Tag: Trump

Portland, Oregon

Three years ago (June 2022) I accepted an invitation to speak at the Western Economic Association meeting in Portland Oregon because it provided the opportunity to visit with my family. My daughter and her two kids live near Seattle and my son and four of his five kids live in Vancouver Washington across the Columbia River from Portland. My daughter and her kids came down to Portland for the occasion and we have a wonderful dinner together in the city.

Serious crime peaked in Portland that year with 95 homicides.  We were also aware of the unsightly presence of the homeless sleeping on sidewalks. Since then serious crime has rapidly declined, with homicides falling to half that number in 2024. President Donald Trump has repeatedly described Portland as “war ravaged” and a “hotbed of violent protest activity”.  He has directed the Secretary of War, Pete Hegseth, to deploy troops to protect Portland and ICE facilities from groups like Antifa which he refers to as “domestic terrorists”. Antifa, by the way, is not an organization but rather a term to describe those fighting fascism.

“Trump on Saturday said he had authorized the use of “full force” if needed to suppress protests targeting immigration detention centers.  Oregon has responded by suing the Trump administration, arguing that the deployment of the National Guard to Portland is “unlawful”. The lawsuit, filed on Sunday by Oregon Attorney General Dan Rayfield, called the move “provocative and arbitrary”, and said it “threatens to undermine public safety by inciting a public outcry”. https://www.bbc.com/news/articles/cddmn6ge6e2o

Federal Judge Karin J. Immergut, a Trump appointee during his first term, blocked Trump’s activation of 200 state Guard troops, then issued a second ruling stopping the administration’s workaround—sending troops from Texas and California instead.

In a letter from my Senator, Tim Kaine, he stated that “President Trump issued an executive order directing Secretary Hegseth to establish new “specialized units” within the National Guard, explicitly trained and equipped to address “public order issues” and available for rapid nationwide deployment. While the National Guard already maintains reaction forces under the command of state governors, this order blurs the line between military support and domestic law enforcement and raises unresolved questions about chain of command, federal authority, and compliance with the Posse Comitatus Act. By creating a framework that could allow federal authorities to bypass governors and insert Guard units into local jurisdictions, the order heightens concerns that the Trump Administration is seeking to normalize the use of the military in routine public safety functions and expand such deployments beyond Washington, D.C. into other U.S. cities.”

We are surely used to Trump’s many lies, so why have I given so much space to lies about Portland? While addressing the strangely assembled Admirals and Generals at the Marine Corps Base in Quanitico on September 30, Trump suggested that his deployment of the military to American Cities could provide a training ground for our “enemies within.” These uses of our “defense” forces against our own people is unprecedented and totally against American law and practice.

President Trump said Monday that he may invoke the Insurrection Act to deploy federal troops to Portland, calling ongoing protests there a form of “criminal insurrection.” The Insurrection Act permits the federal deployment of troops in extreme cases. Surely the courts will block him.

Week after week Trump has chipped away at our constitutional protections. After each “small” step into autocracy is absorbed, he takes another. He has fired the Inspector Generals, who are meant to provide a guard rail of oversight against government abuses of power, and violated the customary autonomy of the Justice Department by instructing the Attorney General to go after his “enemies,” (not just Comey). What might be next? And where (and how) will it end?

Charlie Kirk, RIP

Charlie Kirk’s assassination was another tragedy. I disagreed with many of the things Kirk said, but respected and admired his patient willingness to dialog with disagreeing members of his audience.  It was a behavior the country would greatly benefit from more of.  But liking or not liking Charlie Kirk should be totally irrelevant to strongly condemning his assassination.

A The Hill headline stated “A top State Department official on Thursday warned “foreigners” in the U.S. against praising the death of Charlie Kirk, the conservative influencer who was shot and killed at an event in Utah on Wednesday.”  “foreigners-warned-Charlie Kirk” I would like to unpack that statement a bit. No one should praise his death. If we are sharing with foreign visitors the behavior we would expect from them and that they should display if they want to get on well, that would be fine. But coming from our current State Department I suspect that the warning is a threat of deportation for anyone who would dare to be so rude, which would violate the fundamental free speech principles that have always been so important to our culture.

President Trump stated that the assassin was from the “radical left.”  As the assassin has not yet been apprehended, we don’t even need to wonder what information the President has that has not yet been shared with us. I very much want to know who the assassin was and what his motivation was. But that information will in no way absolve him of the evilness of his crime (we do know that it was a man/boy from FBI photographs). The President’s baseless claim is not contributing to a better atmosphere in America. It certainly did not reflect Charlie Kirk’s commitment to civil dialog.

Econ 101: Trade deficits

A trade deficit is the difference between what we buy from the rest of the world and what it buys from us. To that extent rather than buying our goods and services, the rest of the world holds our dollars. These dollars are most often held in the form of US securities (Treasury bonds, etc.). Though trade deficits help finance Uncle Sam’s spending that is not financed with tax revenue, and thus reduce the crowding out of domestic investment by government deficit spending, President Trump doesn’t like them. Our trade deficit in 2024 was $918 billion.

Trade deficits can be reduced by reducing our imports (this is what tariffs tend to do) and/or by increasing our exports. We export many things including food and oil. Tourism and foreign students studying in the US generate about 9% of our export revenue. This has dropped sharply this year as the Trump administration has blocked or discouraged foreign students and badly treated other visitors, denying entry to some. It has suspended entry of new foreign students to Harvard and is threatening to revoke existing student visas at Harvard.

Trump has not only reached into the affairs of Harvard (and those of many other “enemies”), he is also demanding that the US dollar surpluses held by our trading partners be invested as dictated by the Trump administration. This was stated explicitly by US Treasury Secretary Bessent in an interview by Larry Kudlow on Fox Business. https://www.youtube.com/watch?v=IgcmRJpE1pc  

It is hard to see much free market here. Gregg Ip nails it in his recent WSJ article “The U.S. Marches Toward State Capitalism With American Characteristics”  https://x.com/greg_ip?lang=en

U.S. – Japanese trade agreement

Free trade of goods and services produced without government subsidies or restrictions would maximize the incomes of all involved. To promote this result, the World Trade Organization has led the effort to reduce or eliminate tariff and other trade restrictions and has authorized the use of tariffs carefully targeted to nullify the distorting effect of government subsidies or other interferences in the competitive market production of goods and services.

This is not how President Trump has used or threatened in his usual bully style to use tariffs. For Trump, tariffs are not established to improve a level playing field for world trade, and not even always to protect inefficient American manufacturers such as the 50% tariff on imported Steel. An outrageous example was his threat to impose a 50% tariff on all Brazilian imports, effective August 1, 2025, if Brazil went forward with the prosecution of his ally, former President Jair Bolsonaro, who is charged with attempting to stage a coup d’état to overturn the results of the 2022 presidential election in Brazil. Incidentally, the U.S. currently has a trade surplus with Brazil. Go figure.

On July 23, “President Donald J. Trump announced a landmark economic agreement with Japan…. [In exchange for a reduction of US tariffs on all Japanese imports from 25% to 15%, it] will invest $550 billion directed by the United States to rebuild and expand core American industries…. The United States will retain 90% of the profits from this investment…. In addition to raising billions in revenue, this new tariff framework, combined with expanded U.S. exports and investment-driven production, will help narrow the trade deficit with Japan and restore greater balance to the overall U.S. trade position.” “Whitehouse fact-sheets/2025/07/”  

As an aside, Trump has also threated to punish any country that stops using U.S. dollars as its reserve and trade vehicle currency. Somehow, he fails to understand that for a country to acquire these dollars (and for Japan to acquire the $550 billion it is to invest in the US) they must have a trade surplus (US trade deficit). Oh well.

“Japanese officials said there was no written agreement with Washington — and no legally binding one would be drawn up — after Trump administration officials claimed Tokyo would back investments in the US from which American taxpayers would reap nine-tenths of the profits.”  https://www.ft.com/content/c1183b13-9135-41f6-9206-7b52af66f0a5

In addition to the fact that Japanese officials are disputing that they have agreed to such a deal, I hope that you are surprised that the American government is proposing to create new state owned companies. The world’s experience with state own companies has not been good. Our private enterprise dominated economy has served us (our standard of living) very well.

If this all seems rather confusing, welcome to Trump land.

The Fed’s policy interest rate

Among the things our protectionist, isolationist President fails to understand correctly is the role of the Federal Reserve’s policy rate. He wants interest rates to be lower and thinks that the Fed can cause that by lowering its policy rate. That rate used to be the overnight money market rate. If the Fed lowered that target it would supply more money (bank deposits at one of the twelve Federal Reserve Banks) to banks and thus the interbank money market for managing bank liquidity by buying government securities from banks. If banks’ liquidity (“reserves”) is increased, their demand to borrow in the interbank money market will be reduced and thus the interest rate prevailing in that market will be reduced. Thus, raising or lowering the Fed’s policy rate (and the consequent change in base –Fed reserve—money) was the instrument by which the Fed controlled the money supply (its own base money and the more relevant boarder bank money—M1, M2, etc.)

If you are into this subject, you will already understand what money is and where it comes from. If you would like a refresher read this: https://wcoats.blog/2024/11/08/econ-101-money/  

The above description of the policy rate was applicable until 2008 when banks held minimal reserves (or excess reserves when there was still a minimum reserve requirement) at the Fed. But in response to the financial crisis in 2008 when the Fed purchased huge quantities of government debt (and mortgage-backed securities), the Fed began to pay banks interest on their now very large deposits at the Fed to keep them from lending them in the market and thus expanding the money supply excessively. So, the relevant Fed policy rate now is the rate it pays on banks’ reserves at the Fed, the so-called Interest on Reserve Balances (IORB).

As with the policy rate in the old regime, the IORB is the instrument by which the Fed now controls the growth in the money supply. When the IORB is reduced below prevailing overnight market rates banks will draw down their Fed deposits to lend at the higher market rate thus increasing money growth.

Interest rates in the market are determined in and by the supply and demand for credit in the market. If the Fed lowers its IORB it will increase the growth rate of dollars. The Fed will do so when it judges that appropriate for achieving its inflation rate target of 2.0 percent. The twelve-month inflation rate in May was 2.4% and rose to 2.7% in June. The Fed decided not to lower the rate further at this time. Doing so could well lead market participants to expect higher inflation in the future, which would raise (not lower) market rates for say 10 year Treasury bills.

Current Fed policy seems appropriate to me. It adheres to an inflation forecast targeting regime that has become popular in recent years in major central banks. But it reacted by raising rates too slowly in response to the surge in inflation in 2021-2 during the Covid pandemic. Inflation reached 9% in mid 2022. A better system is to return control of the money supply to the public that can buy and redeem dollars at a fixed price for a hard anchor (such as a gold standard). I laid this out in the following blog: https://wcoats.blog/2022/06/06/econ-101-the-value-of-money/

Benjamin Netanyahu

The International Criminal Court (ICC) issued an arrest warrant for Netanyahu in November 2024, accusing him of war crimes and crimes against humanity related to Israel’s actions in Gaza, including the alleged use of starvation as a method of warfare and intentionally targeting civilians. 

Netanyahu is now considered a wanted suspect by the ICC, and member states are obligated to arrest him if he enters their jurisdiction. So why is he enjoying dinner with US President Trump? Sadly, the US too often ignores the rules of international relations that we helped establish. In doing so we are diminishing our status in the world community. Lossing friends and becoming more and more isolated is NOT in America’s self-interest.

As of now, Netanyahu has not been tried or found guilty by any international court for war crimes. The legal process would require his arrest, extradition, and a full trial before any conviction could occur. Not only has America failed its obligation to arrest him, we have supported his efforts to eliminate Palestinians (one way or another) from their homeland. America is complicit in these crimes. Our support of Israel’s wars is not compatible with our principles of the rights of each and every person and our generous and well-meaning hearts. Those of us who speak out against these crimes risk punishment by the Trump administration — even the deportation of legal residents who have committed no crimes. If we do not speak out against these horrors, we must accept some blame for them.

Econ 101: Government Budgets

Newspapers are full of articles about the deaths or other losses that will result from proposed budget cuts. Today’s Washington Post, for example, headlined a story on USAID cuts “USAID cuts may cause 14 million more deaths in next five years, study says”  “Washington post /2025/07/01/”

If the government’s spending on X is reduced (aside from any improvement in efficiency) the benefits of that spending will be lost. But our resources are limited. If we spend more on X we have less to spend on Y.  So when we lament the losses from reduced spending on X we should take account of the gain from the increased spending on other things.

To put a bit of flesh on this issue, consider the following: “The administration has cut more than a hundred contracts and grants from the President’s Emergency Plan for AIDS Relief, the HIV and AIDS program credited with saving millions of lives in poor countries. President Donald Trump has shut down the agency that signed off on most PEPFAR spending and fired other staffers who supported it.”  “Rubio-pepfar-aids”

Evaluating whether this cut is “good or bad” is not easy because determining the likely alternative use of the money saved is not easy. If we stick to a fixed government budget total, the alternative use by the government of the money saved might save even more lives (or maybe not). But the saving could also be given to tax payers whose use of that money would reflect their own personal needs and priorities.  

The process used by Elon Musk’s DOGE to arrive at the spending and/or personnel cuts they proposed was not transparent thus is largely unknown to us. But I have serious doubts that it was appropriate. Semafor offers the following advice:

“A lot of US government work is highly inefficient, says the science reformer Stuart Buck. Federally funded scientists say they spend 44% of their research time on bureaucracy, federal procurement is “broken” and often results in the government buying products that don’t work, and “the Paperwork Reduction Act paradoxically results in endless paperwork.” “Many such cases,” says Buck. “We should have an official effort to address these issues… We could even call it a ‘Department of Government Efficiency.’” As you might be aware, there is one: It is “widely viewed as a failure,” but the basic idea is sound. How could we make it good?

“The first step, says Buck, would be taking a long time to deeply understand how each government agency works, so you don’t mistake routine human error or some statistical artifact for fraud. Second, it should focus on high-value reforms, like outdated data systems or software. Third, it should learn from previous attempts to cut red tape — because there have been many, not all of which worked. And importantly, a good DOGE would not mistake things we don’t use for “waste” — like an insurance policy, we hope pandemic preparedness infrastructure and fire departments are never used, but they’re in place in case we need them. The real-world DOGE is a failure, says Buck, because it ignored all of these strictures.”  “Semafor.com/newsletter/06/30/2025/”

I think some, if not many, government programs or activities should be reformed or eliminated. But those the public really want must be paid for by the public paying additional taxes or lending to the government (buying US bonds). U.S. debt is dangerously high (123% of US GDP) and continuing to grow.  So to the extend spending is not reduced, taxes should be raised.   

Ukraine Russian Peace Treaty

I am a monetary, not a foreign policy, expert. But after spending good bits of the last two decades in Bosnia, Afghanistan, Iraq, Kosovo, South Sudan and Israel/WBGS I have some questions:

  1. Why did we expand NATO after the collapse of the Soviet Union?
  2. Why didn’t we discuss Putin’s Dec 2021demands to avoid Russia invading Ukraine? https://wcoats.blog/2022/02/26/ukraine-russia-nato/
  3. When Russia invaded Ukraine on Feb 24, 2022, why didn’t we give Ukraine all the military equipment they wanted?
  4. When Russia and Ukraine were ready to sign a peace agreement negotiated in Turkey in March 2022, why did UK PM Boris Johnson tell Ukraine President Zelenskyy not to sign?
  5. Why do Americans, and especially Congressmen, tolerate President Trump’s threats to invade Panama, Greenland, Mexico and expel all Palestinians from their homes in Gaza and break so many American laws?

DEI—a nuanced assessment

DEI — “diversity, equity and inclusion” programs or policies are efforts to promote fairness and full participation of people who have been historically underrepresented or subjected to discrimination. The normal standard of fairness when employing workers is that they are hired (or admitted to college) on the basis of merit—who best satisfied to the requirements for the job. This is what taxpayers who want the best results from their tax dollars, want as well.

Many universities set aside the admission of the best qualified students to reflect the fact that may blacks who might have greater potential than their past performance test score indicated because of racial discrimination should be given preferential treatment. But these “affirmative action” programs where struct down by the Supreme Courts 2023 ruling in Students for Fair Admissions v. Harvard and its companion case against the University of North Carolina, which effectively ended race-based affirmative action in college admissions.

To make room for more blacks, Harvard had raised the bar and thus discriminated against Asian applicants with higher scores. It is appropriate that the standards of equal treatment and merit should be observed for government jobs and public universities.

But private firms and colleges should be able to hire or admit whoever they want. Both firms and colleges may well want the social benefits from greater diversity. Not only can it make the workplace more interesting but the broadened understanding of different racial and religious groups generates greater social harmony as well.

I don’t know what DEI programs generally did or aimed for and am quite willing to believe that they wasted human resources. However, that is quite different from the desirability of properly educating our children about different races and cultures and the history of slavery and harms of racial discrimination. Along with civics, such instruction belongs in elementary school curriculums. Just as the enlightened treatment of gays, blacks, Muslims and other groups in movies and TV shows has led the way toward better understanding, exposure and education are important for building a better and more accepting society.

The government should not interfere in the choices of private firms and university about the composition of their work forces and student bodies.

US Crypto Reserve

The establishment by the Federal government of a fund to invest in crypto assets is a terrible idea. First the US has no surpluses to invest. It would need to borrow the money to invest. While the fund might be stocked to some extend with confiscated bitcoin and other digital assets “The use of seized cryptocurrencies, however, could run into roadblocks as these assets often go back to the victims of financial crimes”  “The Hill”   Second it is a terrible precedent for the government to support and manipulate the private market for private assets. Third crypto assets yield no benefit to the American economy. They do not represent or fund investments in productive capital in our economy. They are simply a toy for those who like to gamble.

Crypto assets should not be confused with technical improvements in payment technology (improvements in the speed, efficiency, and/or cost of making payments with “real” money). Such improvements are welcomed.

Trump posted to Truth Social that: “A U.S. Crypto Reserve will elevate this critical industry after years of corrupt attacks by the Biden Administration, which is why my Executive Order on Digital Assets directed the Presidential Working Group to move forward on a Crypto Strategic Reserve that includes XRP, SOL, and ADA.” Trump had previously dismissed crypto as a scam. “The Hill–Trump announces US crypto reserve”