Words spoken 3½ years before the Great Depression:

"As things are now, we have nothing to look forward to except a continuance of Conservative Governments, not merely until they have made mistakes in the tolerable degree which would have caused a swing of the pendulum in former days, but until their mistakes have mounted up to the height of a disaster." (1926)

You'd think the Heritage guy would know

At The Hill, "Musk draws skepticism with call for $2 trillion in spending cuts" (3 November 2024) by Aris Folley:

Trump campaign national press secretary Karoline Leavitt said the former president’s “pro-growth” tax policies would help “quickly rebuild the greatest economy in history while eliminating taxes on tips, overtime, and Social Security for [hard-working] Americans,”

Richard Stern, head of the Grover M. Hermann Center for the Federal Budget at the Heritage Foundation, the conservative think tank behind the Project 2025 plan, also defended Trump’s 2017 tax law, while arguing that its policies “likely brought in more revenue than a loss.”

Maybe Richard Stern meant "more revenue than less". "Loss" is not quite the opposite of "more" revenue. And he stuck an extra word in there. Sometimes I think people mis-speak like that on purpose, mixing up what they are saying just a little so they have an excuse if somebody challenges them on what they seem to be saying.

I don't really know what idea Stern wanted me to get from what he said. But I think he wanted me to get the idea that Trump's 2017 tax cuts boosted the economy enough to boost tax revenue enough to more than make up for the lower tax rate -- exactly the idea that lies behind the Laffer Curve.

So what the hell, I went to FRED and looked up Federal Receipts. I set the units to "Percent Change from Year Ago" so I could see how much the federal revenue grew each year. Here's what I found:

This Graph at FRED: https://fred.stlouisfed.org/graph/?g=1z1Ao

In the area marked "LOW" the plotted line drops almost to zero (no increase from previous year) in 2016... rises just a little, for a 1.5 percent increase in 2017... back down to zero (no increase) in 2018... a 4 percent increase in 2019... and then a little below zero in 2020, the Covid year.

That's not all Trump's doing, not 2015, not 2016, maybe not 2017, and definitely not 2020. But in 2018 and 2019 federal receipts show very little growth. And there is no recession in that time frame to have caused the low. Hey, voters say the economy was good in 2018-2019,  and the media agreed. Politico (March 21, 2019) for example, said of Trump:

[I]f the election were held today, he’d likely ride to a second term in a huge landslide, according to multiple economic models with strong track records of picking presidential winners and losses.

and

“The economy is just so damn strong right now and by all historic precedent the incumbent should run away with it,” said Donald Luskin, chief investment officer of TrendMacrolytics, a research firm whose model correctly predicted Trump’s 2016 win when most opinion polls did not.

And if the economy was "so damn strong", federal receipts should have been higher than the graph shows. I think it was Trump's tax cut that (a) gave the economy a boost up from the 2016-2017 low, and (b) reduced tax revenues to the lows shown in 2018-2019.

So that's really all I had to say on this, except that Richard Stern must have been making things up. He probably wanted to make Trump look good. But Stern wasn't guessing about federal receipts. He had to know they were low. That's why he said likely brought in more revenue, to cover his ass.

As the FRED graph shows, the Laffer Curve did not bring in more revenue under Trump.

Oh -- and I want to point out that the Heritage Foundation, for tax purposes, is a charity. Somehow, that just doesn't seem right.

Inflation Explanation

https://fred.stlouisfed.org/graph/?g=1Au0q

Okay, Google's AI is smarter than I am

I was going back and forth, changing my post title from "Growth is the solution" to "The solution is growth" and back again. So I figured I'd look it up:

Good answer! It's nuanced, even. Way better than what I expected after it fumbled "public" versus "public sector" the other day.

From: "The Perils of Inflation" at TFTC

Will Durant: "From barbarism to civilization requires a century; from civilization to barbarism needs but a day."

https://www.tftc.io/monetary-inflation-history-rome-modern-lessons/

The Biden Inflation in Two Graphs

1. A Brief Timeline:

Key dates behind the Biden inflation

Friday, March 13, 2020:	313 days before the Biden inauguration
Wednesday, January 20, 2021:	The day of the Biden inauguration
Thursday, March 4, 2021:	43 days after the Biden inauguration
Thursday, March 17, 2022:	421 days after the Biden inauguration

For Jerome Powell's inflation warning of March 4 2021 see the Wall Street Journal Jobs Summit video.

2. Following Milton Friedman:

The Quantity of Money Relative to Output (MRTO) and the CPI

For relevant quotes from Milton Friedman on the Quantity of Money and the Lag see mine of October 12, 2024.

How unusual was the Federal Reserve response to the post-Covid inflation?

This graph at FRED: https://fred.stlouisfed.org/graph/?g=1x6Ir

It was most extremely unusual.

The graph shows the FedFunds rate, the interest rate set by the Fed to manage inflation and economic growth. Usually I just look at the raw data: it is down near zero bla bla bla, it is up near 5 percent yadda yadda yah. This time I'm looking at the "percent change from year ago" in the data -- the same measure people most often use when they talk about the rate of inflation.

The graph goes back to the start-of-data. At no other time was the interest-rate increase anywhere near the extreme reached during the post-Covid inflation -- during, you know, the so-called "Biden inflation". 

The bizarre FedFunds interest rate activity of the post-Covid period was due to 

• the long delay before the Fed began raising the interest rate; and
• the urgency that arose because of that year-long delay.

A less bizarre response would have begun after less delay and could therefore have been more gradual. The less bizarre response would have slowed the increase in prices sooner, and would have caused inflation to top out at a much lower level.

There is only one question that remains, far as I can see: Who was responsible for the delay?