Monday, November 14, 2016

Too Cool For School (or to worry about Donald Trump)

How quickly do narratives change. Last week, those of us worried about Trump's election were told “Don't worry; Trump didn't mean all those racist things he said while campaigning!” Now, we're hearing “Don't worry; Trump won't listen to the white nationalist whom he named White House chief strategist!”

Meanwhile I've been noticing some odd false equivalencies lately – not necessarily from Trumpsters, but from “above the fray/too cool for school” types – the seeming belief that ALL concerns over politics are the same.

For example: those people who freaked out over Obama's election on the grounds that he'd impose Sharia law on the country were no less and no more nutty than the people now freaking out over Trump's election on the grounds that he might actually do some of the things he specifically said he'd do. Worrying that Trump will try to round up and deport a couple million people his first year  – as he said on 60 Minutes last night – is no different from worrying that Obama the Kenyan Illegal Immigrant will impose a Muslim dictatorship and round up all the Christians into concentration camps (which he never said he'd do, though a lot of conspiracy-theory types claimed otherwise).

Last week Hugo Schwyzer, a blogger for the Times of Israel, published a piece titled “Alarmism saved my family from Hitler: Why I won't tell anyone to calm down about Trump.”
In 1938, when Hitler took over Austria, Georg was a successful Viennese family physician, a father of two, a devoted and mild-mannered husband to my gloriously temperamental grandmother, Elsa. Georg was Jewish. Elsa was half-Jewish. The family was not religious in the slightest; they were fully assimilated to the cultural life of the glittering Austrian capital.
When Hitler came in, my grandfather shook his head. “There have always been anti-Semites,” he said. “We’ll stay quiet, and things will get better.” ….  Georg was an optimist. Hitler was just another colorful rabble-rousing politician. Things would settle down.

Elsa knew better. She knew what was coming, even if she couldn’t fully name it. Within a few weeks of Hitler’s takeover she was working to get the family out of the country. … Georg didn’t want to go. Elsa told him she was taking my father (then 3) and my aunt (then 6) and going, and he could stay behind and look for another wife if he liked. My grandfather, protesting all the way that my grandmother was overreacting and having delusions, reluctantly sold his practice.

My family settled in England, first near Manchester and later in rural Oxfordshire. As you might guess, nearly all the rest of my father’s extended family perished in the Holocaust.

My grandmother’s fear saved the family. My grandfather’s sweet confidence and optimism would have killed them.
So when you tell me, a noted soother and calmer of others, that I should tell Muslims and women and people of color that they have nothing to fear from Trump, I think that perhaps you want me to be like my grandfather....
Anecdotally speaking, the “don't worry about Trump” soothers I've seen all have one thing in common: none of them belong to any of Trump's stated target groups. It's always “Judeo-Christians telling Muslims not to worry about Trump's anti-Muslim statements” or “white Americans assuring black ones there's nothing problematic about Trump's debate-question answer that the problem of police violence against minorities is best solved by more 'law and order' plus expanded stop and frisk” or “heteros handwaving away LGBT concerns about the implications of a homophobic vice-president Pence influencing our soon-to-be president.”

The suggestion “Don't freak out about the election; life goes on” is good and valid advice for many millions of Americans today ... but for other Americans, those likely to be the targets of Trump and the Trumpsters, it's a horribly callous thing to say.

4 Comments:

Blogger Hardison said...

I have always believed that economists should have their own version of Godwin's law purely for discussion of anything that might lead to hyperinflation. Having said that, I believe the net result of the Trump Administration will be the collapse of the US Dollar due to hyperinflation.

The Trump supporters will blame Obama, and Democrats will blame Trump, but the fact of the matter is most of us will be equally hungry. (My neighbor with the oddly oversize garden will suddenly be the most popular person on the black.)

7:16 AM  
Blogger Jennifer Abel said...

Hardison, at this point I honestly don't know if what I'm about to say is "a serious rejoinder to your proposal" or "tongue-in-cheek snarkiness." but here goes: I don't think hyperinflation will happen because, for all its horrors, it WOULD at least be very good for people who are over their heads in debt, and I can't see Trump doing anything that might help people with runaway student loans or anything of that nature.

10:34 AM  
Blogger Windypundit said...

Jennifer, it kind of depends on how much debt Trump has, doesn't it? If his assets are in real estate and his debts are denominated in dollars...Trump doesn't seem like the kind of guy who can pass up a moral hazard.

11:25 AM  
Blogger Hardison said...

Jennifer,

I see where you are going with that, but people forget how (relatively) small fixed rate debt is.

As long as interest rates remain low, of course, there is no particular danger in the steadily increasing debt total. The money we are borrowing is so cheap that there is literally some risk of deflation. If you continue letting the debt grow as a percent of GDP, however, interest rates will eventually climb. They might climb as a response to inflation, or they might climb simply because the national debt starts to crowd out the rest of the economy, but eventually interest rates will always rise in relation to unsustainable debt. This becomes the ultimate feedback loop. Rising interest rates cause the interest on the national debt to climb, which runs the debt even higher, which triggers more interest rate increases.

There is a slight negative feedback loop because US citizens currently owe about $8 trillion in fixed-rate debt. Rising interest rates make this debt more valuable, and declining dollars make it easier to pay off. Banks will literally buy and hold dollars to protect this asset from inflation. That only works for about $8 trillion, though. After that, the negative feedback loop simply stops and banks refuse to loan any more money at fixed rates.

This brings us back to Trump’s economic plans. If we take Trump at his word (Ha!), he plans to add $11 trillion to the national debt in the next eight years, depending on how you count. This is over-and-above the $4 trillion that will accumulate regardless of whether Trump’s proposals pass Congress. If we have another recession, then you can mentally tack on another $4 trillion due to decreased revenues, and another $1 trillion for a “stimulus” if anyone still has the stomach for real economics. (Again, Ha!)

The current national debt is $14 to $19 trillion, depending on how you count intragovernmental holdings. Although economists are torn at how high the debt can get before interest rates start pushing up, it is a pretty good bet that tacking on an extra $15 to $20 trillion will do the job.

As soon as interest rates and inflation both start ticking up together, the rest of the country will fall apart rapidly. Salaries will no longer keep up with inflation, so the fact that your mortgage is still denominated in “2014 dollars” (or whatever) is irrelevant. The money you are saving on your fixed-rate debt will offset some of the money you are losing on inflation, but (unless your debt payments are very high or your income is adjusted daily) you will still lose out.

Our GDP is only about $17 trillion, so there will be no way to raise taxes enough to pay down the debt. The only tool left for payment will be monetary policy, which will cause more inflation, etc.

The first part of the economy to collapse will be consumer sales. Truckers are not stupid, and when they realize that the cost of fuel exceeds their paycheck, all the consumer goods delivered by truck will slow or stop. Companies will lay off sales staff due to inventory-stocking problems faster than you can say "J.C. Penny".

The real question is power companies, which frequently have only six months of purchase agreements in place. After six months, power companies will either raise their rates, or stop producing electricity. If power bills start going up 7% per month, most people will blow through their life's savings, just on electricity, in about 2 years.

With me it would take about 5 years to wipe out all my savings. After that, I am dead. I may as well be, though. When I can no longer feed my family, then there is not much else I can do besides sarcastic remarks, which have a low resale value.

Wow that took a gloomy turn, but there you go.

7:36 AM  

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