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“Deep State” Dudley Doubles Down: “Explains” What He Really Meant In Scandalous Anti-Trump Op-Ed
“Deep State” Dudley Doubles Down: “Explains” What He Really Meant In Scandalous Anti-Trump Op-Ed
There is a saying, when in a hole stop digging.
Unfortunately for former Goldman managing director and NY Fed president, Bill “let them eat iPads” Dudley, that is a saying he is not familiar with, and one week after his stunning Bloomberg op-ed in which he advocated the Fed to prevent Trump’s 2020 re-election by sending the economy in a recession, resulting in a brutal response from virtually everyone who slammed Dudley’s musings as the final proof that the Fed was in fact a political animal, one which is more powerful than the executive branch in its ability to pick and choose presidents, Dudley is out with an “explainer”, seeking to “answer” some of the main questions posed by his “provocative” piece.
After reading “What I Meant When I Said ‘Don’t Enable Trump“, let’s just say that Dudley fails in explaining why he said is not what he said, and if anything he has successfully doubled down, giving Trump even more ammunition to throw the book at the political Fed for not cutting rates fast enough as the president has been demanding for months, and for eventually taking the blame for the coming economic and market crash.
Dudley’s letter, written in rhetorical Q&A format, begins by asking himself what motivated him to write this article. His answer is two fold:
First, President Trump’s trade war with China was increasing uncertainty about how global trading rules would evolve, what tariffs would be imposed, what changes firms might need to make to their global supply chains, and what the downside risks might be for the U.S. economy. Just a few days before the article was published, the president ordered U.S. firms to pull out of China.
…click on the above link to read the rest of the article…
Chinese Currency Manipulation–Trump’s Petard
CHINESE CURRENCY MANIPULATION – TRUMP’S PETARD
- The risk that the Sino-US trade war morphs into an international currency war has risen
- The US$ Index is up since 2010 but its only back to the middle of it range since 2000
- The Chinese Yuan will weaken if the Trump administration pushes for higher tariffs
- Escalation of domestic unrest in Hong Kong will see a flight to safety in the greenback
According to the US President, the Chinese are an official currency manipulator. Given that they have never relaxed their exchange controls, one must regard Trump’s statement as rhetoric or ignorance. One hopes it is the former.
Sino-US relations have now moved into a new phase, however, on August 5th, after another round of abortive trade discussions, the US Treasury officially designated China a currency manipulator too. This was the first such outburst from the US Treasury in 25 years. One has to question their motivation, as recently as last year the PBoC was intervening to stem the fall in their currency against the US$, hardly an uncharitable act towards the American people. As the Economist – The Trump administration labels China a currency manipulator – described the situation earlier this month (the emphasis is mine): –
After the Trump administration’s announcement of tariffs on August 1st added extra pressure towards devaluation, it seems that the PBOC chose to let market forces work. The policymaker most obviously intervening to push the yuan down against the dollar is Mr Trump himself.
China does not meet the IMF definition of a ‘currency manipulator’ but the US Treasury position is more nuanced. CFR – Is China Manipulating Its Currency? Explains, although they do not see much advantage to the US: –
…click on the above link to read the rest of the article…
View from the Lake: Deflation & Debt
View from the Lake: Deflation & Debt
Grand Lake Stream | The conversations over the Labor Day weekend at Leen’s Lodge ranged from negative interest rates to the efficacy of a bubble gum colored wacky worm vs live bait in late season bass fishing. We’ve mostly decided that a large mouth bass raised in Maine tastes about as good as small mouth bass when flash fried over an open fire.
Confirming that quality trumps quantity, we proved empirically that a single issue of Grant’s Interest Rate Observer, supplemented with a few pine cones, is a superior fire starting accelerant than a whole section of The Financial Timesor The Wall Street Journal.
One major point of consensus view is that the global investment community needs to stop asking central banks to address issues for which they are neither suited professionally or politically. The spectacle of former New York Fed President William Dudley exhorting his former colleagues on the Federal Open Market Committee to resist President Trump was pathetic and sad, yet another faux pas for the Fed of New York this year.
The Dudley rant illustrates the collective madness that has consumed many observers over the past decade. In truth, the crisis of 2008 still has not been resolved. Dudley wrote:
“There’s even an argument that the election itself falls within the Fed’s purview. After all, Trump’s reelection arguably presents a threat to the U.S. and global economy, to the Fed’s independence and its ability to achieve its employment and inflation objectives.”
Really? Dudley displays the dangerous “I am Superman” complex we wrote about in 2010, a virus that has infected the Federal Reserve System over the past two decades. Mission creep does not begin to describe the pathology of the madness that makes Fed officials think themselves omniscient. We challenge Dudley to point to a section of the Federal Reserve Act than authorizes the political activity he suggests.
…click on the above link to read the rest of the article…
Ferguson: “The Whole World Is Playing A Massive, Multiplayer Game Of Chicken”
Ferguson: “The Whole World Is Playing A Massive, Multiplayer Game Of Chicken”
From Trump’s trade wars to Brazil’s fires, the world is on the brink
‘Hey, Toreador! . . . We head for the edge, and the first man who jumps is a chicken. All right?”
In Rebel without a Cause, Jim (James Dean) and Buzz (Corey Allen) play the most famous game of chicken in Hollywood history, driving their jalopies at full speed towards a Californian cliff. At the last minute, Jim jumps. Buzz, his sleeve caught on the door handle, plunges to his death.
Games of chicken are all around these days. Indeed, it starts to feel as if the whole world is playing a massive, multiplayer game of chicken.
Clearly, Boris Johnson’s jaunts to Berlin and Paris last week were part of a diplomatic game of chicken. The prime minister repeated his readiness to go over the cliff of a no-deal Brexit if the European Union is not prepared to scrap the Irish backstop. Contrary to some UK press reports, the German chancellor, Angela Merkel, and French president, Emmanuel Macron, essentially reiterated their commitment to the existing withdrawal agreement. Vroom!
If Mr “Million-to-One-Against” himself were driving, there would be no chance of the Europeans chickening out. But the man at the wheel of the British jalopy is not Boris but the prime minister’s chief adviser, Dominic Cummings, and the glint in his eye tells you that he would quite enjoy hurtling over the precipice. After all, for him, Brexit is just a means to a higher end: the revolutionary disruption of Britain’s broken system of government.
…click on the above link to read the rest of the article…
Krugman and the Goldbugs
Krugman and the Goldbugs
The announcement that President Trump would nominate Judy Shelton, a long-time advocate of the gold standard, for a seat on the Federal Reserve’s Board of Governors got Paul Krugman thinking: why do some economic commentators become goldbugs?
Krugman offers a rather cynical view. It is difficult “to build a successful career as a mainstream economist,” he writes.
Parroting orthodox views definitely won’t do it; you have to be technically proficient, and to have a really good career you must be seen as making important new contributions — innovative ways to think about economic issues and/or innovative ways to bring data to bear on those issues. And the truth is that not many people can pull this off: it requires a combination of deep knowledge of previous research and the ability to think differently.
So what’s an aspiring if not so smart or creative economist to do?
“Heterodoxy,” Krugman writes, “can itself be a careerist move.”
Everyone loves the idea of brave, independent thinkers whose brilliant insights are rejected by a hidebound establishment, only to be vindicated in the end. And such people do exist, in economics as in other fields.… But the sad truth is that the great majority of people who reject mainstream economics do so because they don’t understand it; and a fair number of these people don’t understand it because their salary depends on their not understanding it.
In other words, Krugman suggests most gold standard advocates are either ignorant or disingenuous — and, in some cases, both.
According to Krugman, “events of the past dozen years have only reinforced that consensus” view that “a return to the gold standard would be a bad idea.”
…click on the above link to read the rest of the article…
Mr. President, This Is How To Get The Fed To Launch Quantitative Easing
Mr. President, This Is How To Get The Fed To Launch Quantitative Easing
Yesterday, after countless demands that the Fed cut interest rates, Trump finally made his first, long anticipated formal demand that the Fed should pursue “some quantitative easing“:
Our Economy is very strong, despite the horrendous lack of vision by Jay Powell and the Fed, but the Democrats are trying to “will” the Economy to be bad for purposes of the 2020 Election. Very Selfish! Our dollar is so strong that it is sadly hurting other parts of the world…
…..The Fed Rate, over a fairly short period of time, should be reduced by at least 100 basis points, with perhaps some quantitative easing as well. If that happened, our Economy would be even better, and the World Economy would be greatly and quickly enhanced-good for everyone!
The good news for Trump is that he has now fully figured out that he has the Fed in the palm of his hand, as he demonstrated just hours after Powell’s July 31 rate cut when Trump broke the US-China trade ceasefire and re-escalated trade war, in the process sending rate cut odds soaring. The flowchart logic, as shown below, is quite simple: all Trump has to do is engage in action that threatens to destabilize the global economy and Powell – as he certified during the last FOMC meeting – has to respond by cutting further, until he eventually reaches a point where QE may be the only possible outcome (as we explained previously in “How The Fed Is Now Underwriting Trump’s Trade War, In One Chart“).
Obviously extending the logic of the above diagram to its logical conclusion also lays out the path that Trump must follow if he wishes to force the Fed to launch QE. And just in case it is unclear, it involves a “gray rhino”, an economic war, and negative rates.
…click on the above link to read the rest of the article…
Economic Storm Trump Will be Blamed For Because of Bad Advisers
Economic Storm Trump Will be Blamed For Because of Bad Advisers
There is a very Dark Cloud hovering over the world economy and at the center of this cloud lies not just Europe, but Germany – the strongest economy holding up all of Europe. The German manufacturing sector is in freefall. Trump will be blamed calling this the result of his Trade War. It is probably too late to get him to even understand that his advisers are old-school and completely wrong with respect to trade. Their obsession with currency movements is what they taught back in school during the 1930s. My advice to China, let the yuan float and Trump will quickly see that China has been supporting its currency, not suppressing it.
Manufacturing indicators have deteriorated globally, yet in a very disproportionate manner. Trump will be blamed for this and his badgering the Fed to lower interest rates is also a fool’s game. Nobody looks at the elderly who were told to save for retirement and you will live off the interest. Their house values were undermined in the 2007-2009 New York Banker’s Mortgage-Backed scam that blew up the world economy from which we have been unable to fully recover. The younger generation cannot afford to buy a house as they are saddled with student loans thanks to the Clintons for degrees that are worthless as 65% cannot find jobs in what they have degrees for these days.
The insanity of those in power knows no boundary when it comes to stupidity around the world. All they have is interest rates and after more than 10 years of excessively low to negative interest rates failing to stimulate the economy in Europe, what do they do? They argue that all physical money must be eliminated because people are hoarding cash and thus defeat their lower interest rates policy.
…click on the above link to read the rest of the article…
Trump’s Blockade Begins: Venezuela Says Food Shipment Blocked In Panama Canal
Trump’s Blockade Begins: Venezuela Says Food Shipment Blocked In Panama Canal
Venezuela’s Vice President Delcy Rodriguez has denounced what state media is describing as a ship seizure by the US in the Panama Canal Wednesday.
The ship is reportedly packed with 25 thousands tons of Soya and was entering the narrow vital central America waterway, when its progress was halted in an event which Maduro government officials have condemned as a “serious aggression” that impedes the country’s “right to food”.
Though in the initial hours of Wednesday’s allegation major international media outlets had yet to confirm the claim, Rodriguez tweeted a statement, saying, “Venezuela denounces before the world that a boat that holds 25 thousand tons of Soya, for food production in our country, has been seized in the Panama Canal, due to the criminal blockade imposed by Donald Trump.”
“Venezuela calls on the UN to stop this serious aggression by DonaldTrump’s govt against our country, which constitutes a massive violation of the human rights of the entire Venezuelan people, by attempting to impede their right to food,” the vice president added.
Venezuela exige a la ONU detener esta grave agresión del gobierno de @realDonaldTrump contra nuestra Patria que constituye una violacion masiva de los derechos humanos de toda la población venezolana al pretender impedir su derecho a la alimentación.
State media subsequently explained that the undisclosed owner of the vessel was informed by the insurance company that it must cease moving the cargo through the canal.
The serious allegation comes after on Monday President Trump signed an executive order imposing a full economic embargo against Venezuela after a week ago the White House began signaling the US would seek to “quarantine” and fully “blockade” the Maduro regime if the socialist leader doesn’t immediately hand over power of his own accord.
…click on the above link to read the rest of the article…
Trump Imposes Total Economic Embargo On Venezuela
Trump Imposes Total Economic Embargo On Venezuela
Late Monday President Trump signed an executive order imposing a full economic embargo against Venezuela after a week ago the White House began signaling it could seek to “quarantine” and fully “blockade” the Maduro regime if the president doesn’t immediately hand over power of his own accord.
The executive order freezes all government assets in the United States and prohibits all transactions by any Venezuelan officials, in what constitutes the first major expansion of sanctions targeting a nation in the western hemisphere in over three decades.
The order focuses on human rights abuses and Maduro’s continued “usurpation” of power as necessary to enact the full embargo, and places the Latin American country on par with Cuba, Syria, Iran and North Korea. Though Trump recently signaled he was “bored” with meddling in Venezuela after a failed military coup earlier this year, the executive order is the latest in a string of measures intent on regime change.
“All property and interests in property of the Government of Venezuela that are in the United States … are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in,” the executive order says. Americans are further prevented from doing business with Venezuela’s government or officials, effective immediately.
Though it falls short of an outright trade embargo, it does dramatically escalate US efforts to force a Maduro exit in favor of US-backed opposition leader and self-proclaimed “interim president” Juan Guaido.
A recent Bloomberg report also indicated Trump admin discussions have involved the possibility of imposing a complete blockade on the country by sea, enforced by US Navy ships.
…click on the above link to read the rest of the article…
Fourth Turning Economics
Fourth Turning Economics
“In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where America will have neglected, denied, or delayed needed action.” – The Fourth Turning – Strauss & Howe
The quote above captures the current Fourth Turning perfectly, even though it was written more than a decade before the 2008 financial tsunami struck. With global debt now exceeding $250 trillion, up 60% since the Crisis began, and $13 trillion of sovereign debt with negative yields, it is clear to all rational thinking individuals the next financial crisis will make 2008 look like a walk in the park. We are approaching the eleventh anniversary of this crisis period, with possibly a decade to go before a resolution.
As I was thinking about what confluence of economic factors might ignite the next bloody phase of this Fourth Turning, I realized economic factors have been the underlying cause of all four Crisis periods in American history.
The specific details of each crisis change, but economic catalysts have initiated all previous Fourth Turnings and led ultimately to bloody conflict. There is nothing in the current dynamic of this Fourth Turning which argues against a similar outcome. The immense debt, stock and real estate bubbles, created by feckless central bankers, corrupt politicians, and spineless government apparatchiks, have set the stage for the greatest financial calamity in world history.
…click on the above link to read the rest of the article…
Top Scientist Says He Quit USDA Because Trump Admin Tried to Bury His Study on Climate and Nutrition
Top Scientist Says He Quit USDA Because Trump Admin Tried to Bury His Study on Climate and Nutrition
Rep. Chellie Pingree tweeted, “Once again, the Trump admin is silencing our scientists.”
Plant physiologist Lewis Ziska quit the U.S. Department of Agriculture Friday. (Photo: Peggy Greb/USDA Agricultural Research Service via sciencenewsforstudents.org)
The exodus of federal scientists in the era of President Donald Trump continued Friday as 62-year-old plant physiologist Lewis Ziska left the U.S. Department of Agriculture “over the Trump administration’s efforts to bury his groundbreaking study about how rice loses nutrients due to rising carbon dioxide in the atmosphere,” Politico reportedMonday.
“There was a sense that if the science agreed with the politics, then the policymakers would consider it to be ‘good science,’ and if it didn’t agree with the politics, then it was something that was flawed and needed to be done again.”
—Lewis Ziska, ex-USDA scientist
Ziska—who worked at USDA under five presidents, both Republicans and Democrats—charged in an interview with Politico that he left the department’s Agricultural Research Service (ARS) because the USDA tried to block the public dissemination of his research on how the human-caused climate crisis’s impact on rice could threaten the nutrition of 600 million people. The study, Politico reported, was internally cleared at the department and peer reviewed prior to its publication in the journal Science Advances last year.
USDA, in a statement to the outlet, said that “this was a joint decision by ARS national program leaders—all career scientists—not to send out a press release on this paper” based on scientific disagreement, and the decisions involving the study weren’t politically motivated.
Ziska, however, said that “this isn’t about the science. It’s about something else, but it’s not about the science.”
…click on the above link to read the rest of the article…
Tomgram: Andrew Bacevich, Future History
Tomgram: Andrew Bacevich, Future History
In Donald Trump’s go-back-to-where-you-didn’t-come-from America, where the fear of immigrants (as well as their grotesque mistreatment) still seems on the rise, just wait. There’s so much more to come. Climate change has barely begun to hit this planet big time and yet, while there’s much writing about the grim circumstances (including gangs, drugs, and violence) that continue to send desperate Central Americans north to the U.S. border, global warming is also a growing factor in the equation. If the weather destroys the possibility of growing your food, you’ve got to do something else or go somewhere else. In the coming decades, count on one thing: thanks to the way we’re changing our very planet, ever more people are going to be uprooted from their homes and sent wandering in desperation across this globe of ours. And if you think about it, since Donald Trump is so desperately intent on aiding and abetting the intensification of global warming via fossil-fueled projects of every sort, he should really be considered the ultimate “invader” of this country. Given what we know about the reactions of those not forced to flee to those who are — to, in fact, a planet already filled with the displaced and refugees escaping violence on a scale not seen since the end of World War II — expect things to grow worse. More heat, more upheaval, more wars, and whatever turns out to follow the “populist right” on an increasingly unnerved planet, along with potentially 250 million or more displaced people by perhaps mid-century. Given the backstory so far, it’s not likely to be pretty.
…click on the above link to read the rest of the article…
US Navy Shoots Down Iranian Drone Over Strait Of Hormuz: Trump
US Navy Shoots Down Iranian Drone Over Strait Of Hormuz: Trump
President Trump announced on Thursday that the amphibious assault ship, the USS Boxer, shot down an Iranian drone in the Strait of Hormuz in a defensive action.
MORE: Trump said that the Iranian drone’s actions were “the latest of many provocative and hostile actions by Iran”
Operators of the drone refused calls to stand down, after which it was “immediately destroyed,” when it came within 1,000 yards of the ship according to the president, “threatening the safety of the ship and the ship’s crew.”
Trump has called on “other nations to protect their ships as they go through the Strait.
The comments come as tensions between Washington and Tehran remain high over a spate of attacks on cargo ships, the downing of an American drone and the British seizure of a tanker carrying Iranian oil. Earlier in the day, the U.S. condemned Iranian naval activity in the Persian Gulf and demanded the Islamic Republic release a small tanker and its crew that its forces seized this week. A State Department official who asked not to be identified discussing the issue cited the Islamic Revolutionary Guard Corps’ “continued harassment” of vessels in and around the Strait. -Bloomberg
Oil futures jumped a bit on the news, climbing 34 cents a barrel to reel in some of the day’s 2.6% loss.
As we noted earlier in the day, Iran’s Islamic Revolutionary Guard Corps (IRGC) said it has seized a foreign vessel with 12-crew members carrying one million barrels of oil. In an official Iranian media statement, the country’s military asserted the tanker was caught “smuggling” the fuel through the Strait of Hormuz.
…click on the above link to read the rest of the article…
De-Dollarizing the American Financial Empire
De-Dollarizing the American Financial Empire
Guest: Michael Hudson
Economist Michael Hudson continues his discussion of Super Imperialism: The Economic Strategy of American Empire with a focus on US monetary imperialism; President Trump’s demand for lower interest rates undercuts America’s requirement for foreign investment to fund its domestic and balance of payments deficit, increases the carry trade and turns IMF and World Bank policies on the US; analysis of US economic domination of the world from its position as the world’s largest creditor post-WWI; analysis of US economic domination of the world from its position as the world’s largest debtor after the 1971 close of America’s gold window; emergence of the dollar-debt standard; how war has bankrupted the US; the difference between imperialism and super imperialism; US bribes foreign governments; China’s banking system; China and Russia stockpile gold as the world breaks out of dollar domination.
Weekly Commentary: History Rhymes
Weekly Commentary: History Rhymes
President Trump and President Xi are meeting in Osaka as I write. We’ll know much more in the morning. Pre-meeting reports had the two sides agreeing to a “truce.” Heading into the meeting, President Trump said progress was made in Friday trade talk preparations, as he seeks to “even it up” on trade. I’ll assume both sides would prefer to convey a constructive meeting and a positive framework for restarting trade negotiations.
Having attained a head of steam, a positive outcome could provide additional juice to the equities rally. Sovereign bond markets, enjoying even stronger momentum, may have to think twice. Is the market’s 100% probability for a July rate cut justifiable in the event of market exuberance in response to improved prospects for a successful completion of trade negotiations?
There was definitely some push back to market expectations for an imminent start to a rate cut cycle. At least a few Fed officials are not oblivious to the risk of bowing to rate cut pressures:
June 25 – New York Times (Jeanna Smialek): “Jerome H. Powell, chairman of the Federal Reserve, said… that the central bank is weighing whether an interest-rate cut will be needed as trade risks stir economic uncertainty and inflation lags. But he made clear that the institution considers itself independent from the White House and President Trump, who continues to push publicly for a rate cut. Mr. Powell said the case for a rate cut has strengthened somewhat given that economic ‘crosscurrents have re-emerged, with apparent progress on trade turning to greater uncertainty and with incoming data raising renewed concerns about the strength of the global economy.’ But he stopped short of saying a cut was guaranteed, noting that the Fed would continue to watch economic events unfold and would avoid reacting to short-term issues.”
…click on the above link to read the rest of the article…
