Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
The Abundance Agenda
Derek Thompson has a nice piece out in the Atlantic today. In it he outlines a set of key steps to move away from the current scarcity agenda and towards an abundance agenda. It's in important idea, and the candidate who can run effectively on the right combination of abundance policies will be well positioned to win the next presidential election. While not all of Thompson's ideas make complete sense, and he has neglected to diagnose some of the key drivers of the scarcity situation such as massive trade deficits and lack of domestic savings, he is moving in the right direction in terms of highlighting a crucial set of issues that need to be solved.
The Senate should reject Jerome Powell -- we're published in today's American Thinker
by Howard Richman and Jesse Richman
Today (January 11), the Senate Banking Committee will hold a hearing on whether Federal Reserve Chair Jerome Powell should be awarded a second four-year term. The Senate should reject the nomination.
As we explained on April 26, here in the American Thinker (Jerome Powell and the Coming Inflation), Powell doesn’t understand economics. He couldn’t even see the difference between President Trump’s economy in which increased supply made inflation unlikely and President Biden’s economy in which reduced supply made inflation almost inevitable.
Back then, prices were going up at a 2.6% rate according to the most recent release (March 2021) of the Consumer Price Index (CPI). Now, according to the most recent CPI (November 2021), inflation is going up at a 6.8% rate. Tomorrow, the December CPI will be reported and the consensus estimate is that it will go up to 7%.
Jerome Powell has printed too much money, has stoked inflation by cutting supply, has taken incompetent actions against inflation, and is currently creating inflationary expectations that could increase both inflation and unemployment for decades. We will discuss each of these huge mistakes in turn.
Printing Too Much Money
Mismanagement of the money supply by the Fed can have massive consequences for the economy. For instance, in what was arguably the worst Fed mistake ever made, Roy Young and Eugene Meyer presided over a contraction by one-third in the US money supply (1929 to 1932) which greatly extended and intensified the Great Depression.
When Federal Reserve Chair Ben Bernanke encountered the same sort of financial collapse at the beginning of the Great Recession in 2008, he invented quantitative easing (massive buying by the Fed of both short-term and long-term government bonds) to make sure that the US money supply wouldn’t fall. Bernanke succeeded! QE1 (the first version of Quantitative Easing) was a great success.
Powell responded to the Covid-lockdown recession with a massive quantitative easing effort despite the fact that this was not a money-destroying financial crisis. Where Bernanke’s actions kept the money supply relatively stable despite a financial crisis, Powell’s actions induced the most rapid growth in the US money supply since at least 1960, as seen in the graph:
Stoking Inflation by Cutting Supply
Powell is actually taking actions that stoke inflation. In his renomination message President Biden praised Powell’s belief that “urgent action is needed to address the economic risks posed by climate change,” perhaps a reference to changing finance costs that are reducing oil and gas development.
Powell is thereby accelerating the very inflation that he is supposed to fight when he prevents banks from making loans to fossil fuel developers, loans that would reduce the future prices of energy, increase US energy exports and reduce US energy imports.
Some recent evidence suggests predictions of catastrophic global warming are based upon a mathematical error. Be that as it may, decreasing the supply of energy is a clear recipe for inflation as demonstrated in the 1970s.
Incompetent Actions Against Inflation
Past Chairs of the Federal Reserve have “tapped on the brakes” when inflation started to rise above 3%, but Powell has refused to do much of anything, relying through most of 2021 on wishful thinking about “transitory” inflation instead of action, and his own untrained intuition instead of economic understanding or the Federal Reserve’s own economics models. (The sum total of this lawyer’s economics course work was the introductory economics course he took as an undergrad.)
In the early days of the pandemic, the impact of his massive increase in the money supply may have been dampened by a diminished velocity that money changed hands due to lockdowns and other pandemic precautions. But as the economy has reopened, inflation has too. Basic monetary theory states that a massive increase in the money supply is going to cause inflation. And it is causing it now.
Powell’s planned actions appear likely to be too little and too late. According to Federal Reserve minutes released recently he doesn’t plan to end quantitative easing until March and only plans to raise interest rates three times during 2022, probably by about a quarter percent each time, bringing the US short-term interest rate up to about 0.8%. This is not nearly enough to make much of a dent in an inflation rate that is much higher than that.
Creating Inflationary Expectations
Powell seems to be intent upon repeating the mistake made by Federal Reserve Chair William McChesney Martin who let inflation rise from 3.0% in 1967 to 4.7% in 1968 to 6.2% in 1969 (according to the CPI). Like Powell, Martin was doing so in order to facilitate the tremendous increase in government spending being made by his president.
In December 1967, while Martin’s inflation rate was climbing, Milton Friedman, then head of the American Economic Association, urged in a speech at its annual meeting (pdf) that the Federal Reserve be required to stick to a target of 3-5% monetary growth. If his recommendation had been followed, the economic malaise of the next 15 years would have been avoided.
The problem is that once the inflation rate gets high enough, inflationary expectations change. Lenders begin demanding higher interest rates and workers begin demanding higher wage rates so as to keep up with inflation. The following graph [used with permission] by conservative economists Paul R. Gregory and Roy J. Ruffin shows that inflationary expectations jumped up in 1969, 1973, and 1979:
As shown, each jump upward in inflationary expectations resulted, simultaneously, in a new relationship between inflation and unemployment, with both being generally higher than previously. [Note: The inflation rate shown in the above graph was calculated from the GDP Price Deflator which is more accurate than the CPI, but not reported as quickly.]
Powell is playing with fire. Once inflationary expectations get going, they are very difficult to bring down. After the inflation-ridden 1970s in which the buying power of a dollar dropped by more than 50 percent, it took President Reagan’s supply-side economics combined with Federal Reserve Chair Paul Volcker’s reduced money supply growth to finally bring them down. And, as anyone who lived through that period can attest, it required sky-high interest rates and a painful recession.
The Senate must reject Powell. If they don’t, it will take another supply-side president, such as Ronald Reagan or Donald Trump, and another Paul Volcker at the Fed to bring down the inflationary expectations that the incompetent Jerome Powell is now creating.
Click here to read a slightly edited version of this piece on the American Thinker website.
Why is inflation rising while economic growth is slowing?
Today the Bureau of Labor Statistics reported that U.S. inflation (as measured by the Consumer Price Index) was 6.8% from November 2020 to November 2021. Meanwhile, economic growth has slowed to an annual rate of just 2.1% during the third quarter of 2021. Why has inflation been rising while economic growth has been slowing? From a macroeconomic standpoint, there are four things happening at the same time:
The Fed can't raise interest rates now without sending the economy into a recession, but it will try by raising the interest rates a bit whenever the stock market is high and lowering them back when the stock market is starting to crash. By doing this, the Fed will prevent the stock market from going higher than it is now, but will not reduce inflation. The Fed will eventually be forced by the momentum of the inflation to significantly raise interest rates, and, by doing so, it will cause a recession.
If you want to preserve your savings, put them into something whose value will rise with inflation but not crash when the worldwide recession happens. Meanwhile donate to campaigns to insure that a second term President Trump can solve America's economic problems by cutting taxes, cutting regulations and mandates, raising tariffs and cutting spending - in other words by doing exactly the opposite of what President Biden has been doing.
Condorcet Jury Theorem and Voter Capacity
Review of “The People Cannot Choose a Constitution: Constituent Power’s Inability to Justify Ratification Referrendums” by Jeffrey A. Lenowitz. Published in the Journal of Politics, Volume 83 Number 2. https://doi.org/10.1086/709864
In “The People Cannot Choose a Constitution: Constituent Power’s Inability to Justify Ratification Referrendums” Jeffrey A. Lenowitz argues that voter ignorance undermines the normative justification for including a ratification referendum at the conclusion of the process of drafting a new Constitution. This argument, however, turns on a failure to distinguish between rampant ignorance on the part of individual voters, and the potential for highly accurate informed choices on the part of the voters collectively. In brief, despite citing Condorcet, Lenowitz doesn’t fully consider the implications of the Condorcet Jury Theorem for the possibility of wise collective choice by voters in the context of the dichotomous choice to ratify or not ratify a Constitution.
Lenowitz is centrally concerned with the constituent power justification for constitutional referenda. He defines constituent power as “the unique power of the people (or the people themselves when exercising this power) to make and unmake their constitution, the fundamental law that undergirds and creates their state” (p. 618).
Lenowitz asks “What kind of choice must the relevant portion of the population be capable of when they vote on the constitution?” To which he answers that “voters must at a minimum be able to evaluate the proposed constitution and act upon their evaluation…. Voters must be aware of and understand what they are creating and authorizing… voters need to be able to accurately reference and apply their own values, beliefs, and interests when making their choice. Specifically, in order to satisfy the logic of CPJ, voters must be capable of making what I call a meaningful choice.”
The next paragraph provides a definition of a “meaningful choice” but engages in a critical element of redefinition. Note that to this point all of the language has been plural. The referendum choice is after all a collective choice. Voters as a whole must have been able to do these things. But in the next paragraph the language is about an individual voter. “A voter makes a meaningful choice while voting on a ratification referendum: if she understands…” And after that turn the rest of the article points out a variety of evidence concerning the general flakiness of many individual voters, and their extension of that flakiness to their voting on referendums including Constitutional referendums.
This turn to the individual voter is, however, highly problematic in this context. It ignores the possibility that voters acting collectively could be making a meaningful choice even in the context of widespread and profound ignorance. It ignores the implications of the Condorcet jury theorem for the potential accuracy of voters’ choices. Jury theorems demonstrate that under a range of conditions, collective choices by highly uninformed voters can lead to an accurate collective choice. If each voter has only a tiny probability above 50 percent of correctly perceiving the details of the constitution, none the less, the collective choice can exhibit a much greater degree of wisdom.
Consider the following simple illustration...
Which version of the Pfizer vaccine is Israel using now?
Israel was the first country in the world to inoculate the vast majority of its citizens with the Pfizer COVID-19 vaccine and the statistics were amazing. On May 6, I mistakenly reported in American Thinker:
But in early July, the number of COVID-19 cases in Israel started to rise exponentially. There were two theories about why this occurred:
At the beginning of August, Israel started testing the second theory by massively administering a third dose of the same alpha-targeted Pfizer vaccine which had earlier failed. For the next month the number of COVID-19 cases continued to rise rapidly. By September 1, Israel had more confirmed cases of COVID than any other country in the world according to statistics calculated by the Daily Mail.
Fortunately, during the first two weeks of September, the rate that COVID-19 cases were rising in Israel started to slow. In mid-September the number of cases per day peaked according to statistics published by Worldometer.com. By early November, the number of COVID-19 cases in Israel had fallen back to a low level. Other countries have experienced seasonal waves of COVID-19 cases. This wave surged when Israelis were using air conditioning and receded when they would have stopped doing so.
We don't know why the Pfizer vaccine appeared to work in September after it had seemed to stop working in July. Perhaps the booster renewed the effectiveness of the alpha-targeted Pfizer vaccine. Perhaps the tailing off of air conditioning use was responsible. It is also possible that Israel switched in September to a version of the vaccine which targets the delta variant. On August 24, Israel's coronovirus czar Zarka had told Times of Israel that Israel would eventually switch to Pfizer's delta-targeted vaccine. Specifically:
We also know that the Pfizer's delta-targeted vaccine exists and is being tested. According to Advisory Board:
Pfizer would be reluctant to make public any news that its delta-targeted vaccine was being used in Israel. That version has not yet been approved by the slow-moving public health bureaucracies in the United States and Europe, and Pfizer would not want to get stuck with old alpha-targeted vaccines that nobody wanted. An epidemiologist interviewed by Advisory Board suggests that this would be their motivation:
Adding fuel to speculation that Israel had switched to the delta-targeted vaccine, on September 23 Pfizer Vice President Dormitzer privately told selected scientists in a Zoom call that Pfizer was using Israel as a "laboratory" to test its experimental vaccines:
Did Israel start giving the delta-targeted booster to Israelis in September? If so, we probably wouldn't know. Pfizer would not want any announcement that would diminish demand for its alpha-targeted vaccine.
An (almost) censorship-free approach to the challenges of fake news and propaganda in social media
For the last several years social media and internet companies have grappled with the challenge of how to manage or contain the spread of fake news and propaganda on their sites. This remains a major problem for the big tech companies. Some recent research suggests that the degree of populism in democracies around the world is correlated to a significant degree with the extent of market power possessed by Facebook, and the degree to which internet service provision is concentrated. Facebook and related platforms have historically arguably played a magnifying role in the spread of fake news and propaganda.
More than three hundred years ago, the humorist Jonathan Swift wrote “Falsehood flies, and the Truth comes limping after it.” And so it has proved to be in social media. The attention-getting exaggeration goes viral. The fact check often fails to follow, as all too often no one finds the fact check unless they go looking for it. And the people who most need it don’t go looking at all.
The reaction to this problem began in force after the 2016 presidential election and has involved the selective identification of accounts for removal, and attaching fact checks to posts, linked articles, and tweets that have been identified as potential vectors of fake news. It has recently expanded to the wholesale removal of apps and websites believed to be vectors of propaganda, radicalization, and misinformation (e.g. the delisting of Parler by Google and Apple, followed by the cancelling of the entire Parler website by Amazon in January 2021.
This censorship strategy for coping with the problem of misinformation involves wholesale removal from the public sphere of specific platforms and voices. It often entails enormous collateral damage. A trivial example. In December 2020 I was forced to switch from Google to rival search engine DuckDuckGo in order to find fact checks of a viral story about election vote totals being changed because the search filters that seemed to be in place on Google to protect me from finding falsehoods about the election were so aggressive that they also kept me from finding a USA Today fact check of those falsehoods.
Censorship as a way to protect the integrity of political debate and thwart malign forces has ancient problems. In Federalist 10, perhaps the most profound of the Federalist Papers, James Madison wrestled with the problem of factions adverse to the rights of other citizens on the long term interests of the community. Madison noted that one possible strategy for dealing with these evil actors is to try to label and suppress them: to destroy their liberty. But he rejected this as antithetical to the entire project of liberty – the basic foundations of freedom and self government. The fundamental challenge once this road is taken is that one person’s ‘faction’ may be another person’s speaking truth to power. Like the government agents who labeled Martin Luther King a dire threat and set out to destroy him, this approach risks misidentifying threats and undermining liberty. Madison wrote
“Liberty is to faction what air is to fire, an aliment without which it instantly expires. But it could not be less folly to abolish liberty, which is essential to political life, because it nourishes faction, than it would be to wish the annihilation of air, which is essential to animal life, because it imparts to fire its destructive agency.”
Is there an alternative approach that could help thwart radicalization and better connect the public sphere without need for censorship? I think that there is. It is to find ways to reconstruct the public sphere in order to curtail the effects of factious misinformation and fake news instead of attempting to eliminate the causes. Most fundamentally, it is to give truth (or at least rebuttals) wings equal to the falsehoods they pursue. In this way, fact can balance falsehood more fully...
Dr. Robert Malone's take on regulatory capture and the COVID vaccines
If you like to hear both sides of questions and make up your own mind, then Dr. Robert Malone's long interview with Veronika Kyrylenko at the New American is a must watch. Currently, the Main Stream Media and the tech monopolies are all purveying the "noble lie" that the COVID vaccines are safe while censoring everything that might discourage people from taking them.
Malone shouldn't be censored. He knows what he is talking about. As a young post-doc at the Salk Institute he was an inventor of RNA vaccines. He also knows U.S. health regulators on a personal basis.
I especially found the first half of this interview to be fascinating. He explains how Pfizer, in its initial reports to U.S. regulators, hid the fact that its vaccine didn't stay in the muscles where it is injected, but instead spread throughout the body. When it spreads to the heart it can produce permanent scarring which can cause sudden early death. He also discusses the sad current state of U.S. health regulation. Our health regulatory agencies have been thoroughly compromised by the large pharmaceutical companies.
If you don't watch this interview, you won't understand why 5 European countries recently warned young people not to use the Moderna vaccine after a study by the European Medicines Agency found that both the Moderna and Pfizer vaccines produced heart disease in a few people, with the Moderna vaccine being about 5 times more dangerous than the Pfizer vaccine. Meanwhile, Taiwan has halted plans to give second doses of the Pfizer vaccine to young people after finding that the risk of getting myocarditis was 10 times higher after the second dose than after the first dose. And be sure to check out this interview with Dr. Peter McCullough about the huge spike in myocarditis cases among young males in the United States and the censorship of his scientific paper on the subject.
But think for yourself: Malone has his own biases. He has been seeking to conduct studies on the effectiveness of re-purposed drugs as alternatives to the vaccines -- inexpensive drugs such as HCQ, Ivermectin, and Aspirin.
Virginia State Election -- Will Republicans Win the House of Delegates?
The Virginia House of Delegates could go either way. Nearly all of the commentary and attention focused on Virginia’s 2021 elections has been directed at the race for governor. But an even closer contest is playing out in districts across the state – the battle for control of the Virginia House of Delegates.
Recent state-wide elections have seen Democrats win relatively commanding state-wide majorities. For instance according to the official counts from the 2020 election, Joe Biden beat Donald Trump by roughly ten percentage points, and Warner defeated Gade by twelve points. Thus, to win the state-wide contests, Republicans need to gain at least five percent more of the two-party vote (while Democrats lose at least an equal amount of the two-party vote) relative to the most recent election.
A recent Politico article noted the fact that the Virginia House of Delegates may well be in play for Republicans in 2021. While the article discusses a few examples, it failed to put them into a comprehensive context. Put in context, it is clear that the House of Delegates races start from a point of real opportunity for Republicans.
Of course, if the House of Delegates races go just as they did in 2019, Democrats will retain their majority. And a very small shift in vote margins wouldn’t change much. If Republicans win one percent more votes than 2019 and Democrats win one percent less, it would give Republicans one additional district (the 83rd district in Virginia Beach). A two point swing would give them three, and still no chamber majority. However, a mere two and a half percentage point gain for Republicans (paired with a parallel loss for Democrats) would give Republicans enough seats to claim a majority in the chamber. Thus, the gap Republicans need to make up to gain control of the House of Delegates (relative to the last election) is half of the gap that would have to be closed to win the state-wide races.
Just where do most of these races stand today?...
Cake Cutting and Gerrymandering
The latest and greatest reform effort heading into the 2020 post-census redistricting was the shift by a number of states towards an effort to take the politics out of redistricting through redistricting commissions. In some places this seems to be working, but in a number of instances the commissions are either deadlocked or fragmenting. Perhaps it's worth considering an alternative approach that creates a fair playing field for the parties without need to try to find (and the perils of trying to identify and appoint) fair and non-partisan members of a commission. This is the cake cutting algorithm approach....
Winning the Trade War by Bringing the Right Weapon to Bear: Import Certificates
Under the Trump administration, the United States began to take measures to fight China's longstanding mercantilist practices. Trump and his advisors sought to use specific and targeted tariffs to bring China to the negotiating table and to bring about a revision of China's trade policy. China responded by upping the ante in its longstanding trade fight with the US, restricting US exports to China in ways targeted to inflict maximal pain on Trump's supporters. The end result by the end of the Trump administration was no resolution. The US had begun to resist China's longstanding mercantilist trade war, but China had not retreated from it at all. The Biden administration has made little progress to date on solving this problem, and it isn't clear it is even trying to solve it. In the meantime, China continues to use the industrial and financial might it has built in part on the strength of the enormous and enduring trade deficit with the United States to expand its reach as a global power. The current administration seems to have no viable route forward in mind, beyond the vain hope that conversation with China's leadership will bring about a favorable resolution.
But there is a viable path forward. That path involves the imposition of import certificates on China's exports to the US in order to force trade into balance. Import certificates are a perfect match for the problem of managing trade with China's nonmarket economy. They are also a principled response to China's mercantilism...
Head of Tokyo Medical Association recommends Ivermectin for COVID treatment
Dr. Haruo Ozaki, chairman of the Tokyo Medical Association, recommends ivermectin for use with COVID patients. He notes that the parts of Africa that use ivermectin to control parasites have a COVID death rate of just 2.2 per 100,000 population, as compared to 13 times that death rate among African countries that do not use ivermectin. Similarly, worldometer.com stats say that the COVID death rate in India (which uses HCQ and ivermectin to treat COVID) is 32 while the COVID death rate in the U.S.A. is 6.5 times higher at 205 per 100,000 population.
If these stats are accurate, then at least 6 of every 7 people who have died in the U.S. of COVID could be alive today had they been treated with ivermectin. Of course, ivermectin's effectiveness against COVID was not yet known when the first COVID wave hit the United States. Also, U.S. health statistics are notoriously inaccurate. Hospitals are given a financial incentive to identify almost everyone who dies with COVID as having died of COVID. Also, the first wave of COVID which hit the U.S. before it hit Africa and India was much more deadly than recent waves, simply because deadly viruses keep mutating into forms that spread more readily partly because they are less symptomatic and deadly.
In recent months, a growing number of American physicians have discovered that ivermectin works. But, according to The Last Refuge, President Biden's Department of Health and Human Services is taking steps, through the liability insurance system, to suppress the issuance of ivermectin prescriptions. Australia's federal government just banned physicians there from prescribing ivermectin to treat COVID.
"The government's cure is what is going to kill the economy"
On Tucker Carlson's Wednesday show, Peter Schiff discussed the rising inflation. Unfortunately, the clock ran out before he had a chance to explain his last claim. That claim was that "The government's cure is what is going to kill the economy." Schiff was right when he said that. It is important for everyone to understand how the Biden administration is driving America straight to a crash:
In American Thinker on April 26, my son and I similarly predicted an economic crash when the government tries to cure the inflation. Here's our prediction of how the economy will play out:
Since we wrote this, every trend that we predicted has been occurring:
The Fed is blowing things big time. It should be tapping the interest rate brakes now, but it is not.
President Biden is blowing things big time. He is simultaneously increasing Aggregate Demand (by calling for massive spending increases) and decreasing Aggregate Supply (by calling for large tax hikes). Both are fueling inflation.
But there is still hope that Congress will prevent the disaster. If it shelves Biden's proposals for additional spending and higher taxes, the inflation could be transitory. Only Congress can save us now.
Click here to read this posting on the American Thinker website.
U.S. Vaccines Work, Chinese are Ineffective - I'm published in American Thinker this morning
So far two countries have exited the worldwide COVID-19 pandemic using U.S.-made vaccines (Israel and the United States) while two other countries have seen infection rates rising despite heavy use of Chinese-made vaccines (Chile and Seychelles).
Success of U.S. vaccines
Israel achieved herd immunity by vaccinating almost 60% of its population using the U.S.-made Pfizer vaccine. According to a chart published by Worldometer, the COVID death rate has fallen to almost zero in Israel.
Similarly, the United States exited the pandemic the week of March 20 when just 25% had been vaccinated, compared to 45% today. That was the week when deaths in the United States, according to the “Excess Deaths” statistics published by the CDC, stopped exceeding the threshold of what are considered to be a normal number.
Failure of the Chinese Vaccines
CNBC reported that Chile has been experiencing rising cases of COVID-19 despite having one of the world’s best vaccination rates. As Thomas Lifson noted in American Thinker, the CNBC article buried the fact that Chile was using a Chinese vaccine.
A similarly deceptive report came out Wednesday on the Bloomberg website, this time about the Seychelles where 62% of the population is fully vaccinated yet COVID cases are still rising. The headline of the story appeared to indicate that vaccines in general are ineffective, but, as in the Chile story, buried deep inside was the fact that Seychelles was mostly using a Chinese vaccine.
The two primary U.S.-made vaccines (Moderna and Pfizer) use the mRNA technology which is about 95% effective. The European vaccine (AstraZeneca) uses a spike protein technology that is about 70% effective. The Chinese vaccines (Sinovac and Sinopharm) use a killed viral particles technology which appears to be ineffective.
The Moderna and Pfizer vaccines were actually the second and third mRNA vaccines developed in the United States to fight COVID-19. The first was the successful Inovio vaccine which Dr. Anthony Fauci’s NIH buried in seemingly-endless clinical trials.
Click here to read it on the American Thinker Website:
Jerome Powell and the Coming Inflation - we're published in American Thinker today
by Howard Richman and Jesse Richman
Usually, the Federal Reserve acts as a counterweight when Congress and U.S. presidents follow inflationary policies. We haven’t had an incompetent Federal Reserve chairman since Arthur Burns and G. William Miller produced simultaneous inflation and recession, an economic malady known as “stagflation.” Federal Reserve Chairman Jerome Powell may not be as bad as Burns and Miller, but he does seem to be making one economic mistake after another.
Like Miller, Powell is that rare exception: a Fed chair without a background in economics. Being an American today is a bit like riding on a bus driven by someone who lacks a CDL. It might work out okay, but some white knuckles on the curves are well justified.
Powell’s First Mistake – Raising Interest Rates under Trump
Powell’s first mistake occurred when he raised interest rates during President Trump’s successful economic boom which occurred without inflation. President Trump’s economic advisor Peter Navarro indicated that this might have cost Trump the election (at about the 10 minute mark):
Powell’s increase in interest rates was not needed because President Trump’s supply-side economics was simultaneously increasing Aggregate Demand and Aggregate Supply, and thereby producing economic growth with little change in price level, as graphed below:
Powell’s Second Mistake – Getting Inflation Started
In response to the pandemic, Powell has engaged in policies that have massively increased the money supply, an increase that has not yet produced major inflation, partly because of time lags and partly because the pandemic has dramatically reduced the velocity of money in the economy. As pandemic restrictions ease, the velocity with which money changes hands will climb, along with inflation.
And Powell will let that inflation get going without doing anything about it. He promised, in a 60 Minutes interview, to delay any rise in interest rates, during Biden’s upcoming boom, until well after inflation takes off.
He may be hoping to avoid the mistake that he made by raising interest rates, unnecessarily, during the Trump boom. We have boldfaced the part of the interview in which he mistakenly confounded Trump’s and Biden’s very different economic strategies:
Biden is following a very different economic strategy from the supply-side economics used by Trump. He is planning to raise government spending and taxation simultaneously. The result could be graphed as Aggregate Demand increasing while Aggregate Supply contracts:
Powell and Biden may believe Keynesian theory which holds that government spending is more powerful than tax cuts for growing an economy. But economic research shows that changes in taxation are 2 to 3 times more powerful than changes in government spending. Specifically:
Under Biden, government spending and taxation levels will be pulling economic growth in opposite directions. But Biden’s spending increases will be so massive that, despite their weaker multiplier, they should overcome the opposing effects of his tax increases. (The spending increases will increase demand while the tax increases will reduce supply.)
Together, Biden’s massive increase in government spending and his increased regulations and taxes will boost inflation, especially when coupled with the massive increase in money supply Powell has engineered and the increased velocity with which money will change hands following easing pandemic restrictions.
But Powell plans to do nothing until the inflation takes off. When the Federal Reserve finally starts upping the interest rate, it will take at least 6 months before higher interest rates begin to have any effect. Meanwhile the rising inflation rate will get its own momentum due to inflationary expectations potentially getting embedded into almost every new contract that is negotiated.
Powell’s Third Mistake – Slowing Fossil Fuel Investment
Due to the danger of climate change forcing the U.S. to switch to renewable sources of fuel, Powell plans to discourage banks from making loans to fossil fuel developers. Republican senators have been objecting:
Powell will be intentionally reducing Aggregate Supply, by reducing loans for private investment into U.S. fossil fuel production. That investment was one of the main drivers of economic growth during the Trump administration.
Powell’s Fourth Mistake – Endorsing Trade Deficits
Trump’s former economic advisor Peter Navarro predicted that the coming inflation will especially harm blue collar workers. Trends in that direction are already apparent in recent statistics and news. The U.S. post-Covid economic boom is already being accompanied by (1) rising inflation, (2) rising trade deficits, and (3) the moving abroad of planned manufacturing investment.
Navarro was especially concerned by Powell’s statement in the 60 Minutes interview that he is counting on increased trade deficits to prevent inflation. Specifically, Powell said:
U.S. blue-collar wages and U.S. manufacturing investment rose under President Trump, partly because Trump ended or renegotiated unbalanced trade agreements. But instead of endorsing continuing efforts to restrain trade deficits, Powell is counting upon the increased trade deficits to keep inflation low by restraining the wage demands of manufacturing workers.
America’s Economic Future
Powell’s first four-year term at the Federal Reserve ends in February 2022. At that point, the Biden administration will likely reappoint him to a second term so that he can continue to restrict loans to fossil-fuel developers and continue to keep his feet off the interest-rate brakes.
Eventually, Powell or his successor will discover that it is a lot easier to let inflation get started than it is to bring it under control. Once the Fed puts on the brakes, Biden’s sugar high will turn into a post-sugar crash due to rising interest rates and rising trade deficits.
The worst case scenario would occur if foreigners stop using the inflating dollar as the medium of exchange in international transactions, resulting in a crash in the dollar’s exchange rate, much higher prices for imports, and a huge cut in the American standard of living. China appears to be preparing for that scenario by rolling out a digital yuan that could be used as an alternative to the dollar for international transactions.
Click here to read it an edited version of this piece without the graphs on the American Thinker website
Viral evolution can go many directions
Optimists keep telling me that viral evolution will make Covid19 weaker. I wish you were right
Bezos forced out as Amazon's CEO
Yesterday, Jeff Bezos was forced out as Amazon’s CEO. (In corporate slang he was "kicked upstairs.") Amazon's Board of Directors may have had enough of him furthering leftist causes at stockholders’ expense. His decision to shut down Parler chased away some future customers from Amazon’s web hosting services and caused many conservatives to stop buying from Amazon , although his successor is the executive who gave the actual order. More worrying to the financial community, it opened Amazon to law suits and government regulation. Morningstar.com, a financial website, reports:
A few days ago, Forbes.com discussed Bezos' commitment of $2 billion of Amazon's money toward fighting climate change:
In May, Bezos created a palatial homeless shelter in one of Amazon's office buildings in downtown Seattle:
Amazon's Board is responsible to Amazon's stockholders. Bezos will be free to pursue leftist causes, but not at stockholders' expense.
Click here to read this posting on the AmericanThinker website.
The Democrats' Phony Impeachment Narrative
The Democrat Party is currently attempting to impeach former President Donald Trump because he supposedly instigated the violent demonstration which took place in a doorway of the Capitol Rotunda on January 6. However, the evidence is in. President Trump did nothing wrong that day. Instead, Democrat Party propagandists created a false narrative that Trump and his supporters are violent insurgents.
1. The first proof is the fact that President Trump called for a peaceful demonstration in his earlier speech at a peaceful rally that day:
Contributing to this proof is the fact that all video versions of Trump's speech were taken off the Internet by censors at YouTube probably because they didn't want any alternative to the narrative being presented by the Democrat Party's propagandists. They even expelled Trump from Facebook and Twitter probably to prevent him from countering their narrative.
2. The second proof is the fact that no intelligent person ever deduces a pattern from a single incident. It takes at least two incidents to form a hypothesis and at least three incidents to generalize a pattern. This incident only seems to be a pattern to those who have been consuming the Democrat Party's propaganda for the last four years. Jewish talk show host Dennis Prager described their anti-Trump propaganda narrative in a January 26 essay:
In contrast, when there is incident after incident of fighting with police, a pattern can be reasonably deduced. For example, the leftist groups Antifa and BLM staged riots in city after city last year. They even fought police for several days at the White House in early June. These battles formed part of an attempted insurrection, according to a June 3 exclusive in the Washington Times:
3. The third proof is the fact that the police waved the demonstrators toward an entrance to the Capitol Building which was only lightly defended by a few policemen. Antifa was there, pretending to be Trump supporters, and helped spark the riot. For more on these events watch this Rudy Giuliani video and explore the links in this American Thinker blog posting.
Contributing to this proof is the fact that censors at YouTube took down Giuliani's videos, probably because they didn't want anybody to learn that there were alternatives to the Democrat Party's narratives. (Giuliani's videos can still be watched at rudygiulianics.com.)
4. The fourth proof is the fact that Germany's ruling party and press pulled a similar trick in order to discredit a huge peaceful demonstration by opponents of the coronavirus lockdown in Berlin on August 29. A German blogger explains their propaganda technique:
Contributing to this proof are the close parallels between the two incidents, suggesting that those in Washington were copying the German technique. According to ZeroHedge:
Those who lived in the Soviet Union developed a healthy dose of cynicism which helped them read in between the lines of Pravda and Izvestia and figure out what was really going on. We need to learn to read between the lines of the Democrat Party's propaganda. Whenever they censor the alternative, they are indicating that they know they are lying.
Click here to read this piece in the American Thinker blog.
Last week I signed an open letter from political scientists calling for the immediate removal of President Trump from office. https://www.insidehighered.com/quicktakes/2021/01/07/hundreds-political-scientists-call-removing-trump
I did so in direct response to the riot by Trump supporters at the U.S. Capitol. This is a shocking and utterly unprecidented event. It must be responded to in the most severe way. The effort (successful for several hours but ultimately repulsed) to disrupt the orderly operations of the US Congress is a direct attack on the fundamentals of American democracy. Trump no longer deserves to be president because he directly encouraged this violence, and was very slow to say anything even tepidly critical of it. If Senator Sasse is right, Trump in fact was jubilant about the events at the Capitol https://www.vox.com/2021/1/8/22220840/sasse-trump-capitol-storming-impeachment. In any event he clearly reacted slowly and badly. Telling rioters who have been breaking down doors in the US Capitol on live television "we love you" after telling them to go there is utterly beyond the pale.
I defended Trump when he was impeached the last time. I believe that Trump is right about some key issues, including the need to balance trade. This is not about policy. It's about American democracy....
UK scientists confirm my theory that COVID-19 is evolving into a more-contagious but less deadly strain
There is no need to panic at the "news” from the UK that the COVID-19 virus has mutated into a more-contagious strain. I called this one in a blog posting in the American Thinker on November 19 called “COVID-19 is getting less deadly”:
Viruses always mutate quickly into more contagious but less deadly strains. The reason is simple. The more deadly strains show serious symptoms which cause patients to be isolated, preventing the deadly strain from being spread. Only mild strains that cause mild symptoms continue to multiply and spread.
This is one of the fundamental findings in the “Evolution of Virulence” literature. The UK report is not really news. COVID-19 has been evolving rapidly worldwide since August, as shown by skyrocketing incidence rates without corresponding increases in excess death rates.
In the 5 weeks since my blog posting, the "excess deaths" in the United States, as reported by the CDC, have remained low even while COVID cases in the US, as reported on the worldometers website, have continued to rise exponentially.
COVID-19 is getting less deadly -- I'm published in American Thinker this morning
The Swedish COVID-19 statistics, as published by Worldometer, suggest that COVID is simultaneously becoming more communicable and less deadly. To see the latest, check out the Daily New Cases and the Daily Deaths on the Worldometer webpage for Sweden. Daily New Cases are rising, suggesting that the disease is getting more communicable. Meanwhile, Daily Deaths are falling, suggesting that the disease is getting less deadly.
These results are not surprising to those who know about The Evolution of Virulence (pdf) in infectious diseases. Viruses, not having DNA, do not reproduce themselves as precisely as do higher organisms. As a result, there is much more genetic variation within their descendants, resulting in rapid evolution which:
These factors have been studied extensively in wild populations of the animal world. The first causes the infectious period of a virus to lengthen. The second causes the virus to become less deadly. As a result, almost all viruses found in wild populations are intermediate in severity. They are neither so strong that they debilitate the host, nor so weak that the host can quickly overcome them.
We have excellent examples of intermediate-severity viruses in the human world – a bunch of different viruses known as the “common cold.” They are not so strong that they kill or debilitate, nor so weak that they can be overcome in less than a week.
The public health authorities have been selecting for decreasing viral symptoms and thus decreasing deadliness in COVID-19. People who display obvious symptoms are getting tested for the virus and then isolated so that they cannot spread the virus to others. A virus without obvious symptoms can hardly be deadly!
As I noted at the beginning of this posting, the Swedish charts clearly suggest that COVID-19 is becoming more communicable but less deadly, just as scientific theory would expect. But what about COVID-19 in the United States? At first glance, the Worldometer webpage for the U.S. appears to show that more and more people are getting the disease and that more and more people are dying of it.
But our Worldometer death statistics are collected differently from the way they are collected in Sweden. In the U.S. we get our death reports from hospitals, and we pay hospitals more money if COVID is included as one of the possible contributors to the death. As a result, our statistics show death with COVID, not death by COVID. If we used the same method to calculate deaths by common cold we might conclude that the common cold becomes a deadly disease during sniffles season!
Fortunately, the CDC publishes another set of data (the Excess Death data) which allows us to separate out death by COVID from death with COVID. In the graph below I have plotted, in red, the Deaths with COVID published by Worldometer and, in blue, the Excess Deaths published by the CDC.
The CDC first calculates expected deaths by averaging the number of deaths for the same week over the last three years. Then it calculates Excess Deaths by subtracting the expected deaths from the actual deaths. I have added a third step: I have divided the Excess Deaths by 10 so that they would fit on the same scale as the Deaths with COVID. The results are displayed in the graph below:
Beginning August 15, there has been a clear divergence between the trends of the two sets of data. In recent weeks Deaths with COVID have actually been rising while Excess Deaths have actually been falling.
The most recent week, the one that ended on November 7, was the first week since the epidemic began in which Excess Deaths were negative. But that week’s death count will almost certainly be revised upwards as the CDC notes:
In both the U.S. and Sweden, COVID-19 is following the disease course predicted by scientific theory. The communicability of COVID has been rising, as shown by rising Daily New Cases, while the deadliness has been falling, as shown in the U.S. by falling Excess Deaths and in Sweden by falling Daily Deaths.
But even though COVID-19 is weakening, these data show that it is still deadly. And this is true in both Sweden and the United States. So don’t start acting recklessly! If you have symptoms, isolate yourself. Don’t spread COVID to others!
You won’t read about COVID weakening in the Democrat Party’s media (i.e., the main stream media and social media) until the presidential election has been decided. They need to pretend COVID is still extremely deadly, or their lame excuses for cheating would crumble (such as their claim that “social distancing” concerns prevented them from letting Republican poll-watchers get close enough to see what was going on).
But the science cannot be denied. Deadly viruses eventually evolve into more communicable but less deadly forms. COVID-19 is no exception.
To read it on the American Thinker website, go to:
How to fix the debates - Jesse and I are Published on the American Thinker blog this morning
By Jesse Richman and Howard Richman
The first presidential debate of 2020 was a national embarrassment. The interruptions and talk-overs numbered more than 90 by some counts. The moderator struggled to enforce the rules yet also led Trump to accuse him of being a third debate participant. Demolition derby in place of debate.
The best solution is simple, elegant, and fair. Let the candidates manage their time but let only one microphone be on at once. This solution is also readily extensible to a debate in which the candidates are in different places to minimize risk from Covid-19. It is sometimes called a ‘chess clock’ debate format.
Imagine this introduction by the moderator of the next debate.
Welcome to the second presidential debate. The rules are as follows. Each candidate has forty-five minutes total speaking time during this debate. You cannot speak for more than three minutes at a time before the other candidate gets a turn. When one of you is using your time, the other will have a muted microphone. To request to speak, push the button on your podium. Your time will start when the other is done speaking. The first question is…
Such a simple set of rules. Such a radical transformation of the debate.
No interruptions. Each candidate will have a live microphone only when using their time. The epidemic of interruptions for instant rebuttals during the other candidate’s argument will be eliminated. Instead, this format lets each candidate speak at will, but forces the candidates to take turns. No more than three minutes each.
No moderator cutting off candidates. A clock with time to speak on the current question and total time will be visible for each candidate. The alternative way to get turn taking is to let the moderator or the networks mute candidates. This risks the appearance and actuality of unfairness and invites rhetoric attacking the moderator.
It will be candidate driven. No one has more incentive to raise the tough questions and tough follow-ups for an opponent. Both will have time to pursue those questions and their answers. The moderator will enter with a new question only when no eligible candidate requests time, or at pre-selected intervals.
It will be fast paced. Candidates will know that they can always use additional time to rebut, but no candidate will want to grant an opponent the luxury of the only extensive closing statement, and candidates will have less incentive to waste time by answering any question with more words than necessary.
It would work equally well for a ‘Zoom’ debate. Because of the turn taking managed by requests to speak and the clock, this format will work well even if the candidates, as a health precaution, are not able to be in the same room together.
Minor candidates can also potentially be included in this format without giving them an unfair advantage, and large primary candidate stages can be similarly accommodated. The key is to use a formula (based on polling, fundraising, or some other metric) to allocate a small amount of time to minor candidates. They would not receive the (arguably inappropriate) equal billing with major candidates, but they would also have a brief chance to make their case.
A debate structured in this way will be good television and good for our democracy. It will move the moderator to the sidelines, allow for more physical distance during the debate, and prevent interruptions.
To read this on the American Thinker website, go to:
Evidence is in: Hydroxychloroquine works -- I'm published in American Thinker this morning
To read it on the American Thinker website, go to: https://www.americanthinker.com/blog/2020/07/evidence_is_in_hydroxychloroquine_works.html
Scientific Fraud in Anti-Choloquine Study?
Emergencies often present ripe opportunities for fraud, and apparently this includes a share of the medical studies purporting to examine treatment outcomes.
A set of studies published in leading medical journals claiming negative outcomes from patient treatment as a result of Choloquine seem to be based upon fraudulent data. For more see this Guardian story...
Dr. Fauci and the Tuskegee Syphilis Study Victims - I'm published in American Thinker this morning
[Click here to read it on the American Thinker website]
On Friday, President Trump announced Operation Warp Speed, a public-private partnership to develop a COVID-19 vaccine by the end of the year if possible. He put two “can-do” people in charge of the process – Glaxo Smith Kline’s vaccine expert Mancef Slaoui to oversee vaccine development and Army General Gus Perna to oversee logistics.
Not only will they facilitate testing of the available vaccines, but they will also arrange production of promising vaccines even before they have been approved. In contrast, during President Obama’s Swine Flu (H1N1) epidemic, the CDC got vaccines approved quickly (just 7 weeks after Phase 1 clinical trials began), but then a shortage ensued while the vaccines were being produced.
Taking Vaccines out of Fauci’s Hands
President Trump just took the power to slow-walk vaccines out of the hands of Dr. Anthony Fauci, head of NIAID (one of the institutes of the NIH). When the first COVID-19 vaccine, the Inovio vaccine, was ready for clinical testing, Fauci buried it in a year-long Phase 1 clinical trial which began in April 2020 and is not scheduled to end until April 2021. (Fortunately, Fauci never got control over Bill Gates’ Moderna vaccine, which is making rapid progress, having already completed its Phase 1 clinical trial.)
President Trump officially announced Operation Warp Speed in the White House Rose Garden. Fauci stood behind him with hands folded in front of him (at the 24:00 mark) while Trump was saying, “And we hope to be able to do something by the end of the year, or shortly thereafter.”
Just three days earlier at a Senate hearing, Fauci had reiterated his claim that no vaccine could possibly be completed in less than a year to 18 months, even though in an earlier interview with Samantha Guthrie on the Today show Fauci had admitted that the coming Operation Warp Speed could get a vaccine out sooner.
Operation Warp Speed is a totally brilliant political move by Trump. He put a “can-do” leader in charge of vaccines, and “can’t-do” Fauci can’t object. Trump’s primary goal is to open up the economy ASAP. Firing Fauci would have hurt that effort. Trump has figured out how to neutralize Fauci’s obstructions without firing him....
[Click here to read it on the American Thinker website]
To read it on the American Thinker website, go to:
Journal of Economic Literature:
Atlantic Economic Journal: