Wednesday, January 31, 2018

What mattered and what didn't matter yesterday

So... did, um... anything happen yesterday?

Was there, like, a speech, or something?  I hate those things.  Yes, I know it's my job, but there's this book, and I kind of like books.  George Edwards, On Deaf Ears: The Limits of the Bully Pulpit.  The title has a slightly different ring to it with Donny-boy as President, but basically, here's the gist.  Presidents can speechify, and nobody has bigger microphones than presidents.  And nobody has a bigger microphone than Donny Trump.  We can't turn away from whatever comes out of his shithole.  According to certain lines of thinking, the president's ability to control the "bully pulpit" means that the president can move public opinion, and thereby shape American politics.

So, um... Trump is a weird but perfect example of the breakdown of this model.  Nobody draws more attention than Trump, but no president has ever been this unpopular at this stage of their presidency.  Over at Gallup, he hasn't broken 40% in ages.  Why not?  He's the platonic ideal of "douchebag."  When douchebags ask themselves, "douche-self, how could I be douchier?"  They look at Donald Trump, and say, "I'll be him!"  Yuuuuge microphone, lousy approval ratings.  Bully pulpit, my ass.

And that's kind of Edwards's point.  Moving public opinion is hard.  Why?  Short version:  party ID.  The answer to all questions about public opinion.

So, State of the Union addresses don't matter in terms of public opinion.  Can they shift the legislative agenda?  Well, Edwards argues that presidents can, in some of his work, but Congress has already pretty much shot its wad.  They cut taxes, and beyond that, these idiots can't really get their acts together to do much of anything, so... anything else is to be ignored.

Beyond that, presidential addresses to Congress are noteworthy only if we get moments like Rep. Joe Wilson yelling "you lie!" to Obama.  That kind of thing didn't happen, so I hope you just caught up on your reading.

Other stuff did matter yesterday.  Trump's lawyers have finally basically admitted that he'll never consent to speak to Mueller directly under oath.  Why not?  He's a fuckin' liar.  I... hate liars.  I don't know if you've noticed this, but I... really hate liars.  That's sort of where Trump loses me completely.  He's the biggest liar in American history, and fact-checkers literally can't keep up, and I hate people who mis-use the word, "literally."  There's a reason I'm a misanthrope.  Anyway, even if he didn't participate in any of the collusion of which his kids, Flynn, and others are clearly guilty, put him under oath, and his inability to not lie means you've got perjury charges.  So, this kind of thing matters.  Then, you've got the GOP rallying around the release of the "Nunes memo."  Remember that little shit, Devin Nunes, who was supposed to have been recused from all Russia-related matters?  Yeah, you knew that was all a lie, right?  Nunes, as I have written before, is basically Tom Cotton, but with traumatic brain injury.  So, he is wholly devoted to the cause of defending Trump from all charges, truth be damned, but... he's... not smart.  What, precisely, is in the Nunes memo?

Bullshit.  The specific putrescence of bullshit?  It doesn't matter.  As I have been telling you all along, the GOP will defend Trump no matter what.  The Nunes memo will be the GOP's official position that the FBI is a commie deep state conspiracy, instituted by that quasi-Stalinist, J. Edgar Hoover, for the sole purpose of destroying America just to get at Donald Trump, around whom the entire known and unknown universe revolves.  Also, death panels, or some such shit.

None of the congressional Republican caucus will actually care about the contents of the Nunes memo.  It will exist as a concept more than a set of words.  The "Nunes memo" will be a phrase invoked to prove, with no need for additional discussion, that the FBI is a communist plot.

I have covered this before.  The idea of the FBI as a left-wing organization is batshit fucking crazy beyond the telling of it.

So there will be no real telling of it.  The phrase, "Nunes memo" will be more important than its contents.  That's the point.  Yup, it's comin'.  And nobody in the House or Senate GOP will read it, or care about its contents.  That's not the point.  The point is the need to say "Nunes memo," as a way to pretend that its invocation dispels all claims of professionalism at the FBI.

That's what mattered yesterday, not Trump's speech.  State of the Union speeches never really matter.

You didn't actually watch it, did you?

Tuesday, January 30, 2018

What Andrew McCabe says about Mueller

McCabe is out at the FBI.  He was pushed out.  Why?  Bullshit "deep state" conspiracy theories.  I keep telling you that nothing will happen if Trump fires Mueller.  Is there any pushback to what happened to McCabe?  Was there any real pushback within the GOP when Trump fired Comey?  No.

This is a dry-run.  If Trump thinks that Mueller is too close to him, he'll fire Mueller.  And nobody in the GOP will oppose him.

Nobody has so far.

Tuesday music: If you only listen to American music, you just suck

So, not much of a theme today, but with the SOTU tonight, here's something from one of those shithole countries with better art than Norway-- Mali.  Boubacar Traore.  Title cut from Sa Golo.  He has a new album coming out this year, and that's always a good thing.  With Ali Farka Toure gone, Traore is the remaining giant of Malian guitar.  Well, there's Ali's kid, Vieux, Habib Koite, Djelimady Tounkara (how could I forget him?!) and there's... OK, never mind.  I can make a long list of awesome Malian guitarists.  Norway sucks.  Fuckin' artistic shithole.  Don't come here, Norwegians!  Keep your damned lutefisk and whiney-ass, shitty music to yourselves!  Here's Boubacar Traore.  Can we have him, please?

Monday, January 29, 2018

Lindsey Graham, Trey Gowdy and empty threats on Trump and Mueller

First, my usual advise.  Don't watch Sunday news shows.  I don't.  I read about them afterwards.  We all have better things to do with our time, like picking lint out of our navels.  Eating the lint would be a better use of our time than watching those shows.  Just read about whatever you need to know later.

Some Republicans, like Lindsey Graham and Trey Gowdy, are supposedly taking a hard line on the notion of Trump firing Mueller.

You know what's coming, right?









It's been, what, a few months since I've referenced one of my favorite books?  Thomas Schelling, The Strategy of Conflict.  I guess I'm due.  Key point for today:  threats have a credibility problem when carrying out the threat is costly to the threatener.  Schelling was mainly interested in international conflict, so if I threaten to nuke you for some minor diplomatic incident, knowing that you're going to nuke me back, I've got a credibility problem because carrying out my threat will lead to something bad happening to me.  In order for my threats to be credible, they either have to not hurt me to carry them out, or I have to have demonstrated a willingness to carry them out despite some self-inflicted harm in the act.

And that brings me to pathetic, little twerps like Lindsey Graham and Trey Gowdy.  What happens if Trump fires Mueller?  What would House (Gowdy) or Senate (Graham) Republicans have to do in order to carry out any punishment of Trump?

Either they have to do a real investigation themselves, or just fuckin' impeach him for obstruction of justice.  Does anyone remember the Comey hearings?  Did one, single Republican show any willingness to do anything other than protect Trump?  No.  Why not?

For the same reason that I keep pointing out.  Donald Trump has an electoral bomb strapped to him, with a dead-man trigger, and the entire Republican Party is chained to him.  He goes down, the GOP goes down.  Every time I make this analogy, I am implicitly referencing Schelling.  If Trump fires Mueller, nobody in the GOP will start an investigation, or support impeachment because they won't be willing to trigger that bomb.  They will protect Trump by rallying around whatever excuse Trump uses to fire him, whether it's golf club membership fees, texts between FBI agents, or the chemtrails being generated by lizard people to cover up the mind-control rays that the Roswell aliens used to get Elvis to kill JFK before he faked his own death.  Trump's party won't stop him.  They could hardly bring themselves to criticize him when he talked about klansman and neo-nazis being very fine people, and that would have been costless.

Neither Graham nor Gowdy has any particular credibility either.  Graham was once a Trump opponent, now brought completely to heel.  He used to point out that Trump is a "kook," and worse.  Now, he attacks anyone who questions Trump's fitness for office.  Why?  To avoid the party-shattering kaboom.  Trey Gowdy?  As far as I'm concerned, he ought to change his name to Mr. Benghazi.  That whole "investigation" was nothing more than an attempt to concoct conspiracy theories about Clinton for electoral purposes.  Hillary Clinton is a weasel, but she had nothing to do with that shit.  Does anyone think that guy is going to turn on Trump?

You may not remember Trey Gowdy, but I do.  He was the Devin Nunes of his day-- precisely as unethical, although rather less stupid.  Lindsey Graham?  He's just a worm.

It is worth remembering, though, that this isn't really specific to Trump.  Remember Roy Moore?

Never forget Roy Moore.  The GOP's position on Roy Moore, briefly, was that he should step aside, and not be seated in the Senate.  Then, when Judge Nugent (yeah, look that child-fucker up) decided that he was just going to power through that shit, nearly the entire party decided to just shrug, because hey, it was either the child rapist, or, heaven-forfend, a...  [gulp]  Democrat!  Even that little shit, Richard Shelby said he effectively abstained by casting a write-in vote, and Shelby was an outlier.

Shift to the presidential level, with the Trump electoral bomb, and...  no.  They won't turn on him.  Even in the case of Roy Moore, a child rapist, Shelby made news by just casting a write-in vote.

So, who in the GOP has a credible threat to turn on Trump if he fires Mueller?

Last June, McGahn threatened to quit, and that did it.  Since then, Trump has left things alone.  Notice, though, that Trump's statements have gone in two directions: a) statements about how he is being cleared of collusion charges, and b) statements about "deep state" conspiracies.

The first part?  He really may think, on some basis, that someone might go down, but not him, in which case he has no reason to fire Mueller.  On the second part, that's just laying the groundwork in case he gets the sense that charges are coming.

Will Trump fire Mueller?

I wouldn't even dare to place odds on that.  If Trump thinks that Mueller is close to anything incriminating, then yes.  Everything that he is doing is laying the groundwork for that, and nobody in the GOP would stop him.  If he thinks he can slip through this without firing Mueller, though, that's his preferred course.  That's probably what McGahn told him.

Monday morning blues: If you don't love blues, you hate America

Bukka White, "Promise True and Grand."

Sunday, January 28, 2018

Bitcoin is bullshit: Wrap-up

I've been meaning to wrap this thing up for a while, and today seems like a convenient day.  Here goes.

Bitcoin is bullshit.  What do I mean by this?  The concept is intrinsically stupid.  It is intended to solve a nonexistent problem:  the problem of fiat currency, which isn't a problem.  Fiat currency is good.  Fiat currency is right.  Fiat currency works.  It clarifies, cuts through...   It plagiarizes the essence of...

Anyway, bitcoin-buggery is nothing more than gold-buggery for the technologically inclined, and it is just as silly.

What does a "good" need to be in order to be useful as currency?  It needs to be a stable store of value.  If it is going up in price relative to other currencies, anyone holding it would be stupid to spend it, so it is useless as currency.  If it is going down in price, a merchant is stupid to accept that good as payment, so it is useless as currency.  Why don't merchants take stocks as payment?  Stocks are goods, but they're volatile, so they aren't useful as currency.  You know what else is volatile?  Fuckin' bitcoin.  The difference?  Stock has value.  It is a share of a company, translating to part-ownership of that company's assets.  Bitcoin?  It can only have value as a currency, but its volatility makes it useless as currency.

So it is completely fucking stupid and useless.  Yes, the great paradox of bitcoin is that even when its price is going up, those increases demonstrate the stupidity of bitcoin.

This is an asset bubble being created by people buying bitcoin, not to use it as currency, but in the hope that they can then sell it to some other schmuck at a higher price, hoping to do the same thing to the next schmuck.

Turtles all the way down.

That's a fucking ponzi scheme.  That's how asset bubbles are created.  This is stupid.  This is bullshit.

And bitcoin can never be more than a minor niche currency, even when the price eventually stabilizes somewhere.  Why not?  No government will ever accept tax payments in bitcoin.  If they did, they'd run the risk of a Greece-style crisis.  Governments need to denominate their debt in a currency that they control.  So, they will only accept tax payments in their own currencies.  That means bitcoin is permanently fucked.

What does that do to consumer transactions?  All legal transactions in bitcoin are intrinsically inefficient and always will be.  In order for anyone to conduct transactions in bitcoin, the purchaser, who is paid in their country's home currency, must convert that currency to bitcoin, and then the merchant must convert some of that bitcoin back to their country's currency to pay taxes.  If this is all within one country anyway, that's two currency conversions for no fucking reason.  Everyone is volunteering to pay transaction costs for no reason.  That's intrinsically inefficient.

Who does that?  People who pay transaction costs to make ideological statements (techno-libertarian-types, for example), or people who are trying to hide their transactions because that's the point.  If your goal is either to conduct an illegal transaction (drug deals, for example), or just to avoid taxes, then sure, cryptocurrencies serve a purpose.  But, if you are a rational, law-abiding person, cryptocurrencies aren't just pointless, they are costly and stupid.  You actually lose by using them, just because the government won't take tax payments in them.  Which they never fucking will.

Why not?  Greece.

What happens now?  Volatility continues for a while because people are speculating.  Some make money, and some lose money.  What distinguishes this asset bubble from other asset bubbles, though, is the ideological component.  Bitcoin-buggery is nothing more than the modern manifestation of goldbuggery, and that can keep re-inflating a burst bubble in a way that makes this asset bubble different from others.  There also really is a use for certain segments of the population for a crypto-currency.  Crooks, for example, really like this shit.  International trade is trickier, but pricing the asset is hard.  That can't happen, though, until the stupid, fucking speculators get out of the market.

Ask yourself:  have you ever shopped and found yourself unable to purchase something because all you had were dollars, and not bitcoin?  No.  (Well, unless you were looking for some really shady, illegal shit).  Is that ever going to change?  Not unless the US government collapses or some other major economic calamity occurs.  That's why bitcoin is bullshit.  Links below if you want to read through the extended explanations.  This thing went on longer than I expected, but that was kind of the point.

Part I: The paradox of bitcoin's rise in value
Part II: What you will never be able to do with bitcoin, and why it matters
Part III: Transaction costs and the irrationality of using bitcoin
Part IV: Who uses bitcoin, amid transaction costs?
Part V: Bitcoin, gold and the money supply
Part VI: Bitcoin and international trade
Part VII: On government-controlled currencies
Part VIII: Expressive versus instrumental benefits for using a currency
Part IX: Bitcoin and the collective action problem
Part X: Bitcoin in perspective
Part XI: When will the bitcoin bubble burst?
Part XII: Currency and ideology
Part XIII:  Ideology and asset pricing

Sunday music: If you don't love bluegrass, you hate America

Crooked Still, "Last Fair Deal Gone Down," from Hop High.

Saturday, January 27, 2018

Mueller and the economy

Just a relatively quick observation for today.  Trump continues to shrug off anything related to Mueller and the revelation that he was talked out of firing Mueller last year, just as his party shrugs off the repeated lies that Trump never even considered firing Mueller.  Pretty soon, Trump may actually talk to Mueller.  Under oath.  (Perjury!  Perjury!)  As I wrote yesterday, and as I have been writing from the start, congressional Republicans will never, under any circumstances turn on Trump.  It wouldn't violate our current understandings of the physical laws of the universe.  It would violate immutable mathematical laws for them to turn on Trump.  If he fires Mueller, every one of them will back him.  McGahn threatened to quit.  If Trump thinks that Mueller is closing in on him, that threat will stop holding any weight for him.  And every congressional Republican will cave to Trump's demand for party support.  Every fucking one of them.  Even John McCain, Jeff Flake, Bob Corker and Lindsey Graham.

Part of what is holding Trump's administration together publicly, though, is the economy.  Are you paying attention to that?  GDP?  Last quarter, it was hovering at 2.6%.  Pretty good.  Unemployment is down to 4.1%.  Inflation?  Nothin' wrong there.  Trimmed mean PCE is sitting at 1.67.  The stock market?  That's just... Scarily good.  I do mean "scarily."  The S&P 500 is up to 2872.  Valuations are starting to look out of proportion to me.  What do I mean by that?  The ratio between the price of stocks and the profits that companies are making.

Part of it makes sense.  Corporate tax cuts!  Corporations keep bigger proportions of what comes in the door, so their profit margins go up.  But, the extent to which stocks have gone up in the current bull market run is just... insane.

As a trader, the general advice is to buy when others sell, and sell when others buy.  If that's the case... sell.  Take profit now that prices are up.

Am I telling you to sell?

FUCK no.  Don't be a trader.  Be an investor.  Invest in a diversified portfolio, such as passively managed S&P index funds, and keep your money there.  Don't try to time the market.  That way lies ruin.

Still, this leads to my point for today.  The bull market run can't last.  They never do.  There will be a "correction" (a 10% decline from the high) or a "bear market" (a 20% decline from the high) at some point.  Anyone who tells you that the market has been solved, and now that the Great and Powerful Donald Trump is here, the market will never go down again... um...  no.

The probability of a significant decline at some point in the next three years is very high.

The probability of a decline in GDP growth rates if not an outright recession (two consecutive quarters of negative growth), or an increase in unemployment... also high, particularly since the Fed is on track to raise interest rates.

Right now, Trump has a floor of support because of a very good economy.  The trajectory was set before Trump was inaugurated.  You can see those trends for yourself in the FRED links provided.  The only possible exception?  The stock market, although we've had a secular bull market going since the bottom hit in 2009.  Then again, stocks are booming around the world, so it isn't even clear that the tax cut gets all that much credit for that because other countries, experiencing similar booms, didn't slash corporate taxes.

What happens when we hit a bear market?  What happens when GDP declines, unemployment increases, or something like that?  And if that happens while Mueller releases some bad shit about Trump?  Live by the sword, die by the sword.

Saturday music: If you don't love country, you hate 'mer'ca

Phil Baugh, "Good Times," from Live Wire!

Friday, January 26, 2018

Friday music: If you don't love jazz, you hate America

OK, fine.  I play too much Roland Kirk.  No, wait... that's impossible!  Here's "Slippery, Hippery, Flippery," from Rip, Rig and Panic.

DACA and Mueller

One of the issues I have addressed on several occasions is that, on any given morning, I have a difficult time deciding what to write.  Politics now are too crazy.  We now have formal confirmation, via the New York Times, that Trump tried to fire Mueller last June.  Trump is denying it, but Trump is the most craven, shameless liar in history.  He doesn't deserve a hearing on this.  Am I 100% certain that the Times is correct?  No, but I default to the treating Times stories as true, and I default to taking every word out of Trump's mouth as a lie.  If Trump took a math test, and wrote down that 2+2=5, he'd insist that every mathematician in history was wrong, Trump is the greatest mathematician ever because his uncle was a professor at MIT, and every math book ever is fake news.  If he wrote down that 2+2=4, I'd worry that I've been doing everything wrong for decades.  He's Donald Trump.  Yes, he probably did try to fire Mueller.

Then, we have the DACA craziness.  Two pieces, actually.  First, Senate Democrats have decided that they aren't making a DACA deal a precondition for a government funding deal.  As far as shutdown showdowns go, yes, they caved completely.  They had no hand to play, and once McConnell gave Schumer a face-saving way to back down, Schumer took it.  It's as I have been writing.

But, we also have Trump's proposal, such as it is.  Some form of DACA policy, wall funding, ending chain migration, and some other stuff.  Will it go anywhere?  If you've been reading my comments, you can guess what I think:  not bloody likely.  Why not?  The House.  Specifically, the House Freedom Caucus.  They're going to look at the DACA part of Trump's proposal, and the "path to citizenship," strip those out, insist that Paul Ryan not let anything with a "path to citizenship" get a floor vote, and Trump gets to claim that he tried to be all-bipartisan-'n'-shit without actually having to do anything while the House kills the deal.  Schumer said earlier this week that the Dems weren't interested in wall funding anymore, so... this looks tenuous at best.

So... why am I writing about these two things?  Here's the deal.  Richard Neustadt, Presidential Power.  Presidents don't have a whole hell of a lot of formal legislative power.  Whatever they can do is limited by their professional reputations and their ability to bargain based on their reputations.  You need to be perceived as bargaining in good faith.

Trump looooooves to tell you about what a great deal-maker he is, but...

Do I have to finish that sentence?  Trump doesn't do anything in good faith.  In particular, Democrats have no reason to trust that he is bargaining about immigration in good faith.  And Mueller is connected to this.  Every time a new Trump lie is revealed, it makes it that much more difficult for Democrats to trust that they can sit at a table with Trump and negotiate with him in good faith without worrying that he's about to stab them in the backs like some... Donald Trump-type person.

Trump has been saying from the beginning that he wasn't even considering firing Mueller.  His people have been saying the same thing.  There are three groups of congressional Republicans:  1) those who have been saying that Trump can't fire Mueller without crossing a red line, 2) those who say it isn't an issue because he'd never do it, and 3) those who say he must fire Mueller because... "deep state" conspiracy, chemtrails and lizard people, or some such bullshit.

Group 1... they're about as sincere as Bob Corker and his deficit hawkery.  I called bullshit on that all throughout the tax debate.  I questioned it on the initial Senate floor vote, and... that was a mistake for me.  Corker voted for the tax cut in the end.  He's no deficit hawk.  There are no Republican deficit hawks.  Any Republican who claims to be anything other than a supply-sider is a liar.  Once Bob Dole adopted a flat tax proposal in '96 with Kemp as his running mate, that was it for deficit hawkery in the GOP.

Any Republican who says they won't back Trump if he fires Mueller is a fuckin' liar.  How do I know that?  Not one of them has stood up to him on anything else.  Spineless cowards, all.  Every last one of them.  Corker, Flake and McCain included.  Yes, John McCain too.  They will all back down, no matter what.

Group 2.  Obviously, they're wrong.  Will they admit it?  No.  Democrats have introduced legislation to try to prevent Trump from firing Mueller, and Republicans have blocked it saying that it isn't necessary because they haven't seen signs that Trump would do it.  What now for Group 2?  Denial.  And if pressed on it?  Waffling, running from the camera, panic, ex post facto rationalization, and eventually, submission to their lord and master, Donald Trump.  See comments on Group 1.

Group 3.  Um... uh...  These people... run our country.  Yeah.

How do you bargain with a president, currently under federal investigation, who insists that he would never fire the investigator, but in fact, tried to fire the investigator last summer, but had his top lawyer threaten to quit amid his refusal to carry out that order?

Neustadt.  You can't engage in negotiations if you aren't seen as a trustworthy negotiator, and this is a classic demonstration of why nobody smart enough to avoid enrolling in Trump University trusts Donald J. Fucking Trump.

Of course, it looked for a while like Schumer was actually trying.  Why?  Schumer's a moron.  What happens now?  Like I said, probably nothing, but you can't bargain if the other side can't trust you to negotiate in good faith.

You know what undercuts that?  Being under federal investigation, claiming you'd never fire the investigator, and then having yesterday's news come out.

See?  I connected DACA to the Mueller story!  Why make choices when chocolate and peanut butter go so well together?

Thursday, January 25, 2018

Interpreting "deep state" conspiracy theories

My media diet requires me to read a little bit of what everyone consumes.  Widely, not deeply, though.  At the moment, if you ask me to tell you precisely what Trumpists are getting at when they claim that the FBI is involved in some "deep state" conspiracy to get Trump, I won't be able to give you a particularly detailed explanation of how they concoct this specific delusion.

And there's a reason.  There is a certain bar that has to be cleared before I start reading or listening.  The bar of plausibility.  Suppose someone tells you that I walk into a room and start ranting, at high volume, using words that brought George Carlin to the US Supreme Court.  Does this clear the bar of plausibility?

Um... have you read this blog?  Of course it does!  I am loud and profane, to the degree that one accepts the validity of the concept of profanity as it relates to language in that manner.  I don't, but that's kind of the point.

On the other hand, suppose someone tells you that same story about The Dalai Lama.  Would you believe it?  See what I mean?  Bar of plausibility.

So, the FBI.  I don't spend a lot of time teaching about the bureaucracy.  Mostly, it's boring.  By definition, pretty much.  One of the few lessons I try to impart is the nature of "the principal-agent problem."  This is an important observation in social science that there will often be problems in the implementation of decisions when the decision-maker (the principal) a) has different preferences from the person charged with carrying out the decision (the agent), b) has limited capacity to observe the agent, and c) has few tools with which to punish the agent if the agent "shirks."  This is often the case in the executive branch, in which executive employees have civil service protection, which exist to prevent corruption.  Presidents are partisans, and the employees of certain agencies will not always have preferences that match the ideological preferences of the president.  EPA employees, and Labor Department employees, for example, will generally be at ideological odds with a Republican president.  When I needed an agency to list that would be at odds with a Democratic president, I always used...

The FBI.

No agency is 100% Democratic or 100% Republican, and even people who are partisans can sometimes break from their parties.  Civil service protection is intended to create independence.  However, if there is any agency that one should expect, a priori, to be Republican, it is the FBI.  It really was the example I had been using in class, for years and years, of an agency one should expect to be at odds with Democrats, and aligned with Republicans.

Add to that the fact that Comey intervened in the 2016 election, announcing a re-opened bullshit investigation into Clinton's emails, less than two weeks prior to the election in violation of the DoJ's formal policy, against the advice of the Attorney General and everyone involved, swinging the election to Donald Trump....

Like I said, bar of plausibility.  Is there a deep state conspiracy against Trump at the FBI?

Did Hillary Clinton murder Vince Foster?  No.  That was total fucking bullshit.  How about the IRS going after conservative groups?  Nope.  Absolute fucking lie.  ACORN?  Bullshit.  "Fast and Furious?"  Complete fabrication.  Obama's Kenyan birth?  Lie.  Death panels?  Bull fucking shit.  Shirley Sherrod?  Wow, yeah, nobody learned their lesson before firing her?  I could keep going, but there is so much fucking bullshit...

Fucking PIZZAGATE!  (Hi, Michael Flynn Jr.!)

There is so much fucking bullshit that if someone tells me that the FBI is part of a liberal deep state conspiracy against Trump, the bar of plausibility isn't cleared, and the people spewing it have lost the right to be heard out.

At some point, I will probably have to dig through this bullshit.  At some point, I had to wade through all of the bullshit conspiracy theories about Obama's birth.

Who kept those going?  Oh, yeah.  Donald Fucking Trump.

Remind me why I am supposed to pay attention to this deep state bullshit about how the FBI is a liberal organization?

For the record, I'm not changing my lectures on the principal-agent problem.  Instead, I'll be adding a section explaining that Donald Trump is a paranoid idiot, a narcissist, a pathological liar, and probably the most corrupt president in history.

Because he is.

Wednesday, January 24, 2018

Chuck Schumer and Trump's wall

I will admit to being baffled that Democrats ever offered Trump funding for his "wall."  The proper response was always:  You want your wall?  Get the money from Mexico, like you promised.  Put up or shut up.  The fact that the Democrats were willing to offer funding for it demonstrates two things:  1) they don't know how to exploit weakness, and 2) they were really trying to get a DACA deal.

Both points demonstrate Democratic ineptitude.

If you had to list the central promises of Trump's campaign, I'm not sure which would be the top:  "lock her up," or, making Mexico pay for that wall.

Regarding Clinton, remember that Trump was full of shit on that too.  Right after the election, Trump admitted that he didn't actually care about prosecuting Clinton.  It was just a way to rile people up.  And... Mexico will never pay for the wall.  Trump admitted in the Nieto phone call that he didn't care about that either.  And Mexico will never pay for it.  Trump just has trouble backing down publicly from his stupid shit.  He's a lying idiot.

And that is what Democrats don't know how to exploit.  Don't give in to his bullshit-- shine a light on it!

Then there's the issue that Democrats were trying to get a DACA deal.  Reference time:  John Gilmour, Strategic Disagreement.  It is about when the parties fail to reach a compromise.  First question:  is there a "zone of agreement" between the two parties, meaning, a set of policies that both parties would find acceptable?  Second question:  which party has the public opinion advantage?

As I keep writing, I am very skeptical that there's a deal to be had.  I don't see how House Republicans go along with any DACA deal, and Trump... is just Trump.  There's no "zone of agreement."

Public opinion?  It's on the Democrats' side.  Problem:  this means we should observe a strategy called "pursuit and avoidance."  Basically, Republicans start inching towards the Democrats to try to cut into that public opinion advantage, and Democrats move away to maintain the advantage.

That isn't what was happening.  Democrats were moving towards the GOP in the search of a nonexistent deal.  How popular was the wall?  Factoring in the broken Trump promise... Yeah, this was just stupid.  This was not how it was supposed to go.  But, it shows that Democrats were really pushing for a deal.

Yesterday, then, Schumer rescinded his offer of funding for the wall.  Why?  He's not trying for a deal anymore.  If wall funding wasn't enough to get a DACA deal, nothing is.  Take that away, and a deal won't happen.  So, he's not trying.  This means he doesn't think a deal is possible.  I think he's right.

Where does this leave us in three weeks, when the temporary funding runs out?

I... have no clue.  If there's no DACA deal to be had...  there can't be an indefinite shutdown.  Schumer blinked because McConnell gave him a face-saving way to do it.  Trump doesn't want Schumer to save face, though.  His whole goal is Schumer's humiliation.


1)  Schumer wants a face-saving way to back down.

2)  McConnell wants to give Schumer a face-saving way to back down.

3)  Trump wants to humiliate Schumer.

Schumer and McConnell are on the same side, kind of.  On policy, they disagree, but since they recognize the strategic constraints they both face, kick the children out of the room, and we don't have any more shutdowns.

Then again, Schumer and the Democrats demanded non-germane policy concessions to keep the government open.  Yes, Democratic readers, they are the Ted Cruzes of 2018.  Don't be hypocrites.  Learn to criticize your own.

Or just be misanthropes.

Tuesday, January 23, 2018

The shutdown has paused: who blinked?

For three weeks, the government is re-opened.  Who blinked?

Here's a quick recap of how I have been describing everything.  A DACA deal won't happen.  House conservatives won't let Paul Ryan bring a bill to the floor because anything with a path to citizenship for any illegal immigrant, regardless of how they crossed the border, will be called "amnesty," and for a Republican, being accused of supporting "amnesty" is pretty much the worst accusation that can be made.  The House cannot pass a DACA deal, and everything else about DACA is just bluster.  So, the Democrats have painted themselves into a corner, making a demand that cannot be met, shutting down the government the same way Ted Cruz did in 2013 with a non-germane policy demand that the governing party cannot meet.  And Trump is just... Trump.  Shutdowns end with someone giving the losing side a face-saving way to back down.

As of yesterday morning's post, I didn't see the GOP doing that because Trump was running his "Democrats are murderers" ad.  Later in the day, though, Mitch McConnell demonstrated once again that he is the only Republican in Washington D.C. with a strategic brain in his head.

OK, you know the old joke.  The one that ends:  "We've already established that.  We're just haggling about the price."  It's antiquated, misogynistic, and offensive.  And not even remotely funny.  It is the kind of thing that Donald Trump would find funny.  If you tell the joke for its own sake, you are a piece of shit.  The reason the joke still circulates is by analogy, and crass as the joke is, the analogy is useful.

So here's what happened.  McConnell can't give the Democrats a DACA deal.  Why?  He can't make the House, or Trump do anything.  A DACA deal just isn't in the cards.  But, he needed to offer Schumer a way to try to escape from the corner into which he had painted himself.  That method was to offer a Senate floor vote on a bill.  What does that mean?  Not a whole hell of a lot because Paul Ryan doesn't have to let that bill get a floor vote, much less pass it, and even if it did pass the House, Trump is still Trump.  McConnell can't negotiate on Trump's behalf, and Trump can't hold a consistent thought in his head for two fucking seconds.  Besides that, he hates DACA because a) he's racist, and b) it was Obama's policy.  So, what does Schumer get?  On policy, not much if anything.  He just gets a way to back down from the shutdown.

So, in exchange for... not much, Schumer agrees to three more weeks of funding, during which.... something... might happen on DACA.  And if nothing comes of that?  If Democrats and Republicans are still no closer to a real deal on DACA than they were two days ago?  Will Schumer shut everything down again?  And hold to that shutdown?

Well, he just backed down after a couple of days in exchange for nothing.  McConnell established what kind of Senator Schumer is.  Then again, Schumer didn't have much of a hand to play from the start, as I have been writing.  The only thing that separates his position from Ted Cruz in 2013 is that his public foil is Trump.  So, where does this go?  Probably nowhere.  I can't see the House passing a real DACA deal, and we now know that Schumer caves.  If McConnell says to Schumer, "look, I did what I could, but the House is another chamber.  You want DACA?  Win some elections.  Wasn't that what you were saying back in 2013?"

If Schumer had the will to see a shutdown through, why not do it now?  Because I don't think he has the will.  That's the point.

Basically, it does look to me like the Democrats caved.  The counterargument you may see is that the Democrats got CHIP funding (the Children's Health Insurance Program).  Have you noticed that I haven't even mentioned that?  Why?  Because that was something I figured would get resolved anyway.  This was a popular program.  Ending funding for a popular program would have made the Republican position look very bad.  So, the GOP took that off the table.  That was bargaining leverage for the Democrats because it made the Republicans look bad.  The Democrats have nothing left.

Kicking out the beneficiaries of DACA is not popular, but it is very low salience, and shutting down the government over this... I am very skeptical that Democrats can win this.  I think Schumer is too.  That's probably why he just caved.  McConnell did what Trump is too stupid to do.  He looked for a way to give Democrats a face-saving way to cave.

In three weeks, though, the Democrats have to decide how fully to cave.

Tuesday music: If you only listen to American music, you just suck

As we debate who is and isn't American, um... Puerto Rico.  Remember them?  Yeah.  US citizens, for as much as people forget.  Here's Miguel Zenon, with the title cut from last year's Tipico.

Monday, January 22, 2018

How the shutdown ends

Up through last Friday, the government was operating, to the degree that the government operates.  It was funded.  That means shutdowns end.  This one will end too.  How?

Someone caves.  Setting yourself up for victory in any negotiation traditionally involves giving your opponent a way to cave.  Right now, we aren't at that stage.  We're still at the recriminations stage.  What does victory look like, though?

In any normal shutdown showdown, what is at stake is policy.  For Senate Democrats and Senate Republicans, policy really is what is at stake.  They fundamentally disagree about policy.  Trump, though, is different.  What we must always remember about Trump is that he doesn't know anything about policy, and doesn't care about policy.  For all his bluster about the wall, remember his phone call with Nieto.

Donald Trump does not give a flying fuck about the wall.  He cares about appearances.

He released an ad accusing the Democrats of being complicit in murders committed by illegal immigrants.  Why?  Because he's Donald Trump, but more generally, this is about how Trump approaches "bargaining."  Since Trump neither knows nor cares about policy-- he doesn't even care about the wall!-- his goals are different.  He cares about dominance displays.  The ad is about displaying dominance.  He doesn't just want Democrats to cave-- he wants it to be as painful and humiliating as possible when they do.  Victory, for Trump, is defined as Democrats being humiliated.  It cannot be defined as anything else because he doesn't know anything about policy.

Remember:  He admitted to Nieto that he doesn't give a shit about the wall.  This isn't about policy.  This is about dominance displays.

What does this mean?  It means Trump can't back down.  I covered this back in the summer of 2016 in the "Political science & craziness" series.  It means he can't cut a deal either because the whole point is that if Democrats are satisfied, he can't be satisfied.  And not in a cool, blues kind of way.  If I define my victory by your loss, then we're never going to agree.

This really does put the Democrats at a disadvantage.  It is much easier to see how they cave than to see how Trump caves.  Then again, one can also see a rift forming between Trump and the Senate GOP because the Senate GOP does not define its victory by Schumer's humiliation.  There is a contingent that actually does care about policy, and actually does look at polls without just writing them off as "fake news."

Every shutdown ends with someone caving.  I really have a hard time seeing how a DACA deal happens, though, given the dynamics within the GOP.  House conservatives will rip Paul Ryan to shreds if he lets a DACA deal get to the floor, and Trump hates DACA.  Not because he understands policy-- he's just a racist, and knows it was Obama's policy.  As we learned from the Nieto phone call, he doesn't even really care about the wall.  All he cares about is humiliating the Democrats.  So... how does a deal happen?  I don't see it.  The only way Democrats "win" this is if Senate Republicans get so spooked that they turn on Trump and the House.

Could that happen?  Sure.  We have seen dramatic splits between the House and Senate GOP before, including during the 2013 shutdown!  It is possible that the polls go so strongly against the GOP that  Mitch McConnell cuts a deal with Chuck Schumer, and then threatens to release incriminating evidence against anyone who stops that deal from going through.

Keep in mind:  I fuckin' hate Trump, and I have a history of ripping McConnell to shreds, but as you'll notice, I've been kind of blaming the Democrats here.  The fact is that Senate Democrats are insisting on non-germane policy concessions for the continued operation of government.  I don't see how this is different from what Ted Cruz pulled in 2013.  If I'm going to criticize him without being a hypocrite, I have to apply the same rule to Schumer.  The only way to do otherwise is to judge them by their policy goals, and I'm not going to do that.  I really can make a case that the Democrats are the hostage-takers here, and I'm not naturally sympathetic to Trump.  This could end badly for the Democrats.

Every shutdown ends with someone caving, though.  I think the Democrats may have painted themselves into a corner.  Trump can't cave.  He is pathologically incapable of doing anything other than doubling down, no matter how weak his position is, and all he really cares about doing is humiliating Democrats.  Suppose Democrats do win the public relations battle.  Trump is kind of a public relations disaster...  What happens if the party losing the public relations battle doesn't cave because their president thinks the polls are "fake news?"

Well, congressional Republicans could cave for him and override a veto, or the Senate could go nuclear, like Trump wants, but that later possibility requires keeping both Collins and Murkowski on board, since the GOP only has 51 seats in the Senate.

This is nuts.

Maybe it's time to put this one back into circulation...

Monday morning blues: If you don't love blues, you hate America

Eden Brent, "Close the Door," from Mississippi Number One.

Sunday, January 21, 2018

Why shutdowns don't happen during unified government

I have made a series of comments that this is the first real shutdown fight to take place during unified government, and I have sort of treated it as a given that we shouldn't see shutdowns during unified government, but... why not?


1)  The party with nominal control of the House, Senate and White House takes the blame for a shutdown.

2)  The party with nominal control doesn't have a filibuster-proof Senate majority.

It follows that we should see shutdowns during "unified" government because the minority party in the Senate should force shutdowns, and blame the nominal majority.  It wouldn't be fair.  It is kind of a "stop hitting yourself" thing, but this is politics.  Fuck fairness.  And yet, this hasn't happened before.  Should we be surprised?

Well, when would we have seen this?  When was the last time one party controlled everything?  2009-10.  Democrats had a brief stint of unified control.  Before that, 2001-6, with a brief timeout in the Senate.  I'll get to that.  Before that, 1993-4.  Before that... Carter.  Let's get to each of these, in reverse chronological order.

In 2009-10, the Democrats had not only unified control, they had a filibuster-proof majority in the Senate for a time.  They started with 58 seats in the Senate, but that was while there was a delay in resolving the Coleman-Franken contest.  Groper-Franken didn't get seated for a while.  That brought the Dems up to 59.  Then, Arlen Specter switched parties, bringing them to 60.  Then, Ted Kennedy died, and Scott Brown won a special election to replace him, bringing them back down to 59.  Functionally, for any important period, though, the Democrats had either 59 or 60 seats, and it would have been either mathematically impossible, or just insanely hard for Republicans to force a shutdown.  They would have needed the likes of Olympia Snowe, Susan Collins, and Scott Brown to go along with it, and that just wasn't happening, even when it was a slim possibility.  The numbers weren't on their side.  A shutdown in the 2009-10 period of unified government wasn't numerically in the cards.

Before that, 2001-6.  Remember I mentioned weirdness?  The 2000 election created a tie in the Senate, so Cheney gave the Senate to the GOP with his tie-breaking vote, but Senator Jim Jeffords (R-VT) got pissed off when the party threatened dairy subsidies and such, so he left the party, became an independent, and voted to give control of the chamber to the Democrats, so there was a period of unified government, and a period of divided government.  The GOP got full control back in 2002.  We really should focus more on the 2003-6 period, then.  Why no shutdowns then?  Well, you start off with Dubya riding high in the polls in the post-9/11 rally-round-the-flag effect, and the initial positivity of the Iraq War, which started out popular.  Don't shut shit down amid that.  That brings us to the 2005-6 period.  After the 2004 election, the Senate wound up 55-45 Republican (OK, 55-44, with an "Independent" voting with the Democrats...).  That would have been enough to shut down the government by filibuster...

A couple of points, though.  First, that's a bigger majority than the Republican Party has now.  Second, there was another BIG issue in the 2004 Senate elections... judicial filibusters.  This led to threats of going nuclear, which led to the Democrats backing down on their filibusters.  Third, the Democrats may have been thinking about the 1995-6 shutdowns, which the Republicans "lost"...

Before that, 1993-4.  Very different time.  The Republicans at the time weren't the party that they are now.  If you are looking for a moment in time that turned the Republican Party into the kind of institution that could elect Donald Trump, I'd go with the 1994 election.  Why?  That was the election that brought Newt Gingrich to power.  Gingrich was the leader of the bomb-throwers.  Prior to 1994, the GOP hadn't had the majority in the House for 40 years, and a lot of Republicans just kind of accepted that.  They figured they should just take whatever deals they could get.  Gingrich didn't believe that.  He thought that the Republican Party should be as conflictual and destructive as possible in order to win a majority.  He had no fucking clue what to do with a majority because contrary to his self-styled image as an intellectual giant, he's a moron, but prior to 1994, he was the primary force opposed to Republicans like Bob Michel, the then-House Minority Leader.  The source of the shut-it-down mentality among the GOP is Newt Gingrich, and it didn't become dominant until the 1994 election, which brought him to power.  Asking why the GOP didn't shut shit down before Gingrich came to power misses the point entirely.

Yes, I really am saying that if you want to blame one person for the political dysfunction in this country, there's a strong case for Newton Leroy Gingrich.

Anyway, before that... you're back to Carter.  We still had Dixiecrats and moderate northeastern Republicans back then.

Really, then, if we are asking why we haven't seen shutdowns during unified government before, we are only asking about that one, weird period during George W. Bush's Presidency.  We can probably ignore the 2003-4 period because of the post-9/11 and Iraq War rally effects, and just look at 2005-6.  That's it.  Two years, and one party.  And even then, the Democrats had less of a margin.  They had 45 seats rather than 49.

Why haven't we seen shutdowns before during unified government?

You know, thinking through the history, that's kind of a bullshit question.

Sunday music: If you don't love bluegrass, you hate America

Phillips, Grier & Flinner, "Paint It Shut," from their self-titled debut.

Saturday, January 20, 2018

Shutdown! What now?

So... this is happening.  Through yesterday morning, the prediction markets were expecting a deal to avoid a shutdown, but... nope.  Shutdown.

For the record, this will be the first real shutdown showdown during unified government.  Let's keep in mind, though, that the Republican majority in the Senate is a 51 seat majority, so if the Democrats filibuster and the Republicans don't use reconciliation rules (which they have prioritized for other policies), it is specious to claim that the Republicans have a lock on power.

This puts Republicans in an odd position.  It can look like they should be able to get whatever they want, but operationally, they can't.  The question is how much Senate Democrats can extract on the basis of the fact that blame will default to the party with nominal majorities in both chambers of Congress and the White House, even though that nominal majority in the Senate isn't a working majority because it isn't filibuster-proof.

We... don't know.  There is no historical record of this.  I'm a political scientist, and science is about finding patterns in past data, whether observational or experimental, and fuck you, observational data are data.  Astrophysicists are scientists, even though their data about stars, galaxies, black holes and shit are observational rather than experimental.  Just because they aren't experimentally creating black holes doesn't mean they aren't scientists.  So, fuck you, historical observational data are the basis of science too.

OK, sorry.  Throat-clearing.

Anyway, we don't know what happens when a party with the White House, the House, and a nominal majority in the Senate winds up with a shutdown because it hasn't happened before.  The easiest thing to do is to blame that party.  Then again, as I wrote yesterday, if the minority party in the Senate is making non-germane policy demands for continued operation of the government, we do have historical observational data, and that party tends to lose.  On that basis, the Democrats should lose.  Then again, the party led by the bigger douchebag tends to lose.  On that basis...  do I have to type it?

At this point, I'll remind everyone of a couple of my favorite electoral anecdotes, not directly related to shutdowns.  Harry Reid, and Claire McCaskill.

Back in 2010, one of the most endangered Democratic incumbents in a bad year for Democrats was then-Majority Leader Harry Reid (D-NV).  He was supposed to be toast.  Then, he had the good fortune to find himself running against Sharron Angle as the Republican nominee.  Sharron Angle is... to call her "batshit crazy" is an insult to the valuable natural resource that is bat guano.  Once upon a time, it had important military applications!  Anyway, Angle made herself famous by saying that if Republicans lost elections, they should turn to "second amendment remedies."

"Second amendment remedies."




So, Harry Reid was really unpopular, but apparently, not that unpopular.  He beat Sharron Angle.  Stick a microphone in the face of someone like Sharron Angle, and she will self-destruct.

Sen. Claire McCaskill (D-MO) learned that lesson.  When she was supposed to be her own special kind of toast, she decided to pick her own opponent.  In 2012, if she had the wrong opponent (meaning, an opponent capable of not drooling for 15 seconds straight), she was going to lose.  So, she looked at the field of Republicans running for the nomination to challenge her, and decided she wanted Rep. Todd Akin to be her opponent.  Why?  Mouth-breathers tend to drool on camera.

McCaskill ran ads against Akin in the primary telling Republican primary voters not to vote for Akin because he's too conservative!  Get it?  She fucked with Republican primary voters!  And it worked, because they're stupid and gullible!  (Hi, Donald!)  They voted for Akin.  Roughly 3 seconds later, somebody stuck a microphone in Akin's face, and he said that we shouldn't worry about whether or not abortion should be legal in cases of rape because in cases of "legitimate rape," women's bodies prevent the pregnancy.  So, you know, any time women who are pregnant say they were raped, they're just lying sluts!

Here is a link to the current official Senate page for the occupant of that Senate seat.  Note that it belongs to Claire McCaskill, not Todd "legitimate rape" Akin.

Lesson?  Stick a microphone in front of the wrong person's face, and you can sometimes win an un-winnable fight.

Then again... Donald Trump is President.  He has said damn-near the same thing as Sharron Angle.  His phrase was "second amendment people" rather than "second amendment remedies," but... same fuckin' thing.  He's as stupid as Christine O'Donnell, he has committed multiple sexual assaults, bragged about it...  I could go on, but the point is he's still the President.  He's an incredibly unpopular President, but he is the President.  So... what happens?

Trump will say and do stupid things.  Why?  He's Trump.  As I keep writing, the goal of a shutdown is to make the other side look like unreasonable assholes, and Trump goes out of his way to look like an unreasonable shitasshole.

Then again, what if Trump just refuses to back down no matter what?  Normally the "losing" side recognizes that the poll numbers are running against them, and they back down.  Trump is already spectacularly unpopular.  Ask him about that, though, and he will deny and tell you about his HISTORIC LANDSLIDE ELECTORAL COLLEGE VICTORY THAT IS THE GREATEST IN THE HISTORY OF THE UNIVERSE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!  Does he believe that he is popular now?  Does he believe that the polls are all "fake news?"  If the numbers run against him, will he believe them?  Will he tell himself that he is really "winning" because Trump always wins?  Will he refuse to back down because he can't bring himself to do that?

What happens if the side that loses the public relations battle refuses to concede?

Prior to election day, Trump was asked if he would accept the results of the election, back when it looked like Clinton had a lock.  His answer was that he would accept the results, "if I win."

What happens if Democrats win the public relations battle and Trump just digs in his heels anyway?

So much insanity here.  What happens now?  I don't know.  Like I keep saying, we are in uncharted waters, with a President who can't navigate his way around a bathtub with his rubber ducky.

Saturday music: If you don't love country, you hate 'mer'ca

I've used this one before, but here are The Mother Truckers with "Broke, and not Broken" from the album of the same name.  Really, I'm going with and here.

Friday, January 19, 2018

Friday music: If you don't love jazz, you hate America

Not pure jazz, but here's Trombone Shorty, "On Your Way Down," from Backatown.

Shutdown threats and non-germane policy demands

As I wrote the other day, government shutdown showdowns are blame games.  Whichever side takes the public relations hit has to back down.  Historically, the GOP doesn't have a good record with this.  Both Bill Clinton and Barack Obama "won" their shutdown fights in 1995/6 and 2013.  Clinton won, essentially, because Gingrich was demanding cuts to Medicare as part of the budget in 1995, and that was unpopular.  Clinton just had the more popular position in terms of public policy.  The 2013 shutdown fight was more complicated, and was based around the general negotiating tactic that the Republican Party adopted after the 2010 election.

In 2010, the Republican Party won control of the House of Representatives, but not the Senate (and obviously, not the White House).  They decided that their method of winning policy fights would be to take hostages.  Mitch McConnell even admitted as much, referring to the debt ceiling as, "a hostage that's worth ransoming."  This was nuts.  The Treasury needed the authority to issue bonds in order to cover the spending that Congress had already ordered, and without the authority to do so, we risked worldwide financial calamity.  Republicans were demanding policy concessions in order to not tank the economy of every country on the planet.  At least both things related to the spending, though...  Obama caved in 2011 and gave the GOP the 2011 Budget Control Act, but eventually he wised up on the debt ceiling and stopped paying ransom.

In 2013, though, Senate pied piper Ted Cruz led a bunch of House rats (the Freedom Caucus, mostly) to their demise.  He told them that they should demand a government shutdown in exchange for a delay in implementation of Obamacare, or possibly defunding, or possibly, something, 'cuz... OBAMACARE!!!!  Yeah, that didn't work out so well.  The GOP had to cave.  Boehner and McConnell knew that would be the result.  They always hated Ted Cruz.  The point, for Cruz, was always that Boehner and McConnell would cave, and that Cruz would be able to call them cuckservatives for doing so.  He really is a shitbag.  This is kind of the critical story, though, because the 2013 shutdown failed spectacularly.  The GOP was demanding completely unrelated concessions in exchange for the continued operation of government.  It made them look like assholes.  The way you win a shutdown is by making the other side look like assholes.  That's hard to do when Ted Cruz is leading your side's charge...  That's also hard to do when your demand is unrelated to the primary issue at hand-- the continued operation of government.

So, here we are.  The House passed a continuing resolution.  Why a continuing resolution?  Because actual appropriations bills are soooo 20th century!  Whether or not we get a shutdown now depends on the Senate, and specifically, Senate Democrats.  PredictIt right now puts the odds at just below a coin toss.  The problem is that right now, their demand is DACA, and DACA is dead.  More than that, it is not germane to the shutdown itself.

If the Senate Democrats shut down the government over DACA, they are pulling a Ted Cruz.  Will they?  Odds right now are slightly against it, but at this point, things are uncertain.  If they do go for a shutdown, what happens?  Part of Ted Cruz's problem was that he is Ted Cruz.  It is hard to look like the bad guy when your adversary is Ted Cruz.

But you know who managed that task?  Trump.  By calling Cruz's wife ugly and accusing his father of participating in the Kennedy assassination.  Of course, Ted Cruz managed to undercut any sympathy anyone might have for him by allowing himself to be brought to heel, but this sort of makes an important point about the dynamic here and the underlying question.

Yes, if the Senate Democrats shut down the government over DACA, they are doing what Republicans used to do.  Same fuckin' thing.  Hostage-taking.  The thing that puts them in a somewhat better position is that their adversary is... Donald Trump.

Remember, though, that in 1995, when Newt Gingrich shut down the government, Bill Clinton was considered politically inept.  His first two years consisted of nothing but bumbling.  A lot of people look back on Clinton as a political operator of rare gift, but in 1995, that wasn't what people thought of him.

Will Trump show some heretofore unseen stable-genius-ness?  Ummm... not likely.  That isn't what the Montreal Cognitive Assessment assessed.  However, don't assume you know how this plays out.  If the Senate Democrats shut down the government here, they are the Ted Cruz of this situation, regardless of what you think of the policies they are pursuing, and Gingrich wrote off Clinton's ability to beat him.

Right now, I have no idea how this plays out.

Thursday, January 18, 2018

Bitcoin is bullshit, Part XIII: Ideology and asset pricing

Screw it.  We have no idea what is happening with the potential shutdown, and bitcoin just had another massive price plunge, so I'm doing another bitcoin rant.

When I left off with Part XII, I commented on the relationship between currency preferences and ideology, arguing that bitcoin-bugs are basically just goldbugs, updated for the computer era, and that we should be aware of the ideological history of currency preferences.  When conducting transactions, though, most consumers just want to conduct transactions smoothly and easily, so while bitcoin-bugs will pay transaction costs for the ideological satisfaction of using their favorite currency, most consumers won't.

As has been clear for a long time, the market fluctuations in the price of bitcoin are driven, not by currency traders converging toward the proper exchange rate between dollars and bitcoin, but by market speculators buying bitcoin at an inflated price hoping to turn around and sell it to a bigger sucker at an even higher price because for a while, that strategy was successful.

You just can't keep that going forever.  That plan, for the housing market, is what crashed the entire world economy back in 2007 and 2008, in case anyone forgot.  Fortunately, not many people actually own bitcoin or get involved in this scheme, so bitcoin can't crash much of anything, but... remember 2007-8.  This is a stupid plan.  House flipping made some people money.  Until the housing market crashed and took the world economy with it.

There came a point at which the speculators and flippers got out of the market.  For a while, anyway.  Real estate is a tempting market for scammers and con artists, and it always will be.  Just sayin'...  Sometimes, when an asset bubble bursts, there are longer term consequences.  Consider the tech bubble from the 1990s and early 2000s.  There were a bunch of companies that pretty much did jack fucking shit.  But, venture capitalists and market speculators threw money at any company that put a ".com" in their names because... well, because.  People were dropping out of college to earn six-figure salaries to build web pages.  Yes, really.

That couldn't last.  The companies that had no business plans just went belly-up and their stock collapsed.  Since then, the tech sector has done quite well, market-wise, and investors haven't been willing to invest in tech companies that didn't have business plans.  I guess they learned that lesson.

Once the speculators got out of the market, assets wound up being priced appropriately.  For a lot of those companies, that meant... well, they couldn't give stock away.

The point is that markets need to kick the damned speculators out in order for assets to be priced appropriately.  The speculators are still driving things in the bitcoin market, but once they're gone, it won't be quite like the tech bubble bursting with bitcoin.  Why?  Ideology.  That, and criminals.

Remember that there are a couple of types of people drawn to bitcoin:  techno-libertarians who are just making an ideological statement, hipsters who just want to be different (fuck you, I'm not that kind of hipster), and crooks-- people who are either moving illegal goods, or just avoiding taxes.  They'll still use cryptocurrencies.  Maybe not bitcoin.  Hell, the hipsters will probably prefer Dogecoin because it's even more ironic.  Still, that's a market.

What you may see now in the analysis is a bunch of people doing conventional stock analysis of whether or not bitcoin's price has hit important "technical" levels that indicate either stabilization or further decline.  That completely misses the point because bitcoin is not an asset backed by anything.  They can't even use the kind of analysis that would usually be done for currencies.  Bitcoin is way too volatile, which as I keep reminding you, makes it useless as currency anyway.  Speculators are freaking out because of rapid price drops.  They should.  Bitcoin could climb again.  Or drop more.  There isn't history for anything quite like bitcoin, and the people involved in this particular market speculation have no clue what they are doing.  Obviously.  So, a lot of them are losing a lot of money, unnecessarily.

At some point, though, they will get sick of losing money on that volatility, and leave the bitcoin market.  When they do, there won't be the highs anymore, because the market highs are driven by speculators.  Where will it settle?  Wherever the hipsters, techno-libertarians and crooks want it to settle.  We have no clue where that is, but if I had to guess based on empirical data, some point around where it was before all of the stupid market speculators jumped on board.  Pick a point representing that, and there's your price.

Remember, though, a currency doesn't work as currency unless it is a stable store of value.  Any movement, up or down, and it is useless as currency to one party in any exchange, and since bitcoin has no value as anything other than currency, its movement itself makes bitcoin a joke.

Bitcoin is bullshit.

I think I have probably covered most of what I want to cover here.  At some point soon, I'll wrap this up, do a summary and compile the links.  Besides, with the shutdown possibility, and politics ramping up again, I don't need to keep stalling.  Perhaps I'll come back to this, but look for a wrap-up post on this soon.

Wednesday, January 17, 2018

The chances of a government shutdown

And heeeere we go again...

While we have been focused on shithole-gate,* there is something of more substantive importance going on, but it is actually related to the whole-shithole/house thing.  Appropriations are about to run out again.  When federal agencies run out of money, they can't pay their employees, who get furloughed, starting with the least-essential employees.  The longer it goes on, the worse it gets.  And we've got through the week to see how another one of these stupid fights shakes out.

No, this isn't normal for unified government.  It is semi-normal for divided government, which tells you something.  Specifically, the Republican Party is a mess.  Paul Ryan can't manage the Freedom Caucus, just as John Boehner couldn't, so the GOP is often dependent on Nancy Pelosi to provide Democratic votes for must-pass legislation.  In the Senate, the GOP isn't using budget reconciliation, so their bills can be filibustered, which means they need to peel off at least nine Democrats, presuming they keep all GOPers in line, but that includes "the Drama Club" (Rand Paul, Ted Cruz, Mike Lee and Ron Johnson).  Frankly, they'll probably have an easier time winning Doug Jones's vote than they would have with Roy Moore, although I suppose they could have offered him a Senate page to seal the deal...

Shutdown fights in divided government have historically been "won" by the president.  Bill Clinton forced Newt Gingrich to cave in 1995 and 1996, and Barack Obama forced John Boehner and Mitch McConnell to cave in 2013, although Boehner and McConnell both knew it would happen, and neither wanted to fight that fight.  After that shutdown, McConnell said, "there is no education in the second kick of the mule.  The first kick was in 1995."  Why did they do it?  They felt their hands were forced by assholes like Ted Cruz, as part of a stunt building towards his presidential campaign.  See what that got him...

Anyway, though, we don't have any data on extended shutdown fights during unified government.  'Cuz they don't fucking happen.  Shutdown fights are blame games.  Whoever takes the blame publicly, by looking more unreasonable, caves.  In 1995, Gingrich looked like an asshole, because he is an asshole, and the position of the GOP came across as more unreasonable, so they had to cave.  That was the main dynamic in 2013 too.  It is all about public perception.  Whichever side takes the public relations hit caves.

So, in unified government, what happens?  First, it is really hard to avoid the perception that the GOP isn't "responsible."  Not impossible, just hard.  After all, if a shutdown happens, which chamber of Congress fails to pass appropriations?  If the problem is that the House can't pass anything, blaming Nancy Pelosi is pretty fucking ludicrous.  When Pelosi was Speaker, she never needed Boehner for must-pass legislation.  If the Freedom Caucus and the Opposable Thumb caucus can't agree, and that's what causes a shutdown, the Democrats don't get blamed.

What about the Senate?  There it gets trickier.  It is highly unlikely that a bipartisan bill passes the House, but fails in the Senate.  But, what if the GOP holds together in the House, and passes something with no Democratic support there, and the bill can't get through a Democratic filibuster in the Senate?  Does a shutdown get blamed on the GOP just 'cuz they're the majority, or on the Democrats for filibustering?  Now we're in public relations territory.

You win this public relations fight by looking reasonable.  The problem for the GOP is that their most visible figure is... Donald Trump, who goes out of his way to be Donald Trump.  The Senate was negotiating DACA, and after first telling the group that he would sign anything, Trump shut down the bipartisan compromise framework, then opened his shithole, and finally told his flunkies to lie on his behalf, and claim that he never said, "shithole."  Personally, I don't give a flying fuck whether it was "shithole" or "shithouse," and neither do any of the Democrats.  Trump's behavior had two effects.  First, it undercut anything like good faith negotiation.  Second, it undercut his party's attempt to look like the reasonable party.

The Democrats' original plan was to demand a DACA deal in exchange for avoiding a shutdown.  As I keep writing, there won't be a DACA deal.  That was never in the cards.  What happens, though, if Democrats force a shutdown over it?

They can, because Republicans aren't using reconciliation in the Senate.  I don't know what happens then.  There is no obvious connection between DACA and the continued operation of government, so it winds up looking a lot like hostage-taking.  The GOP did that a lot during Obama's administration, and it didn't go over well for them.  They lost the 2013 shutdown.  Badly.

Of course, Trump isn't Obama.  Obama was calm and composed.  Not much of a tactical or strategic brain in his head, but he was calm.  Trump is...

Well, let's remember what the Montreal Cognitive Assessment does and does not assess.  If a shutdown happens, he'll open his shithole, and even if his party has a structural advantage, he'll undercut it by being Trump.

That said, Democrats don't have much of a hand to play here, and they don't have a history of playing their hand aggressively.  At PredictIt right now, they're putting the odds of a shutdown at right around 1 in 4.  Sounds about right to me, but hey...  with Trump, who knows?  Shit happens.  In houses and holes, whatever Tom Cotton and David Perdue say...

*While I obviously detest Trump, as a George Carlin fan, I revel in the fact that he forces the political world to confront some of its more stupid linguistic rules.  Some of my "profanity" might be considered gratuitous by small-minded people, but when I write, "shithole,"... nope!  I actually need to write, "shithole!"  Or possibly, "shithouse," but same difference...

Tuesday, January 16, 2018

Jeff Flake and Republican congressional support for Trump

Retiring Senator Jeff Flake (R-AZ) is no fan of Trump.  He has drawn a connection between Trump's constant attacks on the press for their criticism of him and Stalin's opposition to a free press.

Let's get the facts straight here.  Donald Trump does not believe in the concept of a free press.  He wants to prevent the press from criticizing him.  If he could imprison and execute anyone who criticizes him, he would.  I don't think anyone can seriously challenge that, given what we have observed from Trump.  He idolizes Vladimir Putin, Kim Jong Un, Saddam Hussein... And he does so precisely because of their authoritarianism.  This is on record, and not a debatable point.

What he has done, though, is talk endless shit.  His lawyer has filed a suit about Fire and Fury, but that ain't goin' nowhere.  We can ask about the blocking of AT&T's acquisition of Time Warner, but at the end of the day, what Trump has done is talk shit.  And holes.  Shitholes!  Tom Cotton and David Perdue are fuckin' liars, is what I guess I'm trying to say here.  At least Lindsey Graham isn't going along with the lie.

Anyway, there is a great deal of damage that can be done by trash-talking because there are a lot of people stupid enough to believe Trump.  Information is necessary.  The more Trump undercuts people's willingness to accept information, the more democracy is undercut.  Let's throw in that Woodrow Wilson quote here.  Yeah, Wilson was as racist, or maybe even more racist than Trump, but the quote is relevant.

America is the place where you cannot kill your government by killing the men who conduct it.  The only way you can kill government in America is by making the men and women of America forget how to govern, and nobody can do that.

Um... beg to differ, there, Woody.  Donny-boy is doing a pretty good job making the men and women of America forget how to govern.  If people decide that there are no sources of information, then they have no information with which to make decisions.  And we're all fucked.  Yes, you can make the men and women of America forget how to govern.  To borrow a phrase from Upton Sinclair, it can happen here.

It hasn't, but it can.  Without information.

But Trump hasn't done to the press what Stalin did.  This is not the the crushing of democracy.  This is the slow erosion of democracy.


Jeff Flake is an anomaly within the GOP, though, for saying anything at all negative about Trump.  The obvious point is the right one.  He is retiring.

There is scholarly research on the role of sincerity in legislative behavior.  How much of what legislators do is because they are being pressured by electoral or other considerations, and how much is because it is what they really think is right?  Look at retiring legislators.  Once legislators decide to retire, they can do whatever the fuck they want.  So, they will reveal their sincere preferences.  This line of research began with John R. Lott, and has been picked up by several co-authers with Lott, as well as Lawrence Rothenberg & Mitchell Sanders, and a bunch of others, but point being, there's a... lot.  Get it?  Anyway, elections actually kind of suck.  They make legislators... insincere.

The retiring legislators are the ones who have been going after Trump.  Mostly.  Sort-of.  Flake talks a lot of shit about Trump.  Corker, in the past, talked a lot of shit about Trump, but in case you haven't noticed, he backed off of that right around the passage of the tax bill, when he caved on his bullshit anti-deficit rhetoric (which, hey, I called it and should never have questioned my original judgment).  In fact, Flake made noises about not liking deficits too, and he also caved.  What did Flake get?  A "seat at the table" for DACA negotiations.  You know-- the ones that just got flushed down Trump's shithole!  Translation:

Corker and Flake caved because they are cowardly, weak and foolish.  And they occasionally lash out in ways that are empty, feckless and laughable.

Do they like Trump?  No.  Very few congressional Republicans actually like him.  But even in retirement, they are mostly cowed by him.

The analogy that I have regularly made about Trump and the GOP is that Trump has an electoral bomb strapped to him with a dead-man trigger, and the entire Republican Party is chained to him.  If he goes down, he takes the entire party with him, so the party feels compelled to support him no matter what.  If they don't, the party relives the sequence of the 1974 and 1976 elections, in which the party suffered a series of backlashes after the Watergate scandal, resulting in a massive Democratic landslide (a real one...) in Congress, and the election of "history's greatest monster."

The interesting question is how much this matters to retiring legislators like Flake and Corker?  Are they concerned about the party after they go?  Maybe!  Or, maybe there's something else.  The other analogy I have made to the relationship between Trump and his party is "learned helplessness."  Donald Trump is an abuser.  This isn't an analogy.  He brags about sexual assault.  He does so many horrible things that we, as a political culture, tend to move on to the next outrage, and we are currently focused on shitholegate, but really, we shouldn't have moved on from the fact that he brags about getting away with rape.  He is an abuser.  He enjoys bullying people, and when people have been bullied for too long within a relationship, the psychological effect is often to decide that there is nothing they can do about it.  So, they give up.

A lot of congressional Republicans have simply given up and decided that they must accept fealty to Donald Trump.  They simply don't think they can fight him, so they submit to him, the way that abuse victims submit to abusers.  Paul Ryan, Mitch McConnell... they are truly afraid of Donald Trump.  And they should be!  Within the Republican Party, if Trump decided to go to war with any one of them, he would destroy them.

This brings back the concept of the collective action problem, which I have addressed multiple times in this context, but the point is that Trump has brought the GOP to heel.  Note that even Lindsey Graham is being round-about in backing Dick Durbin.  He isn't just flat-out saying, "Durbin is right, Trump said it, and now Trump, Cotton and Perdue are lying."

If he were retiring, he might.  Then again, maybe not.  Even in retirement, Corker and Flake were malleable.

Tuesday music: If you only listen to American music, you just suck

Ok, so I bashed Norwegian music in Friday's music post.  I believe I have one Norwegian musician in my collection:  this guy.  Bjørn Berge.  Why?  Because he doesn't play Norwegian music.  He's a blues musician.  You know, that African-American music style?  Here's "Look On Yonder Wall," from Stringmachine.

Monday, January 15, 2018

Presidential bargaining for dummies, I mean, stable geniuses

Last week, I predicted that nothing would happen on DACA.  However, my original prediction was that the House Freedom Caucus would kill any legislative deal to restore it.  Then... Trump did his Trump thing, and yesterday, he essentially killed any further negotiations by tweeting (of course) that he didn't think there would be a deal because Democrats didn't want one.

Scholarly reference time.  Tim Groseclose and Nolan McCarty, "The Politics of Blame: Bargaining Before an Audience," American Journal of Political Science Vol. 45 No. 1, January 2001, pp. 100-119.  Sorry, I can't give you an ungated link, but if you are on an academic terminal, this will work.

Short version:  Legislative failure can happen if you have an uninformed audience, where the president is trying to appear moderate, but Congress traps the president into a veto, making the president look more extreme by writing a bill, intentionally, that they know the president can't sign.

Within the model, though, Congress doesn't want a policy to pass.  Their goal is to make the president look like an extremist.  And the president doesn't reject deals needlessly.

Enter the Stable Genius!

First, Trump says he'll sign any deal.  Then, he rejects a bipartisan deal framework put together by the Senate's "gang of six."  Why?  'Cuz...  Was that deal veto-bait?  No.  Would the deal have passed the House?  No.  The Freedom Caucus would have killed it there.  What did he have to gain by rejecting it, then?  ...

Trump currently wants to blame Democrats for this falling apart, which... 

That's not how this works.  DACA was a Democratic policy, enacted through executive action by Obama.  Republicans challenged it as "executive overreach," going so far as to call it unconstitutional.  Trump reversed DACA personally, then personally rejected the bipartisan compromise worked out by the Senate's gang of six.  He can't avoid the blame for killing DACA.

The funny thing is, if Trump wanted to do that, he could have!  He could have let the House Freedom Caucus kill the gang of six plan!  But... that's not how our Stable Genius does things.  When Trump is the guy who walks away from negotiations after a compromise is worked out (sort of, anyway), on a policy that he already personally killed, it is hard to shift blame.  What's going on?

Groseclose & McCarty's model is about the drive to appear moderate.  Remember that dust-up during the recorded meeting when Trump said he'd sign anything, even a clean DACA bill?  His party freaked the fuck out.  Trump's goal is not to appear moderate.

Really, this has all been a sham.  DACA never had a chance.  As I said last week, I expected the Freedom Caucus to kill it in the House.  Then, Trump opened his shithole...

Monday morning blues: If you don't love blues, you hate America

Big Joe Williams, "The Death of Dr. Martin Luther King," from Shake Your Boogie.

Sunday, January 14, 2018

Bitcoin is bullshit, Part XII: Currency and ideology

When I left off with Part XI, I noted that the bitcoin bubble is distinct from other kinds of asset bubbles because a significant portion of those who either hold bitcoin or may later buy it do so, not merely out of true belief in its potential to rise in value, but as an ideological statement.  Ideological commitment may drive a belief that bitcoin will either hold its value, or rise in value, but while plenty of people bought worthless tech stocks in the mid-to-late 90s just thinking they could turn around and sell them to bigger suckers later, those speculators had no ideological commitment to the tech stocks they were buying.  That makes regular, old-fashioned market speculators different from bitcoin true believers.  And the existence of bitcoin true believers makes the bitcoin bubble different from the tech bubble.

This is an odd thing.  Do you really care what currency you use?  I... don't.  I have traveled to other countries, and in so doing, used other currencies.  I didn't enjoy paying fees to convert dollars to euros, for example, but the fact of paying for things in euros didn't feel better or worse to me.  I could not possibly have cared less about the units of currency themselves.

Economists have studied money as a concept.  The discipline isn't just about intersections of supply and demand curves, or whatever else you got in that shitty high school class through which you slept.  (Or am I just projecting?)  One of the interesting aspects of techie types is that they sort of want economic policy, and policy more generally, to be made in a technocratic way.  It doesn't work that way.  Too many disputes are unclear, and dependent on value judgments, even within economics.  Consider the Phillips Curve, proposing an inverse relationship between unemployment and inflation.  You can have low unemployment or low inflation, but not both.  Which would you prefer?  Make your choice.  Question the first:  Do you believe the Phillips curve?  Question the second:  If you have to make a choice, which choice do you make?

The data are somewhat unclear on the first question.  We had a period of stagflation in the 1970s, with high unemployment and high inflation, which the Phillips Curve suggested couldn't happen.  To followers of Milton Friedman, this meant the Phillips Curve was bullshit.  To his detractors, it was a weird anomaly that hasn't repeated.  But, even if you throw out that weird period of stagflation, do you prefer low unemployment or low inflation, if you accept that that is the tradeoff?  That's a value judgment.  Technocratic assessments can't answer that question.  This is where the fantasies of techies who want "ideology" out of economics fall by the wayside.  Ideology will always be a part of economics.  Would you rather a few people suffer a lot under high unemployment, or everyone suffer somewhat with high inflation?  That's an ideological question, and your answer will depend on the extend to which you blame the unemployed for their own situations, etc.  Ideology.

The thing is, ideology pops up in weird places where it shouldn't.  Fiat currency.  This is a solved problem.  I have addressed this throughout the series, but this isn't something that is really debatable anymore in economics.  The meaning of 70s stagflation?  Sure.  That's hard.  Fiat currency and monetary policy?  No, that's a good thing.  Period.  Yes, governments can screw it up, but the idea of fiat currency... this is a good thing.  Economists across the ideological spectrum rejected idiotic bullshit like the gold standard long ago.

There is a contingent who will never give up the dream of the gold standard, though.  Those fucking Austrians.  Many bad things throughout history have come from Austria...  Worse things than have come from Africa and Haiti...  Just sayin'...  Anyway, there is a long history of ideological dispute regarding choice of currency, for those who haven't studied history.

Remember William Jennings Bryan?  He was the dipshit anti-scientist in the Scopes trial.  He also gave one of the most famous speeches in any party convention in US history.  "You shall not crucify mankind upon a cross of gold."  He held out his arms like he was being crucified himself, and really hammed it up.  Fucking drama queen.

What has he blathering about?  Gold standard versus silver.  This was seriously a thing in 1896.  Like, a big thing.  A central ideological issue.  People really can, and have, attached ideological principles to their currency preferences.

Then, we get to the depression, WWII, and the process of the world realizing how totally fucking stupid the gold standard was, and the value of fiat currency.  This really was technocracy winning.  There was simply no way for economic problems on the scale with which we were dealing to be handled with a strict gold standard.  Fiat currency gave government the financial tools to address the depression, and fund WWII.  By that point, you get everyone from John Maynard Keynes to Milton Friedman acknowledging that the gold standard is the dumbest fucking thing ever.

Except for those idiotic, fucking Austrians.  Like I said, the extent of horribleness that has come from Austria cannot be overstated.  If I had my choice, in history, between what has come from Africa and what has come from Austria... hint, hint, hint...   Come on, people, read some fucking history.  Some of my references are obscure and coded, but this one is not that obscure, is it?

And yet, there are still a bunch of people who are ideologically attached to gold.  If you follow business news, what you will read is the notion that gold is a "hedge against inflation."  What?!  OK, translation.  That means that if the value of the dollar goes down, the price of gold goes up such that gold retains its purchasing power.

Why would that be?



Look, gold is a fucking scam.  Gold has value.  Why?  People want it.  It is used in jewelry, primarily, but also in electronics.  Still, it is scarce, and people want it.  Therefore, it has value.  How much?  Whatever people want to pay.  Does it follow from that that gold retains purchasing power amid inflation?

No.  No it does not.  That's just ideology.  Here's the price of gold, since the "great recession," from Federal Reserve Economic Data.

The price of gold went way, way up as people freaked the fuck out about inflation, which never materialized, and the price of gold has fluctuated a lot.  Remember that "stable store of value" thing I keep mentioning?  Does this look like a stable store of value to you?  No?  That's 'cuz it ain't.  Gold is not a stable store of value.  It isn't a hedge against inflation.  It is a commodity subject to market speculation and ideological bullshit.

And that's why there are ads for paranoid nutjobs to buy gold based on the premise that everything is going to go to shit, and gold will be the real currency because gold is and has always been the true currency.  The idea that gold is a hedge against inflation is predicated on the notion that it maintains purchasing power because it is the true currency.  Bull-fucking-shit.  Just look at that graph!

So, um, what does this have to do with bitcoin?  Well, I've been writing regularly about the similarities between arguments for bitcoin and arguments for gold because they are basically the same thing.  They are driven by the same ideological impulse, that being the impulse to take currency away from the control of government.  If you listen to any bitcoin bug for any significant length of time, this is the centerpiece of what motivates them.  Fiat currency is bad, government control of currency is bad, so bitcoin is the bestest thing evAAAAR!

And really, that's no different from the impulse towards the gold standard.  We don't use the gold standard.  People still buy gold.  Its price just fluctuates.

What about bitcoin, then?  The problem for bitcoin is that it has no actual use.  For anything, really.  Gold is used in jewelry, electronics, and a few other things.  Beyond that, people have been convinced to trade it, 'cuz... um...

... uh...

... 'cuz people are trading it.  There are endpoint uses, though, and it can be exchanged as a unit of currency.  It generally isn't because it is a pain in the fuckin' ass to use as currency, but you can trade it for stuff.  A lot of what it has going for it is goldbuggery, which is a bizarre ideology committed to the notion that gold just has intrinsic value and will always have intrinsic value.

But, as along as someone will pay for it, it has value.  That's how markets work.  If someone will pay for the shit that comes from my cats' litter box, then catshit has value.

Anyone wanna buy some catshit?  I'll give you a great deal.

Bitcoin?  It has no use in and of itself, unlike gold.  You can't use it for jewelry, electronics, or anything else, and as I keep writing, you have big problems trying to use it as currency.  Right now, there aren't many vendors that accept bitcoin, and even if there were, it's stupid currency.  A currency needs to be a stable store of value.  If it is going up in price, I'm stupid to buy stuff in bitcoin because I could get more for the same price later.  If it is going down, you're stupid to sell stuff to me in bitcoin because what you get will be worth less tomorrow.  And even that aside, since the government won't take tax payments in bitcoin, there are transaction costs to conducting transactions in bitcoin anyway, so... bitcoin is worthless as anything other than currency, and fucking stupid as currency.

What does bitcoin have?  It has people ideologically committed to it.  As long as bitcoin has that, people will buy it.  At what price?  I have no clue.  But as long as bitcoin has that, it will circulate.  Not widely, and not as a prominent consumer currency, but as a curiosity because a group of people who care more about an ideological statement than economic efficiency want it.

And therein lies the irony.  The very people who advocate bitcoin-- techno-libertarian types-- tend to be the ones who think that everything has a technocratic solution, and miss the fact that they are pushing against every technocratic economic solution we have found in the last century.

Of course, the actual ideological impulse is not towards bitcoin itself, but the concept of an electronic cryptocurrency.  Hell, for all I know, that joke currency, Dogecoin might overtake bitcoin, but the fact that people actually buy Dogecoin demonstrates exactly how fucking stupid the cryptocurrency craze is.

At the end of the day, most people just want the easiest way to pay for stuff.  That will always be the currency issued by the government in any country with a functioning government.  There is no actual utility that anyone gets by using a cryptocurrency.  Advocates of bitcoin, and other cryptocurrencies, just like it because it makes an ideological statement.  There is a history to attaching ideological value to currencies, but whatever ideological value bitcoin bugs attach to their cryptocurrency, that won't make it become a big thing.  That's not how economic transactions work.  Because bitcoin is bullshit.

Where does that push the price of bitcoin, and how does that affect the cryptocurrency market?  Coming soon...