Submitted by Thad Beversdorf via FirstRebuttal.com,
Well this election certainly clarified a few things for the people of the world. Most notably is that the experts are clueless.
Paul Krugman, notable ‘expert’ on all things economic has almost 2 million followers on Twitter and an op-ed with the NY Times. This means he has a platform of great influence. And yet, time and time again, he does well to prove he’s an idiot. The following piece posted on election night.
Well “Never” or by noon. So he overshot by eternity. None of us are perfect eh? Now I shouldn’t single out Mr. Krugman as almost every market pro and economist on Earth has predicted that a Trump victory results in complete financial and human obliteration. At least that was the message leading up to the election.
In a piece by Justin Wolfers, for the NY Times, titled “The Markets Are Afraid of Donald Trump“, written just over a month ago the message is clear from his conclusion.
So while over the past 130 years markets tend to react well to Republicans, Justin concludes it will be different with Trump, in fact, worse than the market reaction to the greatest tragedy ever to take place on American soil.
Now if you get a chance to read the full article you’ll see that Justin gives you a glimpse at the fancy math economists use to extrapolate predictions. It’s just enough to make you believe, “Wow this guy really knows some fancy math, he must know what he’s talking about”. But this is the very reason economists like Justin have tragic forecasting records. Now don’t get me wrong the math has its limited place and I’ve sat through all the same fancy math classes as Justin. But the difference between most economists and most good economic and market analysts is understanding that markets and economics have almost nothing to do with math.
Economics and markets are studies about human behaviour and societal constructs, that is the bilateral relationships between humans and the logistic economic and financial environments. And if you don’t understand that there is no math in the world that will help your forecasting. Just look at Justin and Krugman.
Now I write this piece obviously in reaction to the massive clusterf*ck that occurred when Trump’s victory failed to ignite financial Armageddon as all the PhD’s predicted it would. I can’t tell you how many calls I received yesterday from risk managers, traders, money managers, etc. trying to figure out why the market wasn’t collapsing. And frankly, I expected it might simply as a self fulling prophecy. That is, because everyone had been told it would so it would. But the market, while giving a short head fake, decided that low corporate tax rates, improved breadwinner job market in the US and a bit of fiscal stimulus may be good for the economy. Go figure.
I guess my point is that guys like Krugman and Justin are false authorities yet are major players in setting and selling economic policy. This phenomenon of appointing idiots and hacks to roles of policy setting is a true mystery. Until we begin to replace the policy making industry (and it is an industry) with people who actually understand the subjects for which they are setting policy we will continue to find ourselves waking up wondering what in the hell went wrong.
Trump is missing the boat, as almost all politicians except Rand Paul. As long as the US has trade, for which the US never has to pay, Trump can never bring the jobs back. Literally the US has “free trade”, that is trade it never has to give an equal value of some good beside paper value in exchange. The US credits the purchaser with digitally created credits, and takes stuff in return. As long as the world takes US IOUs (digitally created credits) for US trade, the Americans will not go back to work.
The problem is there is no automatic trade balancing mechanism without honest money. As long as the US’s credit card (the dollar) is still accepted abroad without hesitation, the jobs are not coming back. Only when foreigners reject the dollar as payment but demand goods in equal value for trade, will the jobs siltation turn around.
The US has lived off the “Exorbitant privilege” of the US dollar’s role as reserve currency and lived well above its means for 40 years due to it.
One never needs to go to work, if they have a credit card with an unlimited balance that they never have to payoff.
Have you noticed the amount of foreign purchasing of American residential properties, commercial real estate, businesses, and so on?
That is what the “equal value of some good” is being given to them in exchange.
We’re trading (literal) ownership of our country in exchange for those cheap consumer goods.
I believe this to be the case.
Nothing is “free” in this world. Sure, America can print theoretically unlimited amount of dollars, just like any other country can print unlimited amounts of its own currency. The downside is that such printing fuels inflation. The US is not immune to this basic law of economics. Tradable goods’ prices may be depressed by the cheap overseas labor, but non-tradable items are on fire. Real estate, healthcare, financial assets, art are appreciating quickly. And given negative interest rates, may very well accelerate, until the Fed scrambles with multiple rates hikes.
Far from being “privilege”, dollar status as a reserve currency is a curse. The artificial demand for the USD – divorced from America’s dismal trade fundamentals – ensures that dollar is perpetually overvalued, and as a consequence, US tradable sector is perpetually uncompetitive. Trump can rewrite all trade agreements, but as long as dollar keeps its “privileged” position, nothing will work. As soon as America manages to improve its trade balance – which will instantly create dollar shortage elsewhere in the world – the dollar exchange rate will ratchet up until that progress is undone.
The rule of law must be re-introduced: start by indicting Hillary for mishandling classified information (a legitimate Federal crime). You can still let her off easy for being a clueless, senile, incompetent, elderly bitch; just get it on the record that she is GUILTY and CONVICTED of being a criminal.
THEN put her in a real prison for the Clinton Foundation / CGI frauds.
ADD Huma, Cheryl Mills, Bill, Chelsea (if she actually did anything criminal), Podesta, Obama, Loretta, her assistant AG what’s-his-name-the-donor, and a few more, clawing back their ill-gotten gains as penalties and fines for bad behavior.
DO THIS and watch other cockroaches scurry for cover or beg for forgiveness; earn some trust.
Then demand Congress reduce Federal spending by 10% / year for the first four years, in REAL terms. Slash programs, cut waste, dismantle whole departments (DHS, DOEd, DOEn, for starters) and reduce the scope / size / power of the Federal government.
Find a Teddy Roosevelt trust-buster type and sicc ’em on Wall Street, Goldman Sachs, WF, every TBTF institution in NYC and D.C., wherever they are.
We might then have a chance.
All you need to know about all the professional economists is that they think central planning is A-OK and one of their grand eminences predicted that the Soviet Union would surpass us any day now time after time just about up to when it collapsed.
They get all snippy beacause they know how do run things better but no one in the private sector will let them through freedom of action, so they have to rely on politics and the use of force to get to run things. Unfortunately there they can wreck the whole country instead of just one country. Now there is productivity.