The president-elect and his advisers have often spoken of seeking stronger economic growth than the United States has experienced the last several years, perhaps seeking 3.5 percent to 4 percent instead of the sub-2 percent growth that has been the standard since 2009. A white paper by advisers to Mr. Trump released in the fall assessed the view that this lower growth rate reflected demographics and that it amounted to a “new normal,” and declared it “incomplete — and unnecessarily defeatist.”
That view is at odds with both Ms. Yellen’s comments Wednesday and longer-term economic projects that Fed officials have released. For example, the median Fed policy maker viewed the economy’s long-term rate of G.D.P. growth as only 1.8 percent a year, very much in the ballpark that Trump advisers would view as unnecessarily defeatist.
.. It’s possible that what people in Mr. Trump’s orbit view as a desirable boom will look to Ms. Yellen and her colleagues as overheating, and prompt equal and opposite interest rate increases.
.. There are a couple of potential twists in this story. The first would involve potential Trump appointments to the Fed; the second could involve big moves in the dollar.
.. Economists believe a key element of a corporate income tax overhaul advanced by House Republicans, known as a border adjustment tax, would have the effect of creating a huge rally in the value of the dollar compared with other major currencies, perhaps 20 percent or more.
.. it is looking like a distinct possibility that Ms. Yellen could wake up one morning in the year ahead to early-morning tweets directed her way, originating from 1600 Pennsylvania Avenue.
The cult of the expert – and how it collapsed
Led by a class of omnipotent central bankers, experts have gained extraordinary political power. Will a populist backlash shatter their technocratic dream?
.. A quiet, balding, unassuming technocrat confronted the lions of the legislative branch, armed with nothing but his expertise in monetary plumbing.
.. Mario Draghi, president of the European Central Bank, defused panic in the eurozone in July 2012 with two magical sentences. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” he vowed, adding, with a twist of Clint Eastwood menace, “And believe me, it will be enough.”
.. “Superman and Federal Reserve chairman Ben Bernanke are both mild-mannered,” a financial columnist deadpanned. “They are both calm, even in the face of global disasters. They are both sometimes said to be from other planets.”
.. the cult of the central banker was only the most pronounced example of a broader cult that had taken shape over the previous quarter of a century: the cult of the expert
.. Those moments when Bernanke faced down Congress, or when Draghi succeeded where bickering politicians had failed, made it seem possible that this technocratic vision, with its apolitical ideal of government, might actually be realised.
.. No senator would have his child’s surgery performed by an amateur. So why would he not entrust experts with the economy?
.. At the Fed, by contrast, experts were gloriously empowered. They could debate the minutiae of the economy among themselves, then manoeuvre the growth rate this way or that, without deferring to anyone.
.. the ultimate embodiment of empowered gurudom was Alan Greenspan, the lugubrious figure with a meandering syntax who presided over the Federal Reserve for almost two decades. Greenspan was a technocrat’s technocrat, a walking, talking cauldron of statistics and factoids, and even though his ideological roots were in the libertarian right, his happy collaboration with Democratic experts in the Clinton administration fitted the end-of-history template perfectly.
.. Richard Nixon and his henchmen once smeared Arthur Burns, the Fed chairman, by planting a fictitious story in the press, insinuating that Burns was simultaneously demanding a huge pay rise for himself and a pay freeze for other Americans.
.. When Greenspan replaced Volcker in 1987, the same pattern continued at first. The George HW Bush administration tried everything it could to force Greenspan to cut interest rates, to the point that a White House official put it about that the unmarried, 65-year-old Fed chairman reminded him of Norman Bates, the mother-fixated loner in Hitchcock’s Psycho.
.. The Clinton adviser Dick Morris summed up economic policy in this period: “You figure out what Greenspan wants, and then you get it to him.”
.. How did Greenspan achieve this legendary status, creating the template for expert empowerment on which a generation of technocrats sought to build a new philosophy of anti-politics?
.. The bullying of central banks by Johnson and Nixon produced the disastrous inflation of the 1970s, with the result that later politicians wanted to be saved from themselves – they stopped harassing central banks, understanding that doing so damaged economic performance and therefore their own reputations.
.. To the contrary, he embraced politics, and loved the game. He understood power, and was not afraid to wield it.
.. He entered public life when he worked for Nixon’s 1968 campaign – not just as an economic adviser, but as a polling analyst.
.. In Nixon’s war room, he allied himself with the future populist presidential candidate Patrick Buchanan
.. In the mid-1970s, when Greenspan worked in the Gerald Ford administration, he once sneaked into the White House on a weekend to help rewrite a presidential speech, burying an earlier draft penned by a bureaucratic opponent. At the Republican convention in 1980, Greenspan tried to manoeuvre Ford on to Ronald Reagan’s ticket – an outlandish project to get an ex-president to serve as vice president.
.. “He has the best bedside manner I’ve ever seen,” a jealous Ford administration colleague recalled, remarking on Greenspan’s hypnotic effect on his boss. “Extraordinary. That was his favourite word.
.. Greenspan’s critics frequently complained that he was undermining the independence of the Fed by cosying up to politicians. But the critics were 180 degrees wrong: only by building political capital could Greenspan protect the Fed’s prerogatives.
.. But after a landmark 1993 budget deal and a 1995 bailout of Mexico, Clinton became a firm supporter of the Fed. Greenspan had proved that he had clout. Clinton wanted to be on the right side of him.
.. Volcker lacked Greenspan’s political skills, which is why the Reagan administration succeeded in packing his board with governors who were ready to outvote him. When Greenspan faced a similar prospect, he had the muscle to fight back: in at least one instance, he let his allies in the Senate know that they should block the president’s candidate.
.. Volcker also lacked Greenspan’s facility in dealing with the press – he refused to court public approval and sometimes pretended not to notice a journalist who had been shown into his office to interview him. Greenspan inhabited the opposite extreme: he courted journalists assiduously ..
.. It was only fitting that, halfway through his tenure, Greenspan married a journalist whose source he had once been.
.. Greenspan maximised a form of power that is invaluable to experts. Because journalists admired him, it was dangerous for politicians to pick a fight with the Fed: in any public dispute, the newspaper columnists and talking heads would take Greenspan’s side of the argument. As a result, the long tradition of Fed-bashing ceased almost completely.
.. The Brexit referendum featured Michael Gove’s infamous assertion that “the British people have had enough of experts”.
.. In the United States, Donald Trump has ripped into intellectuals of all stripes, charging Fed chair Janet Yellen with maintaining a dangerously loose monetary policy in order to help Obama’s poll ratings.
.. If the experts’ legitimacy depends on delivering results, it is hardly surprising that they are on the defensive.
.. As the advertising entrepreneur John Kearon has argued, the public has to feel you are correct; the truth has to be sold as well as told; you have to capture the high ground with a brand that is more emotionally compelling than that of your opponents.
.. To survive these inevitable resentments, elites will have to understand that they are not beyond politics – and they will have to demonstrate the skill to earn the public trust, and preserve it by deserving it.
Donald Trump’s Wild Night
He has made outrageous commonplace on the trail. And he went for it again on the debate stage.
he tried to interrupt 25 times in the first 26 minutes of the debate, according to Vox—and say a lot of wild, perplexing and untrue things that may well overstimulate the national fact-checking economy
.. Trump came off as an overconfident blowhard, the mouthy guy at the office meeting who never knew much about the topic, didn’t try to get himself up to speed in advance, interrupts all his female colleagues anyway, then tells them to wait until he’s done when they try to get a word in edgewise.
.. he scored points portraying her as a tired politician who had stayed in the game too long. But he did seem a lot less comfortable and more agitated than he does at his rallies, as if mass adulation suits him better than one-on-one confrontation
.. there does not seem to be a lot of recognition of just how remarkable some of Trump’s comments were. Some of those comments have become familiar through repetition, like his suggestion that in America’s minority neighborhoods, you can’t walk down the street without getting shot, or his claim that American jobs are “leaving in bigger numbers than ever,” when in fact unemployment has been cut in half since 2010. But as I’ve discovered after attending Trump rallies, many of us have become so desensitized to his outrageousness that it no longer sounds as abnormal as it is.
.. Janet Yellen is widely considered one of the least political people in Washington, but it barely seemed to register last night when Trump accused her of keeping monetary policy loose for purely political reasons—even though the policy should presumably be even looser if the economy were really in the shambles Trump says it is.
.. Trump also tried to push the preposterous notion that Clinton was a fervent birther, but a less effective one than Trump
.. And when Clinton insinuated that maybe he still isn’t paying the federal taxes that support troops, schools and health care, he again took the bait, not to deny that he’s a free rider, but to scoff that his taxes would just be wasted if he did pay them.
That was a pretty damning non-denial.
.. When Clinton pointed out that it would be a disaster if the country declared bankruptcy the way Trump’s companies have, he said he had just taken advantage of the laws for his own benefit, because “that’s what I do.”
.. it’s hard to imagine another presidential candidate expecting brownie points for allowing blacks in his club.
.. He denied last night that he had ever called global warming a Chinese hoax, even though the evidence remains on his Twitter account. He also clung to his disproven claim that he always opposed the war in Iraq, citing Sean Hannity as his character witness. Trump just keeps blustering through, never admitting error, always assuming his confidence projects authority.
.. “Because I settled that lawsuit with no admission of guilt…It’s just one of those things.”
It’s one of those things that won’t make the news tomorrow, even though “no admission of guilt” at least partially captures the Trump approach to politics.
.. He’s going to keep saying things that normal politicians don’t. He won’t apologize for them. He’ll attack the media for even questioning them. And his supporters will continue to love him for them.
The economic issue they aren’t talking about at the DNC
Democrats have been pushing their ideas for jobs and growth. So why are they ignoring the Federal Reserve?
A report released in February found that 83 percent of Fed board members are white; nearly three-quarters are male. Nearly 40 percent come from financial institutions. Given the Fed’s role regulating the largest banks, that last statistic has proven particularly troubling for many liberal economists and progressive activists.
.. “We will also reform the Federal Reserve to make it more representative of America as a whole, and we will fight to enhance its independence by ensuring that executives of financial institutions are not allowed to serve on the boards of regional Federal Reserve banks or to select members of those boards.”
.. “No one was even talking about the notion that bankers should not select the people who serve on the Fed until this year