Wednesday, May 17, 2017

The Trump Wall of Worry

We hear breathless reporting describing "tumult" in Washington and cries for Trump's impeachment. The market is starting to worry, and with worry comes a correction—surprise, surprise. I offer the following chart so that readers may judge the magnitude of the market's Trump concerns vis a vis other concerns that have popped up over the past few years. So far it's just a blip on the radar:

I worry more about the blatant attempts by the MSM to destroy Trump's presidency at all costs than his persistent problem with verbal diarrhea.


Ausgarry said...

One of these hiccups on the wall of worry may indeed be the big one that derails markets and indeed the economy. Trump seems to have the ability and maybe even the inclination to outdo the most dire predictions and fears. What will hold him back? then again he may blunder harmlessly on.

amritsari said...

So Trump's managerial and ethical incompetence is just verbal diarrhea ??!! Got it. Its amazing how otherwise rational people can't see the obvious. The media didn't force him to take any of the actions he is accused of. And he never takes responsibility for anything. Its constant whining, instead of the winning we were promised. I'm tired of it.

People like you wanted your tax cuts so badly that you were willing to put up with an imbecile for a president. Enjoy the clusterf*** for the next few years. Hopefully he doesn't tank the economy and markets.

Anonymous said...

the reality is defined by the media you consume.
Did you recognize, that exactly when the MSM begun to spin the recent story, that murdered Seth Rich was the leaker and not Putin the hacker?
Did you notice, that Podesta wrote to Hillary in an eamil, top set a precedent for the leaker?
We are talking about murde and your globalist media do not tell you about it...

Frozen in the North said...

Yeah ok blame the media...really!!!

Come on the stuff that Trump has been pulling beggs to be addressed -- no one forced him in the campaign to say that it would be terrible if Clinton won, since she would reveal all "our" secrets -- really this is totally self inflected wound. Flynn was a terrible pick, the more that comes out the more it is evident, but then the Russia links get deeper and deeper for Trump's team.

What the hell do you think journalists are going to do, when Trump calls them lying liars and bullshitter.

Sorry the only media that seems "out of it" is FOX news.

Anyway, Trump WILL NOT BE IMPEACHED, its just not going to happen! There is no precedent of a President being impeached by his own party. Not going to happen.

In other news, GOP and Trump's agenda is done and gone, another 18 months of do nothing...

Rich said...

Please. When the POTUS denies objective reality on a regular basis, there is a problem. The elephant in the room isn't the Republican Party, it's the POTUS' disdain for facts and truth.

Pence 2017

amritsari said...

endseit14 - its gullible people like you who believe every fake news that fits your world view that led to Trump. Next you are going to tell me that Pizzagate is still a true story. Please be introspective and learn from your past mistakes. Try to think logically. Verify stories from multiple sources.

The Cliff Claven of Finance said...

From my own economics newsletter published Monday afternoon -- I rarely include so much politics on the first page but the situation was already bad on Monday. As a libertarian I had little interest in Trump or Clinton -- to me it was Clinton the liar vs. Trump the used car salesman ... but the more I study his executive orders, the more I like them:

"1Q 2016 to 1Q 2017 had +1.9% real GDP growth.

Mediocre, but similar to the +2.1% average growth since the last recession ended.

Mediocre growth is better than a recession!

Republicans are losing their post-election optimism as they realize Trump grossly 'over promised' during the campaign, and Democrat Senators are going to block all legislation Trump wants using the filibuster – even Trump's infrastructure plan that Democrats should favor.

Trump's tax plan never had a chance (I consider that good news!).

Democrats' launched a vicious "uncivil war" on Trump that started before Election Day.

They should change their name to the We Hate Trump Party.

They provide fake over-the-top outrage about almost everything Trump does.

They've created an evidence-free Trump-Russia collusion conspiracy theory when there's more evidence of Hillary Clinton-Russia collusion (see my March 15 post at

But never mind that! There's no unbiased proof DNC computers were even hacked, much less hacked by Russians -- the DNC alone made that claim, and then blocked FBI access to their computers -- yet another reason James Comey should have been fired in 2016.

WikiLeaks claims they got the emails from a DNC insider angry at how Bernie Sanders was treated.

This is a 10-month investigation still searching for a crime.

Trump didn't "drain the swamp".

He stirred up the "alligators".

And he pokes them with a stick every morning with unprofessional Tweets.

After eight years of losing power, the too-far-left Democrat Party is imploding with irrational anger, threats, and conspiracy theories -- so desperate to impeach Trump, make him resign, or have a heart attack, that they will say anything.

The truth no longer matters.

Democrats are now comparing Trump with Richard Nixon.

Maybe that’s good news --

last month Democrats were comparing Trump to Hitler!

Washington DC has become a lunatic asylum.

And if nothing gets done there, perhaps that would be good news?"

xr-3609 said...

Scott, thanks for the post. You have a lot of silent readers that do not often make comments, but respect your work and your process of backing up your opinions with macro/market objective observations!

Scott Grannis said...

xr: thanks!

Adam said...


China gov bonds yield curve has inverted this month in between 7 and 10 years tenors. What is your take on this, plse.


amritsari said...

Cliff Claven - you forgot to add in your tirade that Obama wasn't a US citizen ! LOL ! This page attracts the weirdest conspiracy theorists.

Benjamin Cole said...

I apologize for the following post, which is politics. But see if you do not agree, whatever your politics.


Trump may be a lulu, but we are seeing all the same methods used against Trump that were deployed against “lefties” and others in the commie witch-hunt days.

Anonymous sources who say things, information that is damning but has to be kept secret for national security reasons, endless investigations, innuendo and so on.

Here is a Reuters story in part:

“Michael Flynn and other advisers to Donald Trump’s campaign were in contact with Russian officials and others with Kremlin ties in at least 18 calls and emails during the last seven months of the 2016 presidential race, current and former U.S. officials familiar with the exchanges told Reuters.

The previously undisclosed interactions form part of the record now being reviewed by FBI and congressional investigators probing Russian interference in the U.S. presidential election and contacts between Trump’s campaign and Russia.

Six of the previously undisclosed contacts described to Reuters were phone calls between Sergei Kislyak, Russia’s ambassador to the United States, and Trump advisers, including Flynn, Trump’s first national security adviser, three current and former officials said.

Conversations between Flynn and Kislyak accelerated after the Nov. 8 vote as the two discussed establishing a back channel for communication between Trump and Russian President Vladimir Putin that could bypass the U.S. national security bureaucracy, which both sides considered hostile to improved relations, four current U.S. officials said.

In January, the Trump White House initially denied any contacts with Russian officials during the 2016 campaign. The White House and advisers to the campaign have since confirmed four meetings between Kislyak and Trump advisers during that time.

The people who described the contacts to Reuters said they had seen no evidence of wrongdoing or collusion between the campaign and Russia in the communications reviewed so far.”


I suppose I give Reuters credit for that last exculpatory sentence (there is more to the story, it is the last sentence I quote), but one could have written the story along the lines of,

“There was scant contact between the Trump campaign and Russians—less than three times a month on average—and the limited contacts were determined to be innocuous.”

Think about it.

I say “scant contact,” as a national campaign must generate thousands of phone calls and emails, perhaps every day, and certainly weekly.

And how about the line in the lead sentence “others with Kremlin ties”?

“Kremlin ties”? Egads! Is that Americans who have done business in Russia, or any academic who taught in Russia in the last 20 years?

Is that a campaign phone call to Carter Page, who met with a Russian operative in 2013, except Page did not know he was a Russian operative? Page appears to be a mid-level oil-deals guy (and former U.S. Navy man) who likes Russia and wants to make money. Boris Badinoff?

I hope this guy Robert Mueller is as fair and straight-shooting and not a dramatic, as everyone says.

If Trump is a Russian stooge, I hope he is exposed. If not, I hope Mueller says so clearly.

But I say this: If you are old enough, you have seen these tactics before. This is all out of the old anti-commie playbook, and it was dirty then and dirty now.

Look, you don’t like Trump, that is fine. He is not likable.

But if they can railroad Trump this way, then they can railroad anybody else too.

Anonymous said...

you suggest to check facts. Fine!
But if a source claims something was fake, why don't you do what you suggest to others?
The Russian collusion just got destroyed and there is no Comey-gate. Comey himself under oath said, there was no pressure to stop any investigation in May.
But Comey will hopefully be asked, if he has noticed a severe interference of obstruction of justice, why he did not contact the department of justice, but instead - and against the law - kept it secret...

randy said...

The media is on fire, maybe out of control. It is fascinating and not just a little scary how capable relentless media can be attacking. That doesn't change the reality that Trump created the environment for this. He is the one making statements so frequently and easily observably false. Changing stories. Doing stupid things like firing the guy prosecuting you. Making no effort to show mastery of issues or history - and so constantly looking like a buffoon rather than a president. The (valid) consensus seems to be that he is just massively incompetent, not malevolent. In all likelihood he is simply too stupid to have actual Russian collusion.

His management of the media attacks is just one more piece of evidence of his incompetence. If there is really nothing there with the Russia investigation, then the smart thing would have been to let it play out with Comey. More importantly, change the focus by actually getting something accomplished, showing some competence and focus, some discipline and resolve. We will see none of that though. Trump himself will be responsible for failing to accomplish health care or tax reform, or anything positive that may restore some legitimacy to his term.

Grechster said...

Benjamin: Excellent commentary on your part. Very wise. Mike Whitney (no Trump fan, he) has a piece today that is worth your time. (I accessed it on

misterkrusty said...

Trump's main problem is himself, not the MSM

Scott Grannis said...

Trump can fix his own problem easily: just shut up and stop tweeting. The problem of the MSM threatens our democracy and is not so easily fixed.

randy said...

There is an interesting case study in Texas that might show how things could be different for conservative agenda at the national level.

We have:

Republican Joe Straus as Speaker of the Texas House.
Priorities and news? Fiscal discipline; Economic growth; Education; Military and Veterans.

Republican Dan Patrick as Lieutenant Governor.
Priorities and news? Punishing sanctuary cities; Allowing guns on campus; Blocking transgender bathrooms.

San Antonio News editorial said it well. "Straus doesn’t indulge in scorched-earth tactics or retribution, but a commitment to fairness doesn’t detract from his conservative agenda. Straus legislates with a welcome attitude that puts Texas first."

It's not impossible to have a Conservative agenda while being viewed as genuinely serving the public as a whole. Sadly, national conservatives go scorched earth.

Rich said...

If it were easy for Trump to be circumspect, he would have already done so. The weight of available evidence suggests that he can't. It is an example of arrested development.

Does the MSM include Fox, Breibart, and the cacophony of far right radio host dissemblers?

Listening to them would lead one to believe that Russia is an ally, when it is provably trying to undermining Western democracy.

Scott Grannis said...

For a real-life example of collusion between a politician and a foreign government, read this:

randy said...

Hard to dispute the Obama / Iran story. But it is difficult to understand why he would do that. In Trumps case, there is the suggestion of basic corruption that led to foreign interference in the election, which seems highly unlikely. But at least that story has a understandable motive. Without disputing the Obama story, what would he have gotten out of that to merit the risk? Just the glory of making a deal later?

Rich said...

Cast any ambiguous fact in the most negative possible light with regard to Obama, if you like, but that changes nothing about the apparent bad acts of the present occupant of the WH.

I don't like Pence's social policy, or his climate change denial, or a host of other issues, but I don't think he is mentally unstable, nor do I think that he would use his office to hire his relatives, and set up conditions to enrich himself.

Scott Grannis said...

randy: either Obama believed that doing favors for Muslim countries would lead to better conduct on their part, or he was doing all he could to further a Muslim agenda. As someone once said, if Obama were in fact an agent for a Muslim power, what would he have been doing differently? Not saying I believe that, but I find it hard to find a justification for his approach to the Muslim world.

steve said...

I have NEVER witnessed a more bifurcated political climate. I thought O was bad! DT is his own worst enemy. He sees a traitor behind every door. 50/50 odds that he makes it out of this term before ignominiously resigning or worse-impeached. A totally failed personality...

ARRJD said...

What I don't understand is how such a small viewership that MSNBC has could have any significant influence on the majority of Americans who, like me, could care less what garbage their very stupid journalists spew daily and who never listen to them.

It is the other major liberal biased networks that I am most concerned with and their potential influence on the American public which does not really take the time to analyze what they are saying. If they did they would recognize the unfettered bias in what they purport to portray as news but in fact is nothing more than leftist opinions.

If we all stopped turning on the TV or buying their newspapers (I haven't bought the Times in decades once I figured them out) their approach to "reporting" would change drastically as they need our subscription dollars and viewership to sell ads and stay alive.

I am actually more concerned with the fools who are running the Republican Party who don't have the guts to support and back Trump and the mission which he was sent on to Washington.

McConnell and Ryan should be taking steps to fire as quickly as possible (with political indictments if necessary) those Obama and leftover bureaucrats who are leaking falsehoods and who are tying their damnest to undermine this President and who are trying to create a constitutional crisis since they are not willing to accept the results of the election.

Neither one of them has any brains and worse neither has a backbone.

It is time that we Americans who do believe in our democratic way of life (actually we are a republic which most Americans and especially liberals don't have a clue about) fight back against the self-serving liberal media and those underhanded and unelected members of an entrenched bureaucracy who are trying undermine Trump and his administration.

Let's hope a lot of good comes out of this foreign trip. And that the non-urban people of our country once again understand why they elected him in the first place.

The Cliff Claven of Finance said...

amritsari response to my first comment here:

"Cliff Claven - you forgot to add in your tirade that Obama wasn't a US citizen ! LOL"

Mr. Amritsari:
I'm sorry to see your definition of "debate" is ridicule and a character attack.

How sad that you do not care to try to refute anything I wrote, so there could be
a meaningful discussion.

Apparently you already know everything, so anyone
you disagree with must be 100% wrong, and is not worthy of debate?

Mr Obama, by the way, was born to an American citizen mother, so is an American citizen
no matter where on Earth he was born.

Some confusion with Mr. Obama's birthplace was started
by his literary publicists, who presented him as a Kenyan-born author in 1991.
Strangely, this was not changed until just before Obama decided to run for President

In addition, Mr. Obama never attended a free public school.

The cost of his private schools, especially the colleges,
seemed much too high for his mother and/or grandparents to afford
unless he applied to colleges as a "foreign" student to get a much better scholarship.

With that theory in mind, it's interesting that the Harvard Law Review's 1991 yearbook
presented a biography of Mr. Obama
that states he "was born in Kenya”

These are facts, verified by Snopes, that makes one wonder why Mr. Obama allowed others
to say he was "born in Kenya" for so many years, unless that benefited him financially.

Of course Mr. Obama would be an American citizen no matter where he was born,
but why not be proud of being born in the USA -- and correct the birthplace errors as soon as possible?

And to rile you up some more with an economic issue:
-- We had only +1.5% average real GDP growth in Obama's eight years -- how do you feel about that?

And a foreign affairs issue:
-- Mr. Obama was at war every day of his eight years, and did not win either war -- how do you feel about that?

Okay, Mr. Amritsari, it's time to reply with your childish insults -- liberal-style !

amritsari said...

Funny how right wing capitalists want unfettered capitalism but then turn around and say that media companies are biased and ruining the country. I thought the market place decided what was right and wrong ??!!! So we need censorship ???

Scott - "MSM is a threat to democracy". Man, you have gone off the rails here. You should be a contributor to Brietbart. Really puts a damper on believing your economic analysis (which is what I come here for).

I would like to point out to that a lot of the leaks are coming from WITHIN the white house, against the sitting president. This wouldn't happen if his own people didn't think that Trump was doing things the wrong way.

amritsari said...

Cliff Claven - wow, so many points to counter. So little time. Let me just address 1 - the wars that "he didn't win". Obama inherited Iraq, Afghanistan while Syria started on his watch. I believe, as do most Americans, that these wars were un-winnable unless America sent in huge numbers of forces and stayed there for years and years (remember the general giving the same advice to Bush before Iraq but was ignored). But American public opinion was not and is still not in favor of such an approach (for evidence look at the lack of support for intervention in Syria). A president cannot work miracles on the battleground without more troops, and especially if the local society is unable to forge a battle on its own and form a functioning government. Afghanistan is a clusterf*** in this regard. There will be no peace there unless there are either large number of American forces stationed there for decades or there is a political compromise with the Taliban. Are Americans acceptable to either option ? I know its nice to be able to say we either won or lost a war but reality is not always so clean. E.g. Vietnam, Korea.
Why is America responsible for "fixing" Syria ? Why aren't the local countries gearing up to fight ISIS ? Trump is currently in Saudi Arabia kissing their hand. Is he going to throw a tantrum and demand that Saudis send troops to Syria ? The same way he has been complaining about how NATO countries don't pay their "fair" share ? No he isn't, and no he won't. He just gave them $100 Billion worth of weapons that they are going to use on poor Yemen. Its amazing that we consider Iran to be the greater threat while the Saudis have been funding fundamentalist Sunni schools and terrorists for decades.

amritsari said...

Scott - Obama has been pushing a muslim agenda ??? You mean the way he did by sending American forces into a friendly muslim country (Pakistan) to kill an american enemy (Bin Laden) ? Also read all the news articles published this week about how the Saudis just love love love Trump. The king even travelled all the way to the airport to meet him (a courtesy he did not extend to Obama). I'm sure Trump will bring up the issue of human rights with the saudis - their treatment of women and how non-muslims are not allowed to practice openly in the country, and how beheadings are carried out at a regular rate. And also try to figure out how much Saudi money is behind ISIS. Remember ISIS is Sunni muslims, not Shia like Iran/Iraq.

amritsari said...

Randy at 6:07 on May 19 - great post. Agree with everything.

amritsari said...

endzeit14 - what facts are you asking me to check ?? Unclear. I myself have not believed in active collusion between Trump and Russians. I think he is too stupid to have an actual collusion strategy. The Russians just saw a stooge that they thought could be manipulated and went for it with indirect help. Wouldn't you have done the same if you were in their place ? There could be corruption/black mail issues - there are statements by Trump's son that they have done real estate deals with Russian money. Of course we don't know because Trump hasn't released any tax records. Will have to see what comes out of the inquiries. And as somebody else said - if there really isn't anything there then why not be open and show all the evidence instead of non-stop whining about how you are being treated unfairly.

It is also completely weird how Trump is never critical of Putin and his tactics. Either he is afraid or he actually believes Putin is doing all the right things. I'm not sure which option is scarier.

amritsari said...

ARRJD has laid his cards out openly - he believes that American people are sheep who need to be fed the "right" kind of media dose for them to understand the issues. This is exactly the argument made by lefties - they think the media is not educating Americans about how corporations are taking over their government and civil life.

Charlie said...

Scott, I deeply respect and value your detailed and fact-based analyses here. However, I think you significantly overestimate and underestimate the malevolence of the press and Trump, respectively. (TBH, I don't think either acts with intention.)

amritsari said...

I'm no fan of Erick Erickson but this is a good article. Read it. People close to Trump are leaking because he won't listen to them but pays a great deal more attention to what the press says (the same ones that he says are fake news !!, LOL). Thats their way of getting the message through to him. Unbelievable.

The Cliff Claven of Finance said...

amritsari sez:

"the wars that "he didn't win". Obama inherited Iraq, Afghanistan while Syria started on his watch."

We all know Obama inherited two wars.

We have not won either one, which I suppose was defined by Bush as implementing regime change that can survive on its own without a lot of help from the US.

That means we have lost.

Obama should have ended the Iraq war immediately since Iraq had nothing to do with 9/11 and never should have been attacked by us in the first place.

Or, with all the money spent and lives lost in Iraq, Obama could have left 25,000 to 50,000 US troops there to defend the regime change ... and be a military base for the Mid-East (which is what the neo-conservatives wanted all along).

In Afghanistan Obama ramped up the fighting only to find out Bin Laden had escaped to Pakistan about twenty minutes after the first bunker buster bomb exploded near his mountain cave.

The Russians warned us it is impossible to win in Afghanistan because there is no single central government -- the warlords outside of Kabul are like individual governments -- there is no way to control the country with one government.

Of course Obama did not listen.

Even after Bin Laden was killed, Obama had the perfect opportunity to pull out and say: "Mission Accomplished", but he did not.

After 9/11 happened, I was one of the few people in Michigan who opposed a war with Afghanistan and Iraq.

Wrote about it in my economics newsletter -- lost subscribers by the dozens -- had "friends' yelling at me around my dining room table in my house!

I said find Bin Laden with Army Rangers / Navy Seals and kill him. That's it.

There was no 9/11 connection with Iraq.

And the central Afghan government in Kabul had no control over the eastern mountains where Bin Laden lived, so there was no reason to blame them for his presence.

The Taliban may have been awful, but at least they banned poppy (opium) growing ... and after they lost power they suddenly liked poppy crops for the money they needed.

So its no surprise heroin is cheaper now than when the Taliban were against it.

There was no excuse for Obama to be at war for every day of his eight years.

More Americans have been killed by Muslims after 9/11 than were killed by Muslims on that day.

To make it easy for them, we went to Muslim countries and drive our trucks around like duck in a shooting gallery.

Of course george Bush takes most of the blame ... but wasn't Obama supposed to be much smarter than him?

I find myself agreeing with the rest of your May 20, 2107 12:57pm comment, and I can't tell you how disappointed I am about that -- I was looking forward to a huge verbal battle that ended with you going berserk and comparing me to Hitler, or even worse, to Donald Trump.

Concerning alleged Trump collusion with Russians. That's laughable. Trump doesn't collude with anyone. He doesn't even collude that much with the Republican Party. He does his own thing and has been very successful at everything he does -- real estate -- marrying pretty and smart wife -- reality TV show -- winning an election -- I can't figure out how, because he sounds like a used car salesman to me.

I thought Bush was awful starting after his overreaction to 9/11, Obama was worse -- doubling the debt for a laughable average 1.5% Real GDP growth.

There's nothing like eight years of a Democrat in power to get a Republican elected (and vice versa).

The Cliff Claven of Finance said...

I meant agreeing with your 12:34 post, amritsari.

amritsari said...

Cliff - Nice to agree with you on some issues. I believe the reason Obama didn't just up and leave Iraq and Afghanistan was the reason that is always given - if we leave chaos will ensue and we will get the blame. Right or wrong, a president has to consider the implications of abandoning a loosing strategy - should it be done immediately or gradually. Obama chose the latter approach. Otherwise he gets the blame for causing more chaos. Just look at how many republicans blame him for the mess in Syria. Apparently he didn't drop enough bombs from the air. Those same republicans don't have the guts to come out and call for sending thousands of American troops to Syria. They think bombing from the air will be enough. Just as it was in Vietnam and Afghanistan. LOL. They are called Freedom Bombs (TM) for that reason !

amritsari said...

Trump tells the Russian Foreign Minister and Ambassador that Comey was a nut job and firing him eased pressure on the russian enquiry. Incredible !

Obama made some sympathetic remarks about Trayvon Martin and other black people being killed and people accused him of being anti-cops !

Is this a great country or what ?

amritsari said...

The MSM haters appear to be more bothered by the facts that leaks are happening than by the substance of the leaks themselves.

Its like Trump - he wants to have his cake and eat it too - Says the MSM is fake yet wants the FBI to find the leakers. So that means the leaks are not fake ? Sheesh.

JohnLloydScharf said...

Scott Grannis, I am with you on this. I heard all the same crap regurgitated at Obama, regarding the impeachment, but the Marginalized Socialist Media [MSM] are frothing at the mouth worse than a preacher, on sex sin, whose wife does not know about his girlfriend. We could have had a Republican Woman Governor as the candidate. However, the Alt-Left extremists gave so much press to Trump no governor who has run ONE State got a chance to run 50. The "Russian's Did It" crowd is like the Birthers, but with even less integrity. After six decades of watching politics, mostly as a Democrat until 1978 when I changed parties like Reagan did. Now I go with the quote me Republican Uncle gave me when I was a Democrat in 1973:
"We have reached the age, those of us to whom fortune has assigned a post in life's struggle, when, beaten and smashed and biffed by the lashings of the dragon's tail, we begin to appreciate that the old man was not such a damned fool after all. We saw our parents wrestling with that same dragon, and we thought, though we never spoke the thought aloud, 'Why don't he hit him on the head?' Alas, comrades, we know now. We have hit the dragon on the head and we have seen the dragon smile. Spoken at Thayer's tenth anniversary reunion at Harvard, 1895, as quoted in "American Heritage," (December 1968)

amritsari said...

The "Russian's did it crowd" have evidence to prove russian meddling in the elections - American Intelligence has it all. The only uncertainty is how much it swayed the election results. That will forever remain a matter of debate. You have to admit that an election in which the electoral college went one way and the popular vote went the other was close and could have been swayed. Trump acts like he won in a landslide.

The birthers never had a leg to stand on. It was all racist bullshit.

JohnLloydScharf said...

There is no evidence to prove Russians meddling in the elections. Even Obama admitted that. There are no denials of the truth of the WikiLeaks exposure of the truth. Trump won by a landslide of the States, 31 out of 50. If the TRUTH of WikiLeaks makes you lose, then the system works. Would you say "Deep Throat" meddled in politics because Woodward and Bernstein released the facts of the Watergate Breakin? If meddling in the elections was done, it was by Clinton's minions in the Democratic National Committee. That was the truth that lost her the election. She cheated Bernie Sanders. She cheated by getting questions ahead of time. She cheated by having a prompter.

There is ZERO PROOF of collusion between Trump and Russia; just like the Birther arguments of collusion with the Hawaii State officials.

Roy said...

Politics is the economics' version of cancer. The more there is of it in an economics discussion the less there is of real economics left.

This is why "economists" are so wrong so often.

The only thing that these discussions show is people's confirmation bias. No one is going to change their political or religious views following such discussions.

Economics is not an exact science, to begin with, so we should really use data as much as possible in order to avoid any emotional biases.

I hope this blog would follow this path.

Bob said...

Wow, what an interesting comments section. My confirmation bias is to the right. I like Trump even though I know he is the right bookend to Obama's left, both narcissist's extraordinaire. But at least he's my narcissist.

I'm glad he tweets, even though I cringe at some of them, kind of like listening to a crazy stand up comic you laugh, but uncomfortably.

In the end anything that swats the crazed hypocritical self loving holier than thou so called progressive (but really socialist) liberals down is my man. Go Trump, keep knockin' them pins down. :)

And thanks Scott for keeping this blog going. Don't post much, but always come here for the read.

Scott Grannis said...

Roy: Unfortunately, good economics and politics don't always go hand in hand. Politicians love power, and they love economists to justify their use of power (e.g., taxation, redistribution, regulations, mandates, etc.).

When I was young and unwise to the ways of the world, I was a Democrat. After living in Argentina for four years, and then spending 4-5 years studying economicsm working for an economics consulting firm, and analyzing how public policy impacts economies around the world and through the course of history, I became a committed conservative and finally a libertarian. I am convinced that conservative fiscal policies (i.e., limited government), free markets, and sound currencies create the most fertile ground for economic growth and prosperity. I have spent decades observing how politics impacts economies and markets, and I believe I know a thing or two about how it all works.

As an economist and an investor I believe it is extremely important to follow politics, since public policy can have a tremendous impact on the economy and financial markets. It is impossible to ignore politics.

At the beginning of Obama's administration, I argued that a huge increase in federal spending and a huge increase in regulatory burdens (e.g., Obamacare) would prove to be bad for growth. Ever since then I have been forecasting sub-par economic growth, and I have been right.

Don Boudreaux ( is one of the very best at explaining the difference between good and bad economic policies. I would highly, highly recommend reading his blog every day.

Benjamin Cole said...

Scott Grannis:

I largely agree with you on lower taxes and regulations.

BTW, here is a fascinating study that just one type of government regulation----property zoning---is a very serious hamstring on economic growth.

The best thing that could happen to the US economy is a Supreme Court ruling that property zoning violates property rights. I wonder if even a GOP court has the guts to rule so. Actually, I do not wonder. The GOP court has no stomach for free markets in property, and the Donks are worse.

Yet, on some other issues, I wonder if the world is changing, or if orthodox macroeconomics needs a shake-up.

For example, you have suggested the U.S. federal government should run deficits, as global financial markets need safe securities to trade around.

Then we have the example of Japan, in which the central bank, the Bank of Japan, has bought back 43% of Japanese government bonds (JGBs). They still have no inflation (despite nearly nonexistent unemployment). The BoJ's program of QE and holding 10-year JGB rates at 0% may finally working, and Japan has registered five straight quarters of real GDP growth.

In the US, of course, the Fed went to QE after 2008, bought about $4 trillion in bonds and Treasuries---and the price of gold cracked and never recovered. We have been below the Fed's target inflation rate ever since.

This leads to me to ponder: Should the US government run deficits in good times---say about $300 billion annually---and then pay down deficits through QE in bad times?

Ataraxia said...

There's likely rent seeking goals with property zoning regulation. As a matter a fact, from my observation, there's behind the curtain (political and capital owner) rent seeking activity in every institution and policy created to govern the United States.

The system is obviously working, but make no mistake the institution and capital owners are very careful about keeping people busy (working), consuming (over?), and paying taxes. I'm not at all saying this is a "bad" way to govern. And I'm not saying this to be negative. It's more of a pragmatic observation from a degreed student of the dismal science.

As Milton Freedman lectured (with some Arthur Okun referenced) , this isn't a perfect way to equitably allocate resources, but it is in fact the best way to organize a large population of people while allowing freedom of choice within the confines of the rule of law.

Scott Grannis said...

I believe there is a sound argument for the US to always run a deficit of some modest size (e.g, 2-3% of GDP) in order to keep the market for Treasuries liquid and robust. The world is willing to pay a premium for the role Treasuries pay, so in effect they are a public good. The Treasury market serves as the risk backbone for all markets, and thus they help to make all markets more efficient—and there is a great deal of value in that. Consider that a liquid and efficient market for home mortgages probably means that mortgage interest rates are lower than they otherwise might be, and that translates in lower housing costs and savings for many millions of people.

But all deficits are not created equal. If there is anything that ties them together, it is the fact that they are a form of taxation (as Milton Friedman taught us). Sooner or later they must be paid off by taxes, whether directly or indirectly (e.g., via inflation). Deficits that result from too much spending are particularly bad, because too much government spending is by its very nature wasteful (the money would almost certainly be spent more wisely and efficiently by the private sector). This is the problem that has plagued the economy for the past 8 years: the government has borrowed and wasted trillions of dollars worth of the economy's scarce resources, in the process sapping the economy of its vitality.

Ataraxia said...

Oops, apologies. "Friedman." Writing before coffee = mistake prone. Fail. :)

amritsari said...

I read a lot of right wing economists in 2009 predicting hyperinflation due to Obama's deficits. Never happened. Me thinks their models don't work :)

Also, tax cuts, government spending and regulations versus economic growth. Always a good story except when it isnt' - e.g. Kansas and UK in recent years. Both with tepid growth despite big tax cuts (Kansas) and austerity. I know, I know - the excuse always is that they didn't do enough of one or the other. The libertarian utopia never exists in reality anywhere.

amritsari said...

John Lloyd - "There is no evidence to prove Russians meddling in the elections." Have you been reading the news ? - Just today the ex-CIA chief gave testimony to that effect. Also, if there isn't anything to it, why is Trump so busy calling everybody he can think of and asking them to pour cold water on the inquiries. At last count this includes the chiefs of FBI, DNI, and NSA. And now Flynn is taking the 5th. Like Trump said on the campaign trail - why would anyone take the 5th if they weren't guilty ? I thought being president was a very busy and stressful job but Trump seems to find a hell of a lot of time to watch the media and spend a lot of time and energy to counter talk about the Russian inquiries.

Also, I notice that Trump gave a speech in Saudi Arabia and couldn't get himself to utter the magic phrase "Radical Islamic Terrorism", or some such thing. He repeatedly went after Obama and Hillary for that reason. What a chicken shit.

amritsari said...

Scott - "the government has borrowed and wasted trillions of dollars worth of the economy's scarce resources, in the process sapping the economy of its vitality." - I don't understand. If people could find better rates of return than US govt debt, why wouldn't they invest their money in those places ? Interest rates from US debt are so low. Honest question. Also note that federal spending did not go up significantly after 2011 due to sequestration.

Rob said...

Scott, off-topic but do you have any thoughts on the crypto-currency market, which has gone crazy recently. It feels like the boom days of the dot-com bubble, first-time around. People are talking excitedly about how "block-chain" technology is going to change everything. A one-dollar investment in Bitcoin back in 2008-9 would have bought you 200 Bitcoins. Today they are worth close to half a million dollars. Meanwhile, other crypto-currencies, like Ether, have also gone to the moon - Ether is up 18 times since January.

What do you make of this new currency market ? Do you think there is truth in the talk / hype about bitcoin being the new "digital gold" and the likes of Ether becoming the preferred currency before too long, in our new global / borderless economy ?

Thanks for your thoughts (and feel free to write a whole blog post on the subject if you prefer).

Rob said...

PS. Correction: I meant to write "Ethereum", not Ether.

PPS. These markets are so white-hot right now that even as I was writing, Ethereum became 19 x its January price, rather than 18 !

Rob said...

Btw, this website shows all the leading crypto-currencies, listed by "market cap":

Benjamin Cole said...


I think whether it is a good idea or not, we can count on federal deficits for the next several decades.

"Sooner or later they (deficits) must be paid off by taxes, whether directly or indirectly (e.g., via inflation). Deficits that result from too much spending are particularly bad, because too much government spending is by its very nature wasteful (the money would almost certainly be spent more wisely and efficiently by the private sector)."---Scott Grannis

This is what puzzles me. We see Japan paying down nearly half of its federal debt through QE. The Bank of Japan now holds 43% of JGBs. They have near deflation.

And as I said, the US tried $4 trillion of QE after 2008, and the price of gold cracked and never recovered. We have have sub-target inflation ever since.

Little noticed, China wiped out about $1.3 trillion in debt a few years back though QE. They are below target inflation.

So, it appears that national debts can be reduced through QE without inflationary effect. That is the track record.

I hope so. As I said, it sure seems like the US will run deficits from here to the moon and for many decades.

Another option is for the federal government to not borrow money, but go to "helicopter drops."

Again, the orthodoxy is that helicopter drops will cause inflation, but that was orthodoxy on QE too.

I fear the US will run up huge debts, in a declining economy suffocated by regulation, property zoning, tight money and war expenses. I hope I am wrong.

Scott Grannis said...

Benjamin: you can't pay down government debt with QE, at least not in a monetary system like we have, which prohibits the central bank from printing money. The Fed can buy all the Treasuries it wants by issuing bank reserves, but those reserves are not money and must be held by banks. Treasury still has to pay interest on the securities held by the Fed, and still has to redeem them when they mature.

QE has not resulted in inflation because QE did not involve money creation. As I've explained countless times over the years, QE was all about the Fed "transmogrifying" Treasury notes and bonds into T-bill equivalents (aka bank reserves).

Scott Grannis said...

Re: crypto currencies: I can only claim a basic understanding about this issue. But one major problem with these currencies is that their value is far from what we might call "stable." They appear to be caught up in a huge speculative wave that is unlikely to continue or to end well. Who wants a medium of exchange whose value can change dramatically from one day to the next?

I do however think there is value in blockchain concept, since it eliminates the banking system as middlemen to private transactions. But that methodology ought to be easy to modify to use dollars rather than bitcoin, no?

Rob said...

Interesting, thanks for your thoughts Scott !

Rob said...

"But that methodology ought to be easy to modify to use dollars rather than bitcoin, no?" - A lot of the excitement seems to be in the belief that digital currencies like Bitcoin and Ethereum cannot be manipulated by central banks and are therefore "purer" and above nation-state vested interests or politics. For this reason, other new currencies, like Ripple, are seen by some as too centrally controlled by the banking industry and thus vulnerable to manipulation and cyber attack. It is the decentralised, "distributed ledger" nature of "pure" crypto currencies that many consider their great, revolutionary appeal.

Benjamin Cole said...

Scott G:

My dispute with you regarding QE has never been about the creation of reserves. We all know when the Fed buys $1X of Treasuries, it pays a primary dealer for the $1X, and $1X in digitized cash is deposited into the commercial bank account of the primary dealer.

My point has been that someone sold the $1X Treasury to the primary dealer, and they got $1X….and, additionally $1X Treasury was credited to the commercial bank account of the primary dealer.

In other words, the Fed printed money. You now have 2X Treasuries in the economy---$1X in the primary dealer bank account, and $1X in the hands of the original private-sector seller of the $1X Treasury.

(Actually, the Fed also printed and lent moony to the primary dealers to buy the Treasuries to begin with, through the Primary Dealers Credit Facility, but that is even more complication)

In any event, the way the Fed operates is not determined by divine intervention (despite the attitude of central bankers) nor the laws of physics.

The Fed could dispense with the whole primary dealer crowd, and set up its own money desk and buy Treasuries directly. After all, buying Treasuries is not that complicated. You might wonder why this is not the case anyway.

In this way, the Fed could reduce the national debt. Simply buy it back and retire it, or hold on to it, and deliver proceeds back to the Treasury.

We have seen in multiple occasions on three continents in developed nations that QE does not result in inflation---even with the risk of creating reserves (the US model).

No worries. My suggestions will never become law.

I am just pondering methods that might allow the US to escape a debt-laden future in an economy typified by suffocating property zoning and regulation, welfare and warfare spending and heavy taxes.

Sadly, I do not think our two political parties can fix this problematic future, within current arrangements.

Scott Grannis said...

Rob: many thanks for the link to all the crypto currencies. Never in a million years would I have guessed there are 840!!! I'll have to pay more attention to this market.

Scott Grannis said...

Benjamin: I appreciate your many excellent comments, but on the subject of QE you are consistently wrong. When the Fed buys bonds from a primary dealer it does NOT deposit "digitized cash" into the bank's account. It credits the bank with "bank reserves," which are not money but in effect a T-bill equivalent. When the bank buys bonds from the public (in order to then sell them to the Fed as part of QE), it does indeed pay for them with cash, and the seller of the bonds receives money in his or her account. The amount of cash in the system has not grown at all as a result of these transactions, because the primary dealers needed to accumulate cash before they could buy the bonds to then sell to the Fed.

The Fed cannot "set up its own money desk" because it is prohibited from creating money.

The Fed cannot reduce the federal debt. All the Fed can do (and it has done this) is to exchange bank reserves for notes and bonds. QE has had the effect of shortening the maturity of the federal debt; and the Fed has in turn increased the maturity of the assets it holds. The Fed has taken duration off the hands of the public, in short.

There is nothing inherent in QE that results in a significant increase in the supply of money. Central banks cannot make government debt disappear.

Rob said...

Scott, I also had no idea there were 840 crypto currencies ! I didn't realise there was more than one page. Wow, this is one helluva wild west market. And the mega-boom continued overnight, it's just incredible, like printing money ! Wish I'd been able to capture some of that easy money but didn't have the stomach for such risk (and even less so now !)

Benjamin Cole said...


Well, I guess we will just have to agree to disagree on QE.

But you may wish to ponder this:

The primary dealers did not have enough cash or inventory to fulfill QE orders. The Fed lent them the money to buy Treasuries and then re-sell to the Fed.

Okay, that is something of a complication.

Also, I think we agree the Fed buys Treasuries from primary dealers. Not from commercial banks.

Okay, we agree on that.

So how do commercial bank reserves swell, if the Fed is buying Treasuries from primary dealers?

That is what I mean---the Fed buys $1X Treasuries from Nomura Securities, and it then credits the commercial bank account of Nomura $1X.

You can call it a "reserve," or you can call it "digitized cash."

By whatever name, the reserves or digitized cash can be lent out (yes, in multiples due to fractionalized banking).

The private-sector sellers of the Treasuries (who sold to the primary dealers) also can spend, bank or invest their money. Or convert to paper cash.

I am not 100% sure of the set-up in Japan. Pre WWII the Bank of Japan went to straight-ahead to money-financed fiscal programs, and Japan largely sidestepped the Great Depression (sadly they built armaments rather than roads and power plants etc). said...

I loaded up on equities that day (ETF's), in my short term trading account, which I haven't yet taken the quick profits, like I did in the week/10 days following the dip I bought the day/night of the BREXIT 'panic.

All the while, in my long term account, I bought small & mid cap, s&p 500 and foreign equities via mutual funds, on down days, at market close.

Gimme some more of that good ol'Trump panic fear mongering.