Larry Kudlow admits - wrong about Biden economy

[Tiny]

Originally Posted by eyecu2

Since all gases have different rates of condensation and evaporation, they can be removed by simply knowing what those temps are. There are many stages of refrigeration on Gas lines, to effect this to occur. If you wanted a scientific discussion on that and even more interesting is the oil production in the Sands area in the upper Northwest. But I'll simply leave this out there. I explained my view of Larry Kudlow as an idiot who only knows that prices on bonds are directly proportionate to yields. He isn't more intelligent than that, and falsely tied all sorts of things to supply side economics that just aren't there. The fact that he doesn't know about supply and demand is a great example of that. He supported tarriffs that had to be subsidized by the prior administration. He further thinks that all those went into the coffers for the benefit of the Trump administration and bragged about it. But he was wrong about that also.


Don't take my word for it- here look at this link:

https://www.piie.com/blogs/realtime-...mps-trade-deal
Trump signed what he called a "historical trade deal" with China that committed China to purchase $200 billion of additional US exports before December 31, 2021. Today the only undisputed "historical" aspect of that agreement is its failure. One lesson is not to make deals that cannot be fulfilled when unforeseen events inevitably occur—in this case, a pandemic and a recession. Another is not to forget the complementary policies needed to give an agreement a chance to succeed.

In the end, China bought only 58 percent of the US exports it had committed to purchase under the agreement, not even enough to reach its import levels from before the trade war.[1] Put differently, China bought none of the additional $200 billion of exports Trump's deal had promised.


https://carnegieendowment.org/chinafinancialmarkets/83746#:~:text=Clearly%2C%20the %20Trump%20administration's%20 trade,been%20in%20over%20a%20d ecade.
"Clearly, the Trump administration’s trade policies were not successful. American deficits with China and the rest of the world were higher last year than they had been in over a decade"

So while you may think that Larry Kudlow is a genius, and maybe to you, he is,- I assure you that he has been wrong since he left Bear Stearns. And also the analogy was that Bear Sterns hired incompetent ppl- with a legacy that left the company doomed. Sorry if that needed to be spelled out even MORE directly.


Why don't you tell us about your knowledge and expertise on any of the above commodities, Bonds, and science that is related - or is it simply your opinion on the matter?

IMO Trump's second biggest mistake during his term was the trade wars. He never should have imposed 20%+ tariffs on Chinese toys and textiles and the like. Or on steel.

I don't disagree with most criticisms of Trump's trade policy. And yes, Kudlow had to defend it. But he darn sure didn't want to. It's not fair to place the blame on Kudlow.

And yeah, we better stop discussing gas production here or we're going to get pointed.

[lustylad]

Hey eye - a couple of points. First, thanks for sharing a few details of your background/experience. However, there's no need to be overly specific about institutions attended, just areas of study and work experience.

Second, it would help me better digest your posts if I could figure out when you're quoting another poster, citing an article or speaking for yourself. Maybe you could try to stick to one font color/font size for each and not use boldface quite as much.

I find it hard to engage with you when you don't offer specific examples - e.g. you beat up Kudlow for being wrong without being clear what he was wrong about. TC pointed out that most economists back in 2022 were forecasting a recession over the next 18 months. And your response is - he wasn't just wrong like everyone else, he was SUPER WRONG? Seriously? Please do better. Give us some data - something like Kudlow said real GDP would contract by 4%, whereas the consensus forecast was only -1%. That didn't happen, but if it did it might support your argument. Otherwise how do we engage with you?

Here's another rant I am still trying to make sense of:

Originally Posted by eyecu2

I explained my view of Larry Kudlow as an idiot who only knows that prices on bonds are directly proportionate to yields. He isn't more intelligent than that, and falsely tied all sorts of things to supply side economics that just aren't there. The fact that he doesn't know about supply and demand is a great example of that. He supported tarriffs (sic) that had to be subsidized by the prior administration. He further thinks that all those went into the coffers for the benefit of the Trump administration and bragged about it. But he was wrong about that also.

Why do you keep mentioning bond yields? The fact that bond prices are inversely related (which is what I think you mean when you say "directly proportionate") to yields is a well-understood mathematical truism taught in Finance 101. I've never heard Kudlow waste time explaining this, he knows most people who watch his show already get it so he goes well beyond it. Like every economist, he does analyze yield curves (e.g. an inverted one is often a recession harbinger) and track how bond prices/yields are reacting to changes in Federal Reserve policy. I really don't know what your beef is with Kudlow on this. You're trying to belittle his intelligence, but it only makes your own understanding of bond markets look very shallow.

You proclaim it to be a "fact" that Larry Kudlow "doesn't know about supply and demand". Give me a break. Why do you spout such nonsense? Any dipshit who ever took an intro course in microeconomics knows a little bit about supply and demand. Maybe they only remember that demand curves generally slope down and supply curves are upward-sloping, but that's something. Kudlow took advanced econ courses at Princeton. Believe me, he knows a shitload about "supply and demand", both in theory and when it comes to the practical application of theory to real world economics.

You say Kudlow "supported tarriffs (sic) that had to be subsidized by the previous administration". How do you subsidize a tariff? When I studied economics, I was taught that a tariff IS a subsidy (for domestic producers). Funny how Tiny said Kudlow is a free trader who tried to talk Trump out of imposing tariffs on China and starting a trade war. Yet you blame the guy for policies he tried to soften and mollify under Trump. Trump is the one who brags about his tariffs. Kudlow's attitude is much more ambivalent. China has been the biggest cheat ever to join the WTO. Free trade doesn't mean we have to tolerate unfair trade. If the tariffs were a complete failure as you claim, why has Biden kept them all in place?

And if what your blog link says is true - "China bought only 58 percent of the US exports it had committed to purchase under the agreement, not even enough to reach its import levels from before the trade war... China bought none of the additional $200 billion of exports Trump's deal had promised" - then it looks to me like they cheated again and the Biden administration let them get away with it, since the commitment was supposed to be met during Joe's first year in office (i.e. by December 31, 2021).

[eyecu2]

Subsidized in the fact that any tariffs that were charged to china, were in fact part of a remuneration to the farmers that were affected by those tariffs. They didn't even end up equaling out in the end as a positive or at least ending in a zero net gain to the farmers but just a fat fucking goose egg for Americans, and a serious threat to those farms who were relying on actual sales and open markets, vs. a sham and closed markets since the Chinese told us to go fuck ourselves; we'll buy elsewhere.

Essentially- you raise tariffs to either to remedy trade distortions, or protect domestic industries against things like dumping (low priced or below cost), protect jobs, trade restrictions or balance deficits in trade etc.

Kudlow- may have had to, support those tariffs, but in the end, he keeps on doing that still till today! OMG. He is literally the used car salesman who landed a job in economics. Econ 101 is all I've brought to conversations here since supply / demand conversations with regards to elastic and inelastic models and ideas, only seem to confuse the majority- I'm keeping it at the easy to understand level till others show further comprehension.

Relative to posting off my phone- yeah it's not always the easiest to bring details from one post to another. Sorry if that's harder to follow; it's the nature of this board unfortunately.

I'm done bashing poor Larry- I don't like him. enough said.

[VitaMan]

Elasticity of demand is a basic concept in economics also.
Good to see you admit you don't like Larry. But that was pretty obvious too.


As for labels:


Larry Kudlow - used car salesman
Mr. Trump - PT Barnum (with few qualifications)

[lustylad]

Originally Posted by eyecu2

Econ 101 is all I've brought to conversations here since supply / demand conversations with regards to elastic and inelastic models and ideas, only seem to confuse the majority- I'm keeping it at the easy to understand level till others show further comprehension.

Haha... You crack me up!

Be sure to let us know when you think Tiny, Texas Contrarian and I have shown enough "further comprehension" that you're ready to up your game to a level where your comments stop confusing us!

Originally Posted by eyecu2

I'm done bashing poor Larry- I don't like him. enough said.

You should have said that at the beginning. It would have saved us a lot of band width. I don't have a problem with bashing Kudlow or any economist for that matter, as long as the criticism is intelligent.

[lustylad]

Originally Posted by eyecu2

Essentially - you raise tariffs to either to remedy trade distortions, or protect domestic industries against things like dumping (low priced or below cost), protect jobs, trade restrictions or balance deficits in trade etc.

Sounds like you're defending Trump then. He raised tariffs for all those reasons.

[Texas Contrarian]

Originally Posted by lustylad

As to the debt/GDP ratio, it's already bounded way past 100% if you use gross debt. Maybe that's why most economists seem to have switched to tracking net (publicly held) debt instead, so we don't freak everyone out completely. (Or everyone but Professor Stephanie.)

US Nominal GDP 2023: $27.4 trillion
US Gross Debt (12/23): $33.1 trillion
US Net Debt (12/23): $26.5 trillion

Gross debt/GDP: 121%
Net debt/GDP: 97%

Though I'm not especially concerned with whether I "freak everyone out," I do generally prefer to consider debt held by the public and leave out the intergovernmental stuff. I just think that reflects a much more accurate picture of our nation's rather perilous (and worsening at a rapid rate!) fiscal trajectory.

Originally Posted by lustylad

TC - excellent post, as usual. Except you went a little too far into the weeds with this:

"And doesn't it concern you that the incremental GDP increases (the actual amount, NOT percentages, of GDP increase we might expect as a reasonable estimate of trend) are considerably less than excess government spending (the amount by which spending levels exceed the threshold beyond which public debt/GDP ratio increases)."

I like to keep it simple and just say - "doesn't it concern you that our debt keeps increasing more (or faster) than our GDP"?

"More" means dollar for dollar. "Faster" means percentage-wise, but I get your point.

Well, now that you mention it, the sentence you quoted does look like something of a syntactical dumpster fire!

As you mentioned, people like you and Tiny understood my point perfectly well. On the off chance that anyone here only has vague recollections of their experience sleepwalking through an introductory economics class way back in their skool daze, I'll try to clarify my point (actually two points) in the simplest and most straightforward way possible.

First, and perhaps simplest of all, current and projected deficit spending, as a percentage of GDP, greatly exceeds the current and projected growth of nominal GDP. (Note that I said nominal; not just real, as I'm trying to be appropriately forgiving and liberal here!) Therefore, our current debt-accumulation trajectory is plainly unsustainable over the long term.

Second, I intended to point out that the annual dollar amount (not percentage increase) of deficit spending greatly exceeds the margin by which the increase in the dollar amount of output during the same period exceeds the dollar amount of increase expected to result from any plausible estimate of trend growth absent the spending surge.

Therefore, it doesn't look like we are getting much "bang for the buck" from this tsunami of federal government spending.

Do you remember when maybe about 13 years ago, Nancy Pelosi touted boosts in SNAP spending as a "jobs program?" She trotted out a claim by some government-friendly economist that such social spending would produce a "fiscal multiplier" effect resulting in about $1.73 of increased output for each dollar spent. (That's patent nonsense, of course.)

But shouldn't we be enjoying the benefits of a "multiplier" that's more than just a small fraction of 1.0?

[VitaMan]

The simple answer is if you are able to service your debt and maintain the ability to borrow, you won't have major issues except for a possible credit rating change.

Projections are a dime a dozen.

All economists used to believe a balanced budget was a must. There was a sea change in economic thought some time ago that debt was not necessarily bad or even harmful.

We used to believe the gold standard was required.

[lustylad]

Originally Posted by VitaMan

The simple answer is if you are able to service your debt and maintain the ability to borrow and print your own currency willy-nilly, you won't have major issues except for a possible credit rating change and maybe an occasional pesky bout of hyper-inflation.

FTFY.

Originally Posted by VitaMan

All economists used to believe a balanced budget was a must. There was a sea change in economic thought some time ago that debt was not necessarily bad or even harmful.

Awww thanks, VM. Good to know.

Help me out please... I was just wondering - if debt is GOOD, then more debt is BETTER, right? So why don't we just abolish the income tax and let the government borrow to cover 100% of its spending needs?

[VitaMan]

You are facetious, I'll give you that.


When you come up with an answer to everything, let everyone know.

[VitaMan]

If I was Tunisia, maybe I would be a little more worried about the GDP and debt service.

[Tiny]

Originally Posted by VitaMan

The simple answer is if you are able to service your debt and maintain the ability to borrow, you won't have major issues except for a possible credit rating change.

Projections are a dime a dozen.

All economists used to believe a balanced budget was a must. There was a sea change in economic thought some time ago that debt was not necessarily bad or even harmful.

We used to believe the gold standard was required.

VitaMan, take a look at this,

https://budgetmodel.wharton.upenn.ed...ainable-levels

Some highlights,

PWBM estimates that---even under myopic expectations---financial markets cannot sustain more than the next 20 years of accumulated deficits projected under current U.S. fiscal policy. Forward-looking financial markets are, therefore, effectively betting that future fiscal policy will provide substantial corrective measures ahead of time. If financial markets started to believe otherwise, debt dynamics would “unravel” and become unsustainable much sooner.

We estimate that the U.S. debt held by the public cannot exceed about 200 percent of GDP even under today’s generally favorable market conditions. Larger ratios in countries like Japan, for example, are not relevant for the United States, because Japan has a much larger household saving rate, which more-than absorbs the larger government debt. (Tiny's note: They go on to say that if markets lose confidence in the USA's willingness or ability to pay its debt, the ratio could be a lot lower than 200%.)

Under current policy, the United States has about 20 years for corrective action after which no amount of future tax increases or spending cuts could avoid the government defaulting on its debt whether explicitly or implicitly (i.e., debt monetization producing significant inflation). Unlike technical defaults where payments are merely delayed, this default would be much larger and would reverberate across the U.S. and world economies.

This time frame is the “best case” scenario for the United States, under markets conditions where participants believe that corrective fiscal actions will happen ahead of time. If, instead, they started to believe otherwise, debt dynamics would make the time window for corrective action even shorter.

The following isn't original -- I'm regurgitating what I remember Texas Contrarian posting here, using somewhat more colorful and abbreviated language.

There's no viable way out of this mess. The mother-fucking bastards in Washington are going to keep spending too much money. And for political reasons, they're not going to raise taxes on the bottom 98%. Government can't tax the top 2% enough to solve the debt problem, because (a) they don't have enough money and (b) if you try to tax them at, say, 80% they'll figure out a way not to realize income.

Therefore, in summary, we're royally fucked.

An observation. The current federal debt held by the public is 26.3 trillion dollars. If the government pays 4% interest on that debt, our interest payments will be 1.05 trillion per year. Federal tax receipts, seasonally adjusted, are running $2.8 trillion per year, and total federal receipts are about $4.4 trillion per year. So, at a 4% rate, interest payments represent 38% of tax receipts and 24% of total government revenue! To me that's scary.

[eyecu2]

Thank you Tiny. Succinct & to the point and unfortunately, on the money. Spending does need to stop, or at least slow way the fuck down. We're never going to spend ourselves into a better economy.

We just need to figure out how to get this ship turned around before it's too late without a bunch of knee-jerk reactions.

What programs would be first changed in your opinions?

[Tiny]

Originally Posted by eyecu2

Thank you Tiny. Succinct & to the point and unfortunately, on the money. Spending does need to stop, or at least slow way the fuck down. We're never going to spend ourselves into a better economy.

We just need to figure out how to get this ship turned around before it's too late without a bunch of knee-jerk reactions.

What programs would be first changed in your opinions?

Thanks Eyecu2. Since this isn't related to Larry Kudlow, I'm going to resurrect the "How are we going to pay for this shit" thread and post a reply there.

[VitaMan]

Academic studies are a dime a dozen. This one gives 20 years.