Former Fed Chair Janet Yellen was interviewed by Kai Ryssdal of Marketplace recently. He asked her about Trump:
Ryssdal: Do you think the president has a grasp of macroeconomic policy?
Yellen: No, I do not.
Ryssdal: Tell me more.
Yellen: Well, I doubt that he would even be able to say that the Fed’s goals are maximum employment and price stability, which is the goals that Congress have assigned to the Fed. He’s made comments about the Fed having an exchange rate objective in order to support his trade plans, or possibly targeting the U.S. balance of trade. And, you know, I think comments like that shows a lack of understanding of the impact of the Fed on the economy, and appropriate policy goals.
Ryssdal: More broadly, then, his understanding of the effect of his trade tariffs and his withdrawal from, say, the Trans-Pacific Partnership.
Yellen: Well, I think that’s creating a lot of uncertainty for businesses, and I think my own view is that those shifts are likely to be adverse for the U.S. economy, to the extent that some of these things are bargaining chips, with the hope of lowering trade barriers generally. I suppose the outcome of that, if it’s successful, could be positive …
Ryssdal: It’s a big “if.”
Yellen: It is as a big “if.” And when I continually hear focus by the president and some of his advisers on remedying bilateral trade deficits with other trade partners, I think almost any economist would tell you that there’s no real meaning to bilateral trade deficits, and it’s not an appropriate objective of policy.
I don’t have a good grasp of macroeconomic policy either, but even I understand that bilateral trade deficits wouldn’t be a particularly meaningful metric. It probably appeals to Trump precisely because it appears to be a simple win/lose performance indicator.
As Kay said in an earlier thread, Trump is bad at everything he was supposed to be good at — can’t negotiate his way out of a wet paper bag, has zero understanding of how the economy works, etc. Given the pressures of the job, I feel sure we’ll discover other ways Trump sucks at being president before he finally vacates the office.
By most accounts, Yellen was good at her job as Fed chair. But Trump replaced her with a man because Yellen is too short and female.
Open thread!
schrodingers_cat
My ex-friend who voted for JS and listened to Rush L for “balance” had a bee in the bonnet for Janet Y as far back as 2014. RWNJs hated her. I have no idea why.
Ruckus
@schrodingers_cat:
She was competent – that shows them up in a big way.
She was for the country – not for the RWNJs or their owners.
She is a she – can’t have female, competency, successful and not on their side. That’s the whole enchilada there.
ETA RWNJ really are whiny ass little children, so drumpf is their natural leader. And because they are who they are, they pout and stomp their little feet about how the world is so cruel to them. They are simpletons who can’t grasp that the world is equally cruel to everyone and that being assholes doesn’t give them the right to fuck over anyone they see as getting a better ride than them.
West of the Rockies
I’m not a big Kai fan. I find his super casual “I’m hip” voice to be annoying, but this looks to be a very edifying interview!
Kelly
I think a lot of folks see the economy as a pirate’s treasure chest. There’s only so many pieces of eight and anything that doesn’t reflect that belief is some kinda con job. Also if we have to balance our checkbooks so should the durned guberment.
Betty Cracker
@West of the Rockies: Me neither. The smug comes pouring out of the speakers and fills the car when he’s on, but he does seem to realize Trump is a disaster, so he’s got that going for him.
Brachiator
The crazy thing is that business supports Trump despite his manifest incompetence. Nor do they look to federal agencies (apart from the Fed) to counter or ameliorate Trump’s ignorance.
I guess they figure that as long as they have tax cuts and relaxed regulation they can ride out the instability caused by Trump’s policies.
burnspbesq
Kai knows his shit. Why doesn’t that matter more than the superficial nonsense y’all are whingeing about?
BruceFromOhio
Marketplace makes for a good podcast – the editors and correspondents walk a very important line of removing the ideology from the stories, and look at every story strictly through an economic lens. I’ve learned a helluva lot over the years from this resource, and was tickled the day I discovered that MrsFromOhio includes it in her posse of regular podcast consumption. @West of the Rockies, I regret that his demeanor annoys; he has an interesting background prior to the microphone for MP, he’s done some really great “Stories from the Corner Office” interviews with all shapes and sizes of CEO, and he absolutely does not suffer fools gladly. I happily ‘listen’ past the super casual “I’m hip” voice, the guy lives in LA and probably can’t help it.
Chair Yellen, you are sorely missed.
ruemara
@Brachiator:
Quoted for truth & expanded to include everything else. They think they’ll ride out environmental disasters and even wars. Nope.
The infernal stupidity of being fired because you’re short. And I’d like to slap anyone with a Feminists for Trump tshirt, right now.
trollhattan
I’ll take Humphrey-Hawkins for two-hundred, Alex.
They distrust the Fed deeply, less so with Rand cultist Greenspan in charge but still, and a Obama-era chick was taking a very bad, not good thing and making it way worser. Now they get to hate on Christine Lagarde instead!
Trump’s trade deficit fixation is as fascinating as it is moronic. Meanwhile, the Republican’s budget deficit and ginormous debt get kicked down the path to trap the next Dem president. It’s almost as though they had this crazy scheme….
The Midnight Lurker
I know a LOT of small business owners who voted for Trump and are really suffering for it. All of them are angry, and most blame Trump but a few die hards blame Obama/Hillary/Pelosi/AOC/liberals/socialism.
The GOP Governor of South Dakota, Kristi Noem had some harsh words for Trump’s ‘trade war’.
https://thehill.com/homenews/state-watch/431175-south-dakota-governor-state-devastated-by-trump-trade-wars
There is no way in hell she would have been this bold in a deep red state without having heard from a shitload of small business owners there.
OT: Daily Kos has an interesting article up on Robert Mueller’s ‘good friend’ and current AG William Barr.
https://www.dailykos.com/stories/2019/2/25/1837456/-Trump-s-attorney-general-wants-god-s-moral-order-enforced-by-government
JR
@Brachiator: The take home is that many in business don’t understand how economics works. Or much of anything else for that matter. Trump is not some incredible outlier.
Kent
Gotta think that at this point Yellen is probably damn grateful that Trump fired her. So she doesn’t have to put up with his idiocy and have her legacy tainted by whatever fresh criminal stupidity his Administration does with the economy. EVERYONE who comes into his orbit becomes tainted as a result. Even those who were left over from previous administrations.
??? Goku (aka Amerikan Baka) ??
@Kelly:
I never balance my checkbook. I just keep track of my spending online with my bank, so I can’t relate to that.
Duane
@Ruckus: Two more things. 1) Under Obama the Fed was printing money, so INFLATION ARRGGHH!
2) Obama.
geg6
@Kelly:
The trouble is revealed when literally every single person who has floated this idiocy around me has never and will never balance their checkbooks. They are all the most financially illiterate people I have ever seen. Even the chiropractor (wife is a friend of mine) who is wildly successful knows nothing about the finances of his business. His daughter and long-time office manager are the ones who know. And his wife, when it comes to their home and personal finances. But he swans around, lauding Trump as a successful businessman like himself and loudly proclaiming his superior knowledge of economics because he’s rich! His wife, meanwhile, is beside herself over Trump and seriously contemplating a divorce because of it.
James E Powell
@Ruckus:
Let’s see . . . female who is not from the Barbizon School of RW Blondes on Cable, worked for Clinton, appointed by Obama? That’s seems like more than enough for RWNJs.
Betty Cracker
@Kent: True, and he shat all over his own appointee for hiking interest rates, even though one assumes the reasons for doing so have been explained to him repeatedly. Even though she loved the job, Yellen must be relieved on some level not to have to deal with that nincompoop.
Steve in the ATL
@Kelly: yeah, that’s a longtime right wing talking point, a subtle way of saying austerity for the poor and middle class instead of tax increases for the rich.
And ignores the facts that (1) households can’t print money, and (2) households aren’t responsible for the macro economy.
??? Goku (aka Amerikan Baka) ??
@The Midnight Lurker:
That dailykos diary is overly pessimistic at the end. The hard-right members of the judiciary can be removed from the bench.
J R in WV
I was fortunate to have my intro Econ class taught by the chair of the department. He was an excellent teacher, and I was an older non-traditional student with opinions. At the time, 1980-82, stagflation was rampant, economists had trouble with the current non-standard economic conditions.
Also, the whole core of modern economics depends upon continuous growth, which is not even theoretically plausible forever, as global climate change appears to be showing up to prove a point. I couldn’t really get him to admit that eternal growth wasn’t feasible, but I made A’s from him and one more class would have done another major. It was not to be.
All that said, I know far more about how global economies work than Trump does. His economic “ideas” are not just wrong, they are catastrophically and diametrically wrong and could destroy the world economy as well as AGW can.
??? Goku (aka Amerikan Baka) ??
@geg6:
She should. Her husband sounds like an asshole.
Dorothy A. Winsor
OT: Someone I know on FB is homeschooling her kids and just asked for ideas for homework she can use as punishment if they don’t stop squabbling. I want soooo badly to tell her not to do that. Don’t communicate that learning things is a punishment.
patrick II
I am just going to show my ignorance and disagree with the idea that bilateral trade balances are unimportant. I don’t agree with Trump on anything else, including his bully strategy for correcting a trade imbalance, but our trade imbalance with China is harmful to this country. We owe them 1.5 trillion dollars, they have taken jobs, and as part of our companies investments over there they have been obligated by the Chinese Government to give up trade secrets. I understand enough of economic theory to know trade is multilateral and it is all supposed to work out for the good, but that is a confused misunderstanding of what is natural law and what are patterns we humans use for our theoretical benefit, but can be abused in the real world as the Chines are doing now.
International economic theory is just a theory and is great right up until it clashes with other more important national goals, most of which we seem to have abandoned. Unfortunately our only international goal now seems to be to make the world safe for large corporations.
chris
@J R in WV:
Krugman thread.
Frankensteinbeck
The trade deficit was a huge topic in the 80s, presented almost universally as a sign other countries were beating the US in a contest. Trump and a lot of conservatives never left the 80s, or at least the confused amalgam of buzzwords that stuck with them from the 80s. I bet if you say the words ‘acid rain’ in front of him he has a screaming fit about Greenpeace. He certainly still believes the 80s stereotype that inner city ghettos are full of black gang members dealing drugs to elementary school children and performing drive-by shootings.
SenyorDave
Ryssdal: Do you think the president has a grasp of ANY (e.g. macroeconomic) policy?
Yellen: No, I do not.
Fixed
Brachiator
@Ruckus:
Yellen was appointed to economic posts by Bill Clinton and Obama. That makes her an enemy of the people.
Kelly
@J R in WV: The right wingers have been very successful using the language of economics without using the actual content. “Supply Side” has been an extraordinary marketing tool. I’ve read several MMT articles lately. I’m not competent to analyse MMT but it seems to depend on a lot of hand waving. That said I’d be tempted to use it like supply side a marketing tool to sell the massive programs we need to mitigate and limit climate change. The necessary majority may never understand how the economy really works.
The Midnight Lurker
@??? Goku (aka Amerikan Baka) ??: Yeah, you’re right. But that’s Kos. I was just surprised by his statements on separation of church and state and that he blames ‘secularism’ for the U.S. moral decline.
I can remember when they used to call us ‘godless commies’.
??? Goku (aka Amerikan Baka) ??
@J R in WV:
That’s an interesting point you bring up. Continuous economic growth is definitely not possible, especially at the rate the world saw post-war and for the next 50-60 years. An annual 1-2% economic growth is probably the new normal and historically speaking, that’s still pretty good compared to most of human history.
However, natural resources are limited and the only possible way for economic growth to continue is to explore and exploit natural resources from space. The trouble with that is cosmic and Solar radiation being damaging to humans beyond 75 million km, leaving worlds like Europa out of reach of crewed exploration.
Doc Sardonic
@Kelly: Balancing your checkbook doesn’t matter that much, however ‘the damn gubmint needs to balance their budget like I do, I can’t spend more’n I bring home’ is the rallying cry. Funny thing is most folks don’t think they deficit spend, but, you got a mortgage,deficit spending. Got you a car payment…..deficit spending. How ‘bout that credit card balance…….more deficit spending. A balanced budget would be basically zero sum. In a perfect world you want your budget to run a surplus, so you can have a “savings account”.
Victor Matheson
Couple of items here. First of all, I have been on Marketplace maybe a couple of dozen times over the years. I have invariably been impressed with the quality of the reporters asking questions. Ryssdal himself was a very sharp interviewer the one time I talked with him personally. Obviously, like all news programs, they are partially infotainment, but that doesn’t mean that they don’t do a pretty good job in the information department.
As for Janet Yellen, my students and I had a discussion about her the other day. Basically my take is that Yellen’s replacement Jerome Powell is great, and except for the manner in which he got the job, I can’t say anything negative about him. However, replacing Yellen with someone who appears so far (and at the time he was appointed) to be very similar to Yellen policy-wise, is a pretty appalling break with tradition.
One nice thing about the Fed, however, as opposed to the Supreme Court, which is set up in a similar manner, is that most Fed Board of Governors members have hopes for a long career after serving on the Fed. Thus, they have a real incentive to deliver results in the form of good economic performance while they are on the board. And you have a much better chance of making real dough afterwards by being the best technocrat possible while on the board as opposed to being some sort ideologue.
Brachiator
@JR:
True to a large degree. And for most knowledge of macroeconomics is not necessary.
But you have to have some who have a clue in order for the financial system to operate.
But Trump is president and directly influences policy. I suppose that this underscores the idea that you really don’t want a businessman to be president.
TriassicSands
Arguably, what Trump is worse at than anything is also what he is best known for — his ability to pick the best, most talented people (on his faux reality show). Trump’s time in the Oval Office has shown that he is grossly incompetent at everything except manipulating the press and his devout, dumb-as-a-rock followers. But his selection of personnel — his appointments — have been almost universally terrible. (The almost has to make room for Yellen’s replacement, Jerome Powell.)
Brachiator
@TriassicSands:
Worse, deliberately chooses people whose job seems to be to undermine the agencies they were put in charge of.
??? Goku (aka Amerikan Baka) ??
@The Midnight Lurker:
Yeah, Barr’s comments seriously disturbed me too. I admit I had never heard of him until recently. I never knew he was such a theocrat.
West of the Rockies
@??? Goku (aka Amerikan Baka) ??:
Attempt no landing on Europa.
bemused senior
@Dorothy A. Winsor: When my 2 girls were school age and would squabble, I would tell them to go into their own rooms and pretend they were only children. No talking to each other. This seemed to cause them to reconcile pretty quickly.
Dorothy A. Winsor
@bemused senior: @bemused senior: Good idea. Much better than using homework as a punishment.
Steeplejack
@geg6:
Also, the “checkbook economics” idea that the government should have a balanced budget every year drives me nuts. Every one of the idiots who espouse this has a mortgage, a car payment and/or credit card debt. They should walk the walk and not buy anything unless they’ve got the cash to pay for it up front.
Victor Matheson
@TriassicSands: Exactly. Almost amazing that he ended up with a completely qualified Fed Chair. Again, if Yellen had been retiring or termed out of her position, Powell’s appointment would have been a completely justified appointment.
I actually feel a bit bad for him. He did not step up to take this position. He was an existing member of the board appointed by Obama (although he was a Republican appointment made specifically to placate obstructionist Republican senators who were blocking all appointments, including Nobel Prize winner, Peter Diamond.) And he took a position where once confirmed he is completely shielded from Trump’s influence. But no matter what his historical record, he will always have the footnote of unfairly replacing Yellen despite the fact that this wasn’t his fault or intention.
Dorothy A. Winsor
Open thread? This might be interesting.
Dorothy A. Winsor
@Steeplejack: Not to mention student loans
Steeplejack
@Kelly:
What is MMT? Modern monetary theory?
MattF
Rather OT. Barry Ritholtz has a novel view of what went wrong in the Amazon HQ2 debacle in NYC. It wasn’t all those newly minted commies in the House– it was Jeff Bezos doing things that were politically and economically indefensible. Worth a read– any criticism of billionaires is rare– and Ritholtz is a smart guy. And, um, not actually a liberal.
ETA: I should say, via Daring Fireball.
trollhattan
@West of the Rockies:
Speaking of space travel (not Space Force!) just learned Hayabusa 2 successfully landed and collected its sample from asteroid Ryugu. Simply amazing feat.
Steve in the ATL
@??? Goku (aka Amerikan Baka) ??:
I missed the original post. It wasn’t about my wife, right?
Steve in DUVAL!
Bortles!!!
cope
@Dorothy A. Winsor: Tell her.
When I was still teaching, it was one thing I took with me from all my education classes (one of the few): do not give academic rewards/punishments for non-academic behaviors. It used to chap my hide that fellow teachers would give extra credit points for bringing in classroom items or not going to the bathroom for a whole semester or some other such behavior. And you are dead right, never make any act of academic activity (reading, homework, math problems) a punishment.
jl
Agree with others that Powell is very close to Yellen in outlook and policy objectives and approach. When he was appointed, though, he had much less practical experience than Yellen, so in that respect was not a good move. Why replace Yellen with a Yellen mini-me except with less experience?
Amazing that such a qualified person as Powell could get by Trump, so I figure some departed cabinet person sold him on the basis of ‘central casting’ central banker looks. Trump’s other nominees to Fed positions have been crazy and/or incompetent, but I haven’t checked to see how many of the really bad nominees have bee confirmed versus withdrawn or stalled in Congress.
Dorothy A. Winsor
@cope: Her friends are all chiming in with homework suggestions. I’d be treading on tricky ground. I’ll go see if I can find her post again. I like the idea of making the punishment fit the crime, ie separate rooms as bemused senior suggested above would fit better.
ETA: OK. I tried. We’ll see.
FlipYrWhig
@patrick II: I am not an economist, and maybe I’m missing a nuance here, but as far as I know a trade deficit per se doesn’t result in anybody owing anybody anything. If Chinese people buy fewer American-made goods than Americans buy Chinese-made goods, there’s a deficit by definition, but no one in America — and no government entity — ends up on the hook for the difference. Isn’t what you’re talking about the Chinese government buying American treasury bonds?
West of the Rockies
@trollhattan:
I missed that! I usually get my science fix from Science Friday, which, as you well know, has a keen ear out for such stories.
cckids
@Dorothy A. Winsor: Speaking as a former homeschooling parent, I agree – homework shouldn’t be punishment. Some of the best advice I ever got was to figure out the difference between discipline and punishment. I was told: ask yourself: do you want to change their behavior?, or do you want to make them pay (lol).
Both are needed at times, depending on the child’s age.
Perhaps she is remembering her past (or Harry Potter): writing lines is the closest “homework” punishment I can think of. It has no real learning attached to it, but is designed to be boring and painful in a minor way, thus hopefully teaching them to act better. Speaking from personal (childhood in Catholic schools) experience; doesn’t work so well.
ETA: My own threat for squabbling was always: “If you’re going to act like this, you can go back to school.” Since homeschooling was at their repeated requests, this usually worked; they’d avoid each other until they calmed down.
JPL
@Steve in the ATL: Some people do have a mortgage though, which these assholes seems to ignore. There really is a strong movement to balance the budget, and when someone mentioned it to me, I said something ugly. ( I pointed out that they could start with unfunded mandates such as Medicare part D which is a lifeline for some folks.) .
Kelly
@Steeplejack: Yes, MMT= Modern Monetary Theory
Dorothy A. Winsor
@cckids: That is good advice.
MattF
@Steeplejack: Kevin Drum offers some orientation to MMT.
Kay
I didn’t get the email because I’m not on her list but I’m going to give her a (small) donation for this. You have to try to get better and this is a higher standard. Anyone who raises standards during the Trump Presidency deserves one of my miserly donations :)
Victor Matheson
@FlipYrWhig: When the Chinese sell goods here, they end up with a stack of dollars. They can do two things with the dollars.
1. They can buy goods and services in exchange. If they do this, we end up with no trade deficit.
2. They can buy assets in the US – stocks, bonds, government debt, bank accounts, real estate, NBA teams, whatever. If they do this, they end up with a big trade surplus, but a capital account deficit of exactly the same size, and they end up owning a piece of the US. Whatever the Chinese now own is owed the same sort of normal payments anyone who owns an asset is owed. They will get rent or interest or dividends or a share of business profits. And again with those payments they can either buy US good and services or more US assets.
FlipYrWhig
If I’m following you — even in your simple version I feel more than a little dim — that still doesn’t sound like “losing money,” which is the way Trump always talks about trade deficits. It may justify why a trade deficit is a concern for other political or economic reasons.
Just One More Canuck
geg6 @16
chiropractor
That’s part of the problem, that, and what Goku said
Xavier Onassis
People see the word “deficit” and they go “Ooh, bad!” No, ooh good. People in other countries are making TVs and cars, and we get to use them. If they didn’t do that, we’d have to make them for ourselves or do without.
It’s a point of logic that a nation can only consume what it can produce for itself, or can trade for with other nations. As it happens, one of the things we produce in the US is dollars. And people in other countries are willing to trade stuff for dollars (because they want the dollars more than they want the stuff) and we would rather have the stuff so it’s a mutual agreement.
This won’t last forever. Eventually they’ll have all the dollars they want, and will look to trade those dollars for stuff. (Right now they mostly trade the dollars for Treasury bonds; which is to say they are trading checking account money for savings account money.) And if we want the dollars more than stuff, we’ll trade. Again, it’ll all be by mutual agreement.
VOR
@trollhattan: I remember during the election Trump claimed he could fix the budget deficit quickly. As I struggled through his garbled syntax, I realized he didn’t know the difference between the budget deficit and the trade deficit. Adjusting our balance of trade with China and Mexico would not massively pay down the budget deficit.
stinger
@Dorothy A. Winsor: Yikes. I hope she gets pushback, if not from you then from others. Homework specifically as punishment?? She needs to be (home)schooled on better parenting.
FlipYrWhig
@VOR:
I’m not sure he knows that GDP, the stock market, the federal budget, and “the economy” are all different things. In his brain they’re all BIG PILE OF MONEY. He definitely thinks that if the stock market goes up it reduces the deficit.
stinger
@cckids: Yours is a more thoughtful reply than mine. All kids need to learn techniques for dealing with interpersonal differences. The mother should use these opportunities to teach them methods of recognizing, averting, minimizing, and mitigating situations that bring on “squabbling”. Those skills will stand them in good stead as they grow older; using homework as punishment will not.
Bumper
@Dorothy A. Winsor: probably way late but here’s an idea. Distract from the current situation. Take a break and do something physical-go outside and shoot hoops, run some relay races, play catch, put on music and dance. All kids need recess to reset. Then come back and do something quiet: quiet reading or a read aloud or drawing. After that they can get have a quiet talk about how to handle problems or just get back to work, even separately if necessary. But NO to extra work!
Also, other ideas on the thread are good too.
sm*t cl*de
@Xavier Onassis:
Trump wants the US to pillage other countries – to take their stuff and send nothing in return.
If, however, this is done voluntarily – other countries ship stuff to the US, US companies don’t send so much back – it is a TRADE DEFICIT and shows that those other countries are taking advantage.
sgrAstar
@James E Powell: not to forget that in addition to her other accomplishments, Janet Yellen taught at Berkeley. Her hubby George Akerlof is also a Berkeley emeritus and Nobel Prize winner in Economics. Go Bears.
FlipYrWhig
@sm*t cl*de: His economic understanding is basically “plunder.” He’s kind of stupid. About everything.
Ruckus
@James E Powell:
I believe you wanted to reply to Mrs S. Cat above me.
Ruckus
@J R in WV:
He’s failed at everything for a reason.
He’s a fucking moron. The best moron ever. No one is more moronic than him.
boatboy_srq
@schrodingers_cat: Woman. Good with money. Spoke [limited] truth to power. Of course they hate her.
Ruckus
@Kelly:
Lots of folks can’t balance a checkbook or understand fractions or percentages, calculus is about a thousand miles above their heads, and listening to the concepts of economics just makes their ears bleed. And after that there are still schools of thought in economics that in a recession, everyone including the government must tighten their belts – so that the strong survive and the weak die off.
Ruckus
@bemused senior:
Mom tried to do that but that’s actually what we usually wanted when we were kids, to be sent to our own rooms. Or to go out and play with others.
Ruckus
@Dorothy A. Winsor:
Well now that women are in pretty much all jobs in the military it probably should be unconstitutional. Can’t actually be equal without actually having equality.
catclub
@jl:
Actually, Trump wanted extremely easy interest rate policy to keep the economy happy. Yellen had shown she was strongly in favor of that.
But Trump booted her out for Powell, who was not nearly so much for easy rate policy. To any extent that he does raise rates faster than Trump might like, that is totally on his choice to boot out Yellen.
catclub
@boatboy_srq: also Jewish, never a winner in RWNJ circles.
sm*t cl*de
@FlipYrWhig: The important point is lack of consent.
Influx of goods from plunder: GOOD.
Influx of goods from trade deficit: BAD.
Slave raids: GOOD.
Immigration: BAD.