy Doesn’t Roar Anymore: The long boom after World War II left Americans with unrealistic expectations, but there’s no going back to that unusual Golden Age“:

People who had thought themselves condemned to be sharecroppers in the Alabama Cotton Belt or day laborers in the boot heel of Italy found opportunities they could never have imagined. The French called this period les trente glorieuses, the 30 glorious years. Germans spoke of the Wirtschaftswunder, the economic miracle, while the Japanese, more modestly, referred to “the era of high economic growth.” In the English-speaking countries, it has more commonly been called the Golden Age.

[…]

The Golden Age was the first sustained period of economic growth in most countries since the 1920s. But it was built on far more than just pent-up demand and the stimulus of the postwar baby boom. Unprecedented productivity growth around the world made the Golden Age possible. In the 25 years that ended in 1973, the amount produced in an hour of work roughly doubled in the U.S. and Canada, tripled in Europe and quintupled in Japan.

[…]

Ever since the Golden Age vanished amid the gasoline lines of 1973, political leaders in every wealthy country have insisted that the right policies will bring back those heady days. Voters who have been trained to expect that their leaders can deliver something more than ordinary are likely to find reality disappointing.

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To Trump and Clinton: Heed the Lesson Jimmy Carter Never Learned

From left: Donald Trump and former Secretary of State Hillary Clinton (credit: Gage Skidmore/Marc Nozell)

Yesterday I observed here how the 2016 race reflects American conditions in the late 1970s — also stagnant — and how the political elites are echoing President Jimmy Carter’s feckless reaction in his notorious July 15, 1979 address to the nation in which he said, in part:

The threat is nearly invisible in ordinary ways. It is a crisis of confidence. It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation.

The erosion of our confidence in the future is threatening to destroy the social and the political fabric of America.

What’s really going on? The destruction of our social and political fabric derives from stagnation, not vice versa.

My Letter to the Left: the Gold Standard Will Restore Upward Mobility was an analysis of an important piece by Stan Sorscher in The Huffington Post, itself headlined “Inequality — “X” Marks the Spot — Dig Here.” Sorscher perceptively wrote:

The second message is the very abrupt transition from the post-war historic period to the current one. Something happened in the mid-70’s to de-couple wages from productivity gains.

The third message is that workers’ wages – accounting for inflation and all the lower prices from cheap imported goods – would be double what they are now, if workers still took their share of gains in productivity.

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The Trump vs. Clinton Election Enters the Realm of Farce

From left: former Secretary of State Hillary Clinton and Donald Trump

The 2016 presidential campaign confirms what Marx wrote: “all the events and personalities of great importance in world history occur, as it were, twice… the first time as tragedy, the second as farce.” Karl, not Groucho, Marx.

We enter the realm of farce. It’s the economy, Stupid!

We are experiencing a reprise of the political paralysis of the 1970s, stagnation replacing stagflation. Jimmy Carter tackled the malaise in widely noted speech on July 15, 1979. This was later derided as his great MEOW (“Moral Equivalent Of War”):

The threat is nearly invisible in ordinary ways. It is a crisis of confidence. It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation.

The erosion of our confidence in the future is threatening to destroy the social and the political fabric of America.

The confidence that we have always had as a people is not simply some romantic dream or a proverb in a dusty book that we read just on the Fourth of July.

The symptoms of this crisis of the American spirit are all around us. For the first time in the history of our country a majority of our people believe that the next five years will be worse than the past five years.

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