He Was Right!

Before the election we heard Donald Trump say it over and over again, “Folks, the election is rigged.”  His victory tour has been silent on the subject until recently when the CIA “in a secret assessment” (I wonder how long they had been hanging on to that) said that Russia was involved in the WikiLeaks email releases of the Democratic National Committee (DNC), possibly to swing the election results in his favor.  While the Trump campaign embraced the FBI’s resumption of reviewing Clinton’s emails only eight days before the election (clearing her once again only two days before), his Tweet response to the CIA’s assertion was to discredit the Agency saying “these are the same people that said Saddam Hussein had weapons of mass destruction.”

Trump’s pre-election rally in Green Bay, Wisconsin on Oct. 17 pretty much summarizes his stump speech about “a rigged election,” repeated like an Anvil Chorus in other speeches:  “Remember, we’re competing in a rigged election. This is a rigged election folks, OK? The media is an extension of the Clinton campaign as WikiLeaks has proven.  And they don’t talk about WikiLeaks, they just keep talking about Trump, Trump, Trump. They want to put nice, sexy headlines up even though nothing has happened, nothing took place, even though it’s a total fabrication. They even want to try rigging the election at the voting booths, and believe me there’s a lot going on.  Do you ever hear these people?  They say ‘there’s nothing going on.’ People who have died 10 years ago are still voting.  Illegal immigrants are voting. I mean, where are the street smarts of some of these politicians?”  Talk about “fabrications.”

In spite of Trump’s claim that he won in a “landslide” just that little bit of tailwind of the FBI’s bringing up the Clinton email affair again right before the election, and WikiLeaks providing the DNC email may have provided enough of a boost for Trump to marginally win these three swing states: WI, MI, and PA.  I’ve done some number crunching on this. Clinton’s national victory margin of 2.6 million votes or nearly 2% more than Trump became a hundred thousand total vote deficit in those three states, less than a percent difference.  Had those states gone to Clinton, she would have won the electoral vote and she would be President.  So much for Trump’s “landslide” victory but the one truth he told was the election was rigged, although not the way he asserted, thanks to Russia, WikiLeaks, and the FBI.

Steel, coal, and low-skilled manufacturing are not coming back in those rust belt states like the 1950’s.  He knows it.  He now reneges on his words unabashedly, even admitting they were only said to get himself elected, such as during his “victory tour” in Grand Rapids when the crowd was jeering “lock her up” “he said: No, it’s ok. Forget it. That plays great before the election. Now, we don’t care, right?”

Or “Buy America, Hire America” just another get-elected slogan, his businesses routinely buying overseas and hiring less expensive foreign labor. As our local December 8 Palm Beach Post headline spelled out “Trump again hires non-U.S. club staff.”  His Mar-a-Lago Club in Palm Beach routinely uses the federal government’s H-2B visa program to hire foreign workers for the season instead of domestic ones.  Nothing makes a difference in his celebrity revered, post-truth world.

A little more than a year ago I wrote It Can’t Happen Here? [Emphasis on the question mark] One would think our democracy is immune to demagoguery because our forefathers created a governmental structure of checks and balances.  Alexander Hamilton even adopted the safeguard of the Electoral College, a buffer of sorts, to ensure our Presidents are “pre-eminent for ability and virtue.”  One could argue that if there was ever a time when the Electors should reconsider an election, this is the one.  But that isn’t going to happen with Trump and his 17,000,000 Twitter followers, possibly locked and loaded.  Electors who vote their conscience do so at their own personal peril.

That is my fear over the next four years, the potential to circumvent those checks and balances, including the traditional press, via social networks and fake news.  As he said on 60 Minutes, “I have such power in terms of numbers with Facebook, Twitter, Instagram etc,…[They] are great form[s] of communication.”  He knows it and we better watch out.

PS  The evening after posting this article I read the New York Times and discovered that Paul Krugman wrote a very similar assessment, making some of the same points (The Tainted Election).  Lest I be accused of plagiarism, I wrote my first draft two days before, letting it sit as I am prone to do with any political entry, and then editing and posting it.  I have long admired Paul Krugman and feel in good company that the facts drew us to similar conclusions!

Krugman Vs. Hussman

John Hussman, the erudite economist who runs his own mutual funds, and Paul Krugman, the Nobel Memorial Prize winner in Economics have a bone to pick over inflation. Essentially, Krugman thinks such an outcome from the current economic turbulence is a non sequitur as the funds being created with all this debt is essentially not being lent out – they are going back into Treasuries. Therefore, he concludes, “when it comes to inflation, the only thing we have to fear is inflation fear itself.”

Hussman has some pointed rejoinders to this view. The lack of money velocity will have to be indefinite for inflation to remain tame. Eventually this debt will have to be addressed via inflation or through a dramatic expansion of economic activity. He expects a doubling of the U.S. price level over the next decade.

Their discussion takes me back me to the 1970s when the fear of inflation led Paul Volcker to raise short-term rates to unheard of levels, with ultimate success but not before the inflationary genie escaped the bottle. Certainly, recent gyrations in the Treasury market as well as the resurgence of commodity prices show this debate is now being waged in the marketplace as well.