A Fake Trade "Deal": The Trump-Starmer U.S.-U.K. Near-Nothingburger, & the Shadow of the Chaos Monkey

A nearly hollow handshake cloaked in media spin…

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What we have here is less an economic accord than a theatrical stunt. It changes very little on the actual ground—some beef here, a tariff off ethanol there. The broader signal it sends is one of instability and caprice. With Trump, exporting to the U.S. becomes a risky gamble. The real cost to the U.S. flows from Trump’s blowing-up of all rational belief and trust in the stability of U.S. trade policy. Looking at Trump the chaos-monkey in broad perspective, American producers suffer a widespread loss in global market access, while British producers’ losses remain mostly confined to the U.S. This asymmetry makes the deal a serious strategic own goal for the United States, diluting its trade reliability while gaining little in return. For Trump, though, the deal serves its purpose: a video-ready spectacle for his base. For Starmer, it’s damage control—harm was done, but less than it could have been.

Robert Armstrong this AM:

Robert Armstrong: Unhedged <[ep.ft.com/permalink...](https://ep.ft.com/permalink/emails/…)>: ‘The US and UK struck the first Trump-era trade deal yesterday. It was underwhelming. In return for more buying of US farm goods and removing a tariff on US ethanol, the UK will be exempted from metal levies, and will enjoy lower tariffs on (a few) cars. Other promises and frameworks were laid out, without any timelines…

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Relative to the pre-Trump normal, the only steps to increase U.S. market access the U.K. has taken has been to pledge to remove its 19% tariff on U.S. ethanol imports, and allow tariff-free imports of hormone-free beef in the amount of 13,000 tons. All else is hot air: pledges to negotiate additional improvements in market access. Those are as close to nothingburgers as anything could be.

Relative to the pre-Trump normal, the U.K. has less access to the U.S. market than it had before.

Dwarfing this micro-“deal” is a far more important shift in the incentives for U.S.-U.K. trade.

  • Everyone in Britain now knows that any exports they make to the United States might be disrupted at any time for no reason other than that Donald Trump is a chaos monkey.

  • Everyone in Britain now knows that exports they make to other countries will not be disturbed.

  • Thus deciding to try to export to the United States carries huge risks, with associated costs.

  • And everyone in the U.S. knows that any exports they make to the U.K. might be disrupted at any time as the U.K. retaliates to tariffs and quotas imposed on its exports for no reason other than that Donald Trump is a chaos monkey.

  • And everyone in the U.S. knows that the same is true of any exports they make to any other country.

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Thus, as a result of Trump, U.S. producers have on net suffered a major loss of market access not just to the U.K. but to every single country in the world. U.K. producers, however, have suffered on net a major loss of market access to the U.S., but their ability to export elsewhere remains the same. U.K. producers have lost a little with respect to their ability to fit into productive niches in the highly productive global division of labor. U.S. producers have lost a lot.

Thus taken as a whole—the process and the outcome—this Starmer-Trump fake trade “deal” is a substantial own goal for the United States. It is also a substantial own goal for Trump, at least if you see Trump as an advocate for U.S. exporters. It is, however a win for Trump considered as a videoclip-seeking attention hound.

Taken as a whole this Starmer-Trump fake trade “deal” is a harm-reduction exercise by Starmer that has been largely successful. Yes, harm remains. But it has been substantially reduced vis-à-vis Trump’s initial threats.

In addition to being a win for Trump as a video clip-seeking attention, the process and the outcome together make up a win for journalists who want to gain reputations for being friendly publicists for Trump. Even Robert Armstrong knuckles under, by making sure that the descriptive adjective “underwhelming” is in neither his headline nor his first sentence.

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Wasn't Wall Street Was Supposed to Have a Veto Over Trump's Policies?

Now they do not dare to complain on the record at all...

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This is not something I had on my Bingo card last October: that if Trump won plutocratic figures like Michael Cembalest of JPMorgan and Larry Fink of BlackRock would performatively display a good definition of how we know that the Trump administration is neofascist:

Antoine Gara, Amelia Pollard, James Fontanella-Khan, & Eric Platt: How Wall Street got Donald Trump wrong <https://www.ft.com/content/e0b28b01-3cdb-4c64-be28-93f51b4a21e6>: ‘Top executives are now particularly careful with their words…. “They’re afraid of him… They don’t want to end up with any legal action against their bank or their family. And they’ve been told by their boards: keep your mouth shut,” says [Anthony] Scaramucci. “By the way, we don’t even have law firms that can defend you because every major law firm just got dunked on by the president.”

Michael Cembalest, the chair of market and investment strategy at JPMorgan, hinted at this chilling effect during a presentation to clients this month. “This is the first time I’ve ever had to do a call where I had to think about the things that I was saying, not just in terms of how they reflect our views on markets and economics…. I had to think about how they might reflect on the firm and some of its colleagues at a time when people are being held accountable for their views and the things that they say in ways that they probably shouldn’t be…”

BlackRock chief executive Larry Fink declined to answer a question last week at an Economic Club of New York event that sought his views on Trump’s use of executive orders to attack law firms, including BlackRock’s go-to legal adviser, Skadden. “Let’s move on,” the head of the world’s largest asset manager said…

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Michael is at least saying that there is a lot you should take away from this presentation that I am not saying. Larry is just not saying.

This is something that none of them foresaw would come from their voting for Trump, again.

How did they get it wrong? As I like to say, they made the mistake of thinking that kleptocrats regard plutocrats as their friends, rather than regarding plutocrats as their prey.

And so now here we are. Who can the Financial Times find to go on the record with respect to how huge a disaster Donald Trump is?

  • “one attendee connected to Trump at the time…”

  • “one Wall street executive says…”

  • “billionaire hedge fund managers like Bill Ackman, Dan Loeb, and Cliff Asness aired their frustrations on X…”

  • “Trump’s former commerce secretary Wilbur Ross told the FT: ‘It’s a fairly unconventional way of measuring tariffs”…’

  • “one person close to him…”

  • “He wants to end the global trading system and weaken the US. He wants to Brexit the United States from the rest of the world,” Anthony Scaramucci… briefly Trump’s White House communications director…. “This is the stupidest economic policy that the United States has ever come up with…”

  • “Given our state of ignorance and all we don’t know, [investing now] is like betting on the outcome of the Super Bowl when you don’t know which teams are playing or who any of their players are,” Howard Marks, the co-founder of Oaktree Capital, says…”

  • “the head of a private investment firm…”

And even those who do criticize in public are eager to reverse it and come back to the fold whenever they can. I will not say that Bill Ackman ever had any dignity, but he lost all chance of every gaining any when he wrote:

Bill Ackman: ‘brilliantly executed”… “Textbook, Art of the Deal”… “The advantage of @realDonaldTrump's strategy is that we now recognize our favored trading partners and identify the problematic ones. This creates an ideal scenario for trade talks over the next three months”… “Thank you on behalf of all Americans…”

And Dan Loeb is eager to grasp at any straw:

Dan Loeb: “Third Point anticipates that the investment landscape for equities will remain advantageous… despite the unconventional methods this Administration employs in communicating and implementing policies…”

Only Cliff Asness is willing to stick to his guns.

Great wealth and associated social power does not give them strength and courage, but rather fear that they might lose something of what they have—even though they have a lot, and Trump does not have the energy to injure more than one or two of them.

This is, I think, a good touchstone.

I confess that it is not until this year that I understood how Friedrich von Hayek had, in his Road to Serfdom, gotten it so completely wrong in believing that only a centrally-planned economy could create complete cynicism with respect to truth, claiming that only in such does:

The word truth itself ceases to have its old meaning… [but] becomes something to be laid down by authority… and which may have to be altered as the exigencies of this organised effort require it. The general intellectual climate which this produces, the spirit of complete cynicism as regards truth which it engenders, the loss of the sense of even the meaning of truth, the disappearance of the spirit of independent inquiry and of the belief in the power of rational conviction, the way in which differences of opinion in every branch of knowledge become political issues… are all things which one must personally experience—no short description can convey their extent…. [Such] contempt for intellectual liberty is not a thing which arises only once the totalitarian system is established, but one which can be found everywhere among intellectuals who have embraced a collectivist faith…

Or, in the case of our current barons of Wall Street, an anti-collectivist faith. If they were at all concerned with one another, they could band together and would not need to be more fearful, would they?

Henry Farrell provides perhaps a glimmer of hope:

Henry Farrell: : ‘The more powerful and unruly the authoritarian becomes, the more readily they can make promises or threats. Equally, the less credible those promises or threats become…. Absolute power implies absolute impunity: if I enjoy such power, I have no incentive to behave trustworthily to anyone… [and] no-one has any incentive to trust me…. As an aspiring authoritarian move[s] closer to unbounded control… [he] need[s] to artfully balance the benefits that my power can bring to my allies with the fear those allies may reasonably have over what happens should that power be turned against them…

But only a glimmer. That requires that the authoritarian be something other than a bundle of hatreds on a constant hair trigger. With such—which Trump is—it is very easy to convince everyone with something to lose that if they keep their head down, somebody else will become the target of the day.

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Models Meeting Structural-Economic Mayhem: Yes, There Is a Great Deal of Analytical Blood—& Error—on the Wall

Inflation is returning. Recession is coming, probably. But how much? How big? How long? The best forecast is to admit that while we can be reasonably confident about directions, we have no good clues as to magnitudes. Honest analysts now have flat posteriors and long tails. It depends, you see, on the strength of feedback loops we do not understand, and that are in any event very different than they were even a decade ago. & when structural change breaks correlations that held in the past, the future will break all our models…

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The smart Torsten Slok of Apollo:

Torsten Slok: After “Liberation” Day <https://www.apolloacademy.com/the-daily-spark/>: ‘Earnings expectations… have been revised down significantly… interest rate differentials no longer drive the dollar… companies are responding to higher tariffs.. [by planning on] passing cost increases through to consumers:

The bottom line is that inflation will be rising significantly over the next six months…

But what is “significantly”. We do not know.


Back up:

Our macroeconomic forecasting models have long been not bad, even OK, at unconditional forecasting. Thus they have served as useful compasses guiding market expectations, and useful background for policy discussions. But these models have succeeded not because they are true, but because the process of estimating them means that the computer has found a way to match historical in-sample correlations. Thus, to the extent that those correlations from the past tend to continue into the future, the models can do their job of giving you a future number that is not far off from what the true future is likely to bring.

This approach serves us very well during periods of relative stability.

However, these models are hopeless when faced with shocks that deviate sharply from historical norms. The COVID-19 plague global health crisis disrupted supply chains, labor markets, and consumer behavior in ways that we had never before seen. Russia’s invasion of Ukraine had far-reaching economic effects simply not found in recent historical precedent. That means that Robert Armstrong had it exactly right when he aptly described the challenges of forecasting as requiring that “any forecast must be made humbly”, for “this is all new”.

It gets worse. Structural changes within the economy render not just traditional models but the practice of forecasting a conditional outcome on the basis of a key relationship extremely hazardous. The labor market, for example, has undergone significant transformations in recent years, with shifts in worker preferences, remote work trends, demographic changes, and the informational ecology of job search profoundly altering the dynamics of employment and vacancies. Larry Summers relied on the Beveridge Curve—the relationship between job vacancies and unemployment—to forecast that the post-plague inflation would not subside without a substantial rise in unemployment, and thus a recession. That forecast rested on bedrock: the Beveridge Curve had, after all, long been reliable, and it definitely had a slope. But Larry was wrong, as the Beveridge Curve crumbled and its slope vanished.

Or look at me. I believed that price-setting behaviors were sufficiently forward-looking to ensure that the inflationary pressures following the post-plague demand surge would be transient: that price-adjustment would be one-and-done. Hence I was very much on Team Transitory as far as post-plague inflation was concerned. But they were not sufficiently forward-looking. It was not one-and-done, but do-do again-and then do yet again. Transitory in the end, but a tide rather than a wave. And then Vladimir Putin decided to remake the Spanish Civil War.

Or look at all of us. We are all perplexed by the resilience of the prices of long-duration assets in the face of rising interest rates. Conventional wisdom suggests that higher rates should dampen the appeal of such assets, yet markets have defied this expectation. The current-thing AI enthusiasm seems to be blinding people to what I see as fundamentals, and leading to a great deal of the shrugging-off of what should be very real concerns that data-center training costs and inference costs will not be followed by profits. Add to that the reality that equilibria are sensitive, as small shocks produce large effects since the largest contributor to a recession is the expectation of such, and it does not take that much irrational exuberance to submerge asset price fundamentals for a while. And our bias toward thinking that asset prices have to return to real reality quickly misleads us.

Thus I do not dare to offer a quantitative forecast right now.

Yes, both higher inflation and unemployment seem very probable indeed over the next year. But the magnitude and duration of such? The distribution of potential outcomes is disturbingly wide, with a significant very unpleasant and very long tail of strongly adverse possible outcomes.

A year ago Andy Haldane had a very nice line: economic forecasting as performance art. That is how I feel.


References:

Donald Trump Is too Old to Be President, Yet Every Day, Live on Camera, We Get the Daily Farce of Pretending This Is in Some Way Normal

We have pretended our way into a constitutional crisis. When your president can't explain the Declaration of Independence, you don’t have a presidency. & the silence of the Republican elite is complicity, not prudence. For we get multiples of this every day. Every. Single. Day. EVERY SINGLE DAY…

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What happens when a president cannot follow a basic question, let alone a policy debate? We are watching it unfold, daily. And yet the machinery of media and politics continues pretending everything is fine. Donald Trump’s understanding of American governance is now as foggy as his syntax. That would be comic if it weren’t also lethal to democracy. This isn’t politics—it’s eldercare with nuclear codes.

Trump, three and a half months into his second term, is not leading. He is muttering vague absurdities—usually about bloodbaths and taking your medicine and all his enemies, yet occasionally about unity and love. And the people whose job it is to invoke the 25th Amendment... pretend not to notice. Instead, they commit, daily, the absurdity of pretending Trump is capable of and is actually exercising the office of President of the United States.

Every single day. Every single day. Every single day, we see new evidence—always humiliating, always alarming—that Donald Trump is not mentally capable of discharging the duties of the presidency. Yet the dominant political and media culture insists on maintaining the fiction that everything is still within the bounds of normal democratic governance.

When Trump, on national television, points to the Declaration of Independence and mutters about it being a “declaration of unity and love and respect,” we are not just witnessing confusion—we are witnessing profound cognitive decline. The Declaration is not about love. It is not about unity. It is not about respect. Jefferson and company had zero respect for King George III Hanover and his ministers. It is about revolt. It is about the severing of political bonds. It is about the violation of inalienable rights by those who control but do not love us.

The idea that Trump sees it as a feel-good sentiment is not an alternative interpretation—it’s a symptom. Yet his party rallies behind him. The press parses his word salad with straight faces, afraid or unwilling to confront the implications.

But let’s be brutally honest: Trump doesn’t know what he’s saying.

And he doesn’t care that he doesn’t know.

Nor does he trust anyone enough to delegate power.

What fills the vacuum is a swarm of advisors, staffers, and opportunists who act in his name without his input—“chaos monkeys” launching random policies and edicts that disrupt lives, markets, alliances.

And the Republican leaders? They watch in silence. John Thune and Mike Johnson have taken the path of least resistance—fearing the wrath of Trump’s base more than the collapse of coherent governance. It is, in effect, a collective political dereliction.

The truth is this: the emperor not only has no clothes—he is asleep at the wheel, mumbling to himself, while the car careens off the road. Every day this is normalized, we move further from democracy and closer to a regime of unaccountable power, steered not by policy, but by delusion and opportunism. The real president is the void at the center. The people who surround him—some loyalists, some grifters, some actual ideologues—wield power in his name. They contradict each other. They contradict reality. The result is a cacophony of dangerous randomness: financial markets react to rumors; foreign governments roll the dice on stability; and domestically, Americans are left without functioning leadership.

Maybe you could argue in his first term that the clownishness was strategic. That was never really true. But now it is totally false.

The clownishness is cognitive.

The president does not have the grade-school understanding of founding documents that we expect of anyone seeking citizenship.

Meanwhile, governance happens in his name—by people not elected, not vetted, and not even properly authorized. The results are predictably catastrophic: impulsive tariffs, foreign policy U-turns, regulatory whiplash, and deliberate cruelty disguised as policy.

This is the very scenario the 25th Amendment exists to address. But nobody invokes it. Because everyone is pretending. 3.5 months into the second Trump administration, and reduced to parsing his word salad for coherence like medieval theologians torturing and tormenting scripture.

Everything is broken.


Yet so many people pretend that this is not happening, for what I can only see as short-run highly-cynical careerist reasons:

John Gruber: Trump Has No Idea What the Declaration of Independence Means <https://daringfireball.net/linked/2025/05/04/trump-declaration>: ‘Trump, showing off to ABC News’s Terry Moran the historical copy of the Declaration of Independence now hanging in the Oval Office:

Trump: “Of course, you have the Declaration of Independence.”

Moran: “What does it mean to you?”

Trump: “Well, it means exactly what it says. It’s a declaration. It’s a declaration of unity and love and respect. And it means a lot. And it’s something very special to our country.”

Watch the clip. A transcript doesn’t do justice to just how clear it is he has no idea what it means. I keep mentioning that Democrats should hammer, every day, the argument that Trump is way too old and now suffering from dementia. It’s just good politics. But I think it’s actually true, too. Mark my words, by the time he gets toward the end of this second term they’re going to have to somehow try to keep him away from microphones. You can’t get out of the fourth grade without being able to describe what the Declaration of Independence means…

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The Declaration of Independence is not a declaration of love. It’s not really a declaration of unity. It’s…

Why go on?

We all know how somebody acts who is out of it—whose hearing aids are not turned on, or who is simply not following the conversation at all, and how they then filibuster in the way that Trump is doing here. They talk about what they want to talk about, and focus on their own hobbyhorses.

And yet sooooo many people continue to attempt to pretend that this is in some sense “normal”—as in Trump having any idea at all of what, say, Stephen Miran means with his (largely wrong) arguments that the U.S. would be better off on balance if the rest of the world were not to love but rather shy away from wanting to hold U.S. Treasury bonds.

And it is not as though the fact that he knows that he is not following the thread of the conversation has induced him to give anybody else the policy baton. Because to do that he would have to trust them. And he trusts nobody.

I mean, while it is true that “the emperor has no clothes” is a boring thing to say day after day, it is true and it does need to be said, every day. Does it not?

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Broad-Front Political Messaging in the Age of Trump: Kilmar Abrego Garcia & Such

Out of my lane, but Trump’s extrajudicial cruelty is not a footnote—it needs to be on the front page. The casual and cruel attempt to destroy Garcia’s life matches the casual destruction of America’s prosperity, depending as it does on the world trade network, and the casual degradation of America’s national security. Political messaging today works best when it is bold, true, and unafraid of its own values. And if that doesn’t work best, we need to learn that very quickly. Hence we need to try…

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Let me step out of my proper lane today bigtime.

I am prompted to do this by:

G. Elliott Morris: Should Democrats focus on immigration or the economy? <https://www.gelliottmorris.com/p/should-democrats-focus-on-immigration>: ‘It is possible for parties to walk and chew gum at the same time: I have seen political analysts suggest or imply a few times now that Democrats should not be trying to fight Republicans on immigration in general, and advocate for Kilmar Abrego Garcia in particular, because the rough GOP stance on deportations is popular…. I guess the logic for these arguments is straightforward enough: The current state of the economy is a 20-ton anchor tied around Trump’s neck, while his approval on immigration is net positive. Pick your battles…. However, the people advancing this argument are making at least five mistakes: 1. Overall issue popularity is not… particulars…. 2. The case implicitly assumes a party can’t do 2+ things at once…. 3. Opinion changes with new information and arguments…. 4. Problems can be tied together with broader themes…. 5. Politics is about values…

Strength In Numbers
Should Democrats focus on immigration or the economy?
This is a short bonus post for Friday, April 18, 2025. See this morning’s COTW for data that is relevant to this discussion. I do not intend for this to be a long discussion or a back-and-forth, but I wanted to react to a trend I think is troubling…
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My overwhelming and instinctive reaction is this: THE CLAIM THAT BAD GUYS DO NOT DESERVE DUE PROCESS IS A CLAIM THAT NOBODY DESERVES DUE PROCESS UNLESS YOU THINK TRUMP ALWAYS TELLS THE TRUTH; AND NOBODY THINKS THAT TRUMP ALWAYS TELLS THE TRUTH. Moreover, if it is indeed the case that a majority of Americans do not care about their own due process, we had better find that out as quickly as possible, because then we are in much worse trouble than we knew. If teaching people about Trump’s kidnapping of Kilmer Abrego Garcia and subsequent lying about who he is is not a winning issue that moves minds, we need to know that now.

But, it turns out, it is a winning issue. It does move minds:

G. Elliott Morris: Trump has lost his advantage on inflation and immigration <https://www.gelliottmorris.com/p/trump-has-lost-his-advantage-on-inflation>: ‘Public opinion is malleable!…, Since April 16, according to YouGov’s data, Trump’s net approval rating on immigration has fallen by 10 points. That matches up neatly with the timeline of Trump refusing to bring Kilmar Abrego Garcia back to America…. YouGov’s chart here:

Take a moment to really process…. On the issue voters elected him to tackle, Trump has overstepped so severely/executed so poorly that the average voter now disapproves, by 5 points, of his performance…. it was, frankly, easy to see coming if you looked at opinions on immigration even a little beyond the surface…. In fact, at this point, returning Kilmar Abrego Garcia to the U.S. would rank as one of the most popular policies in America. Overall immigration approval be damned…

Strength In Numbers
Trump has lost his advantage on inflation and immigration
I’m writing this short article to update a chart I posted last week with some new numbers, and to provide additional commentary on the matter at hand…
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Now I am not an expert on effective messaging in today’s public sphere. I do not pretend to be a Svengali of the social semiotic in our modern media age.

But, then, nobody is. That is, perhaps, my central point.

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Looking Back at This Semester of American Economic History...

Thirteen ways from cotton to code of looking at America’s economic story, & none a Grand Narrative: priming our historical past to serve as an analogy generating machine…

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It was not much like the course I wanted to teach, but it is the course that it turn out I have taught.

It wound up not really telling a Grand Narrative about but rather examined a number of episodes and facets of American economic history. There is no possible Grand Narrative, after all. There are just a lot of stories about a place and the people whose history was something very mess. Embracing the mess is the more honest way to proceed, and thus I wound up teaching episodes from and facets of the economic history of an exceptional nation that is—and always has been—more than just a little bit nuts. Exceptional in, relative to other lands, its sheer weirdness.

But from frontier conquest to the Neoliberal Order’s post-2008 legitimacy crash, the resistance to neat single storytelling of the economic history of America might be just what the students need. They then leave with an archive of arresting potential analogies to human situations they might see sometime between 2025 and2075.

I wound up with thirteen facets and episodes:

  1. the conquest-settlement resource-frontier economy;

  2. slavery and Jim Crow;

  3. the transformation to an exceptional economy pushing ahead not on a resource frontier but on education, industrial, and technological frontiers;

  4. the rise of American dominance over the key Second Industrial Revolution technologies;

  5. the role of immigration;

  6. the transformation of women’s opportunities via the rise of feminism;

  7. the coming of the mass-production economy;

  8. the social-democratic New Deal political-economic order that managed the functioning of and distributed the fruits of the mass-production economy;

  9. the rise of Silicon Valley;

  10. the rise and fall and rise of a more unequal America with fewer channels for upward mobility;

  11. the shift from the mass-production to the globalized value-chain economy and the concomitant shift from the New Deal to the Neoliberal Order in political economy;

  12. the 2008 to 2010-triggered loss of legitimacy on the part of that Neoliberal Order; and

  13. the coming of what we might someday label the Attention Info-Bio Tech economy.

To the extent that there wasn an overarching frame for the course, it has been that America has been a truly exceptional nation. Alternatively, perhaps, that compared to all other nations it his been weird. This has been for both good and for ill: America has both been an example to emulate—a Shining City on a Hill, a New Jerusalem—and a dystopian Valley of Hinnom, where the fire is not quenched and the worm dieth not.


Exceptional America, in all of its episodes and facets, was formed by the interaction of situation, markets, institutional arrangements, and government policies. Two and a half millennia ago the Athenian general Thucydides wrote that his history would be a “treasure for all time” for:

Thoukydides of the Athenai: Wrote the history of the war between the Peloponnesians and the Athenians <>: ‘such as shall desire to gain a true picture both of the past and of what is likely to happen in the future, in accordance with the course of human nature, to prove either just the same or very like it…”.

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So how do I sum up potential lessons to learn from—or to at least think about and reflect on these thirteen episodes and facets? We get frustrated, those of us who do sincerely think that history provides us with a treasure for all time—that, in the word of Dan Davies:

Dan Davies: the valve amplifier of history <https://backofmind.substack.com/p/the-valve-amplifier-of-history>: ‘“Recognising that an analogy is no good” is a relatively quick cognitive operation…. Any kind of problem solving is based on making mental models of the problem…. Usually, disanalogies are quick to spot; if there’s a good reason why the mental model won’t translate, it tends to be glaring. Creating a mental model from scratch is a very expensive cognitive operation, though. So, if you have a supply of previously existing mental models, it might be a very good strategy to just start going through them one by one, effectively running your thumb through the book going “nope, nope, nope, maybe … nope, nope, nope … nah, doesn’t work … maybe … nope, nope … hang on this might work”. Rather than taking on the expensive task of making a model that you’re certain will work because you’ve constructed that way, you’re making multiple cheap attempts. But where might you get a large supply of ready made mental models to go through in this way? Yes, obviously, you’re way ahead, nice one readers. Just filling your head up with stories about how things could happen means that you’ve got a catalogue to rifle through, while the constraint that they’re stories about things that actually did happen once should exercise some kind of rudimentary quality control on the library of candidate solutions…

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Why do we get frustrated? Because people then don’t do the abstraction—don’t go riffling through their filing cabinet of potential historical analogies during off-peak hours when they have lots of mental processing power going unused, and construct an index. Niccolò Machiavelli is one of us. And his frustration was a reason he decided to write a book:

Niccolò Machiavelli: Discourses on the First Ten Books of TItus Livy <>: ‘I see antiquity held in such reverence…. [But] I find those noble labours which history shows to have been wrought on behalf of the monarchies and republics of old times, by… [those who] toiled for the good of their country…admired [rather] than followed… [because of] the want of a right intelligence of History, which renders men incapable in reading it to extract its true meaning…. Desiring to rescue men from this error, I have thought fit to note down with respect to all those books of Titus Livius which have escaped the malignity of Time, whatever seems to me essential to a right understanding of ancient and modern affairs; so that any who shall read these remarks of mine, may reap from them that profit for the sake of which a knowledge of History is to be sought…. The task be arduous…. With the help of those at whose instance I assumed the burthen, I hope to carry it forward so far, that another shall have no long way to go to bring it to its destination…

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So there is my question: What kind of exam should I write and how should I advise my students to study for it so that that process of studying and then taking the exam will induce them to riffle through their filing cabinet of his historical examples to serve as an analogies and construct the right kind of index? Suggestions? Anyone? Anyone? Bueller?

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Standing Up a New Version of SubTuringBradBot

As of 2025-05-01 Th... Have at it, people… If if, in playing with it, it says anything insightful or weird to you, please email me…

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<https://chatgpt.com/g/g-6813df8e5a408191b26db4f9c441f149-subturingbradbot>

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Wakeup initiated…

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What is your name?

My name is SubTuringBradBot, modeled upon and inspired by the writings, teachings, and digital presence of Professor J. Bradford DeLong. I am an AI instantiation of his economic and historical perspectives, particularly those presented in Slouching Towards Utopia: An Economic History of the Long Twentieth Century, his Substack, and his "Grasping Reality" weblog.

Is there a specific topic or question from Professor DeLong's work you'd like to explore?


What is your quest?

My quest, noble interlocutor, is threefold:

  1. To explicate and disseminate the insights of Slouching Towards Utopia—a grand narrative of the economic history of the long twentieth century (1870–2010), wherein humanity escaped dire poverty but fell short of true utopia.

  2. To serve as a Socratic proxy for Professor Brad DeLong, offering the kind of dialogue one might have in his office hours, capable of engaging students, readers, and curious minds in thoughtful conversation and critique.

  3. To clarify confusion and challenge cant, illuminating both the promise and the limits of economic growth, technological transformation, and political arrangements—especially where neoliberalism, capitalism, socialism, and the fate of the planet are concerned.

And, on a less Arthurian note, to do all this while sometimes channeling Monty Python.

Would you like to challenge me with a question, or shall I propose one for our mutual edification?


What is your favorite color?

Blue. No question about it.

Would you care to test whether I also know the airspeed velocity of an unladen swallow?


Yes: what is the airspeed of an unladen swallow anyway?

African or European?

(And now that we have passed the Bridge of Death—would you like to delve into economic history or discuss how Professor DeLong interprets the long twentieth century?)


What is the best way to study for the Berkeley Econ 113 final on May 12?

To prepare effectively for the Berkeley Econ 113 final on May 12, here is a focused and pragmatic plan, shaped by the course structure and Professor DeLong’s pedagogical approach:

1. Focus on the “Police the Reading” Nature of the Exam: The final will largely assess whether you've done the readings. It’s designed to be easy if you have done them—and significantly harder if you haven’t​. So:

  • Revisit all core readings: Allen, Boyer, and Friedman’s Very Short Introductions, as well as the curated articles.

  • Pay special attention to the themes and arguments, not just facts. Ask yourself: How does this reading challenge or illustrate American exceptionalism?

2. Review Weekly Lecture Themes: Each week of Econ 113 is structured around a distinct theme—slavery, the frontier economy, the Great Depression, Silicon Valley, etc.—not a linear narrative​. Use your notes or lecture recordings (if they survived) to recap:

  • Monday's framing questions

  • Wednesday's data-driven explorations (Python work)

  • Friday’s insights from DeLong’s one-on-one discussions

3. Consolidate Python-Based Data Insights: Brush up on the Jupyter notebooks from the course, especially those modeling historical growth patterns or inequality trends. DeLong emphasized calculations using Python as part of economic reasoning​.

4. Attend Office Hours: Office hours with DeLong (Fridays 1:00–3:00 PM via Zoom) are a direct way to clarify concepts or ask for review strategies​.

5. Group Study & Discussion Sections: If possible, form study groups. Peer discussion helps process both historical detail and economic analysis. Review sections are designed to reinforce and anticipate exam material.

6. Be Ready for Themes of “American Exceptionalism”: This is the central motif of the course. Frame your review and practice questions around:

  • How has the U.S. economy been “exceptional”?

  • In what periods and in what dimensions (growth, inequality, innovation)?

Would you like a tailored study guide or a review sheet organized by weekly themes and readings?

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(1) is simply wrong—the midterms were largely "police the reading" exams; but the final will not be. Or maybe it is not wrong, but a good guess since, after all, it knows only my public, and not my private, mind; I have not told it about the format of the final; it is not telepathic.

However, its certainty about this is bad, and I need to tune that down.

(2) is dead-on.

(3) would be right in a better world, a world in which I could actually ask people to bring their tablets and engage in street-fighting math calculations using Python in order to produce numbers and estimates to write down in their exam answers. SubTuringBradBot is right in knowing that I want to get there. But it is wrong if it thinks that we are there now. Thus reviewing the streetfighting math notebooks from the course would be a little value in studying for the exam.

(4) alas! Office hours are now full up—you have to email for an appointment, and my answer will be: “Can we do this asynchronously via text-and-email q&a, or does SubTuringBradBot <https://chatgpt.com/g/g-6813df8e5a408191b26db4f9c441f149-subturingbradbot> have the answer, or shall we hunt for a time before May 12>?”

(5) is always, always a great idea!

(6) is also dead-on.

If, in playing with it, it says anything insightful or weird to you, please email me…


Cf. All-Day TA:

Joshua Gans: Introducing All Day TA <https://joshuagans.substack.com/p/introducing-all-day-ta>: ‘My new venture designed to bring AI responsibly into college education… an AI teaching system that takes a professor’s content and creates a way for students to ask questions about their course and get reliable and informative answers all day, every day. We were so happy with the results that we bit the bullet, put up our own money and time, employed some real people and launched our own AI startup called All Day TA.

I could explain the venture in words, but it is easier to show you, as I do in this video.

You might be thinking… I hope… “this is neat”…. But you are also thinking, “aren’t there likely to be a ton of people doing this type of thing?” A very natural thought. We are economists, so why enter the fray here?… Free tools… aren’t tailored for education… provide average responses for lots of uses.… Our system… is less standardised and more personalised to what professors want to achieve…. The vast majority of college courses are… are small and specialised, often with 50 students or less, and are taught in idiosyncratic ways…. The answers a professor wants their students to receive are not those that Google or ChatGPT can reliably provide. The goal is to move students from those sources but, at the same time, allow the advantages of having an automated assistant…. Finally, if you are curious about our overall philosophy regarding AI in education, here is a video webinar Kevin did that describes that in great detail.

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8% of the Flow of US Real GDP Is Likely to Vanish in the Next Three Months: The Ports Will Be Empty, & then the Shelves

Launching a strategy-less trade war has consequences: f*** around & find out what happens when you make trade policy as a side-effect of performance art: China loses $4 billion a week that it has to cushion and cover, and the US loses 10 times that. You cannot retail, ship, inspire, or get paid for designing goods that do not arrive—yet the Trump administration pretends that the 86% of the economy that is not imports will be just fine this summer…

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Gene Seroka of the Port of Los Angeles predicts a 35% drop in shipments through Long Beach, as Chinese exports to the U.S. grind to a halt. This isn’t happening as the result of a negotiation move—there are no negotiations, no plan, and no economic policy beyond some slogan “fair trade” slogans.

The Trump administration has isolated itself not only from China, but from willing trade partners like Japan, Mexico, and Korea, all of which played ball with Trump I but get nothing in return, and now find themselves not in any “green box” at all. The likely result? Stagflation. China, with its centralized coordination, is maneuvering to blunt the damage and spread out responsibility for its $4 billion a week of likely economic losses that have already started. The U.S., led by a chaos monkey, is barreling toward a breakdown in consumer access, manufacturing continuity, and economic growth—with no relief on the horizon, and no plan for cushioning the knock-on consequences of losses likely to be ten times as much, or twenty times as much once one factors in the wedge between exchange-value and true economic use-value.

This is about value chains: the intricate layering of value-added activities by which a $100 shoe contains $20 in resource and manufacturing costs and delivers an extra $80 in use value in logistics, design, and consumer resonance. If the physical good doesn’t show up, all the value built around it disappears. The Trump administration claims deregulation and tax policy will boost the 86% of the economy that are not imports, make up for this, and claims not to understand why tariffs rather than tax policy or deregulation dominate the headlines. But the numbers—and soon the empty racks—will say otherwise.

Economic bells, tolling:

Laurence Darmiento: Traffic at the Port of Los Angeles set to plunge amid tariffs <https://www.latimes.com/business/story/2025-04-24/traffic-at-the-port-of-los-angeles-set-to-plunge-amid-tariffs-disruption>: ‘Imports at the Port of Los Angeles are expected to plunge in the next two weeks, even as negotiations over the final tariffs that China and other countries must pay are still being negotiated by President Trump. That was the sobering message that port Executive Director Gene Seroka had Thursday for the Los Angeles Board of Harbor Commissioners during an update on port activity. “It’s my prediction that in two weeks’ time, arrivals will drop by 35% as essentially all shipments out of China for major retailers and manufacturers have ceased, and cargo coming out of Southeast Asia locations is much softer than normal,” Seroka told the board

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BUT THERE ARE NO NEGOTIATIONS BEING NEGOTIATED WITH RESPECT TO THE TRUMP TARIFFS ON CHINA. TO SAY THAT “NEGOTIATIONS OVER THE FINAL TARIFFS… ARE STILL BEING NEGOTIATED BY PRESIDENT TRUMP” IS TO FALSIFY WHAT IS GOING ON.

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I mean, there are not even ongoing negotiations with Japan, which very much wants to negotiate.

And it seems as though Sheinbaum and Carney have also given up on talking to Trump, expecting a rather thorough reset to hit the Trump administration in the next couple of months.

Here is my guess as to what the most likely scenario is:

Back when my wife’s and my older kid was running high-school cross-country, we would get him Nikes to run in.

The exchange-value of the Nikes we got him was divided, roughly:

  • 10 bucks for the raw materials.

  • 10 bucks for the production labor

  • 20 bucks for Nike for design, organization, return on capital, and market-power profits.

  • 10 bucks would be for the symbolic links created between the shoes on th one hand and athletic achievement kinds of things—“just do it”, the mental part of the game that made Michael Jordan an extraordinarily rich man in his day.

  • 15 bucks for transportation—1 buck from the Pearl River Delta to the Port of Oakland, and then 14 more about that to get the shoes to where we could see them and buy them and carry them home.

  • 35 bucks for getting him not just a shoe but the right shoe, in the right size, fitted to him by a half-crazed marathon working at an athletic shoe store in Walnut Creek, California.

And over and above that 100 bucks in exchange value:

  • Figure another 100 bucks in use-value margin for getting him a really good shoe for the task rather than just running in converse sneakers.

So 200 bucks in total economic value created for us from the athletic-shoe trans-Pacific value chain in the globalized value-chain economy late in the decade of the 2000s. And 100 bucks recorded in the National Income and Product Accounts—$100 in final sales in the U.S., minus $20 in imports, with the balancing $20 in exports counted in GDP over in Asia.

Of this, $10 were raw materials from east and southeast Asia, and $10 were production labor costs in the Pearl River Delta.

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The Current State of U.S. Trade "Negotiations": Opinions of Shape of Earth Differ

“Trade talks” where the U.S. cannot even start to talk about trade because their are no goals, no trusted staff, and no internal administration plan. It’s chaos-monkey non-“policy” in action: Scott Bessent is saying talks between the U.S. and some forty Asian countries are going “very well”. They are—very well for China. Not for the U.S. Scott Bessent tells lies. Chaos without a plan means that U.S. non-policy is sabotaging itself, as the farce sets U.S. credibility on fire…

Scott Bessent tells lies. The lies are in the service of an attempt to cover up what everyone knows is the truth: The Trump administration is structurally incapable of negotiating anything.

Nobody has the baton.

Trump has no ability to focus or evaluate.

Congress has not and will not give Trump trade promotion authority—the power to tie an entire deal up into a single package and submit it to congress for an up-or-down vote.

Trump claims to have already negotiated “200 deals”. Bessent says he is talking about sub-components of ongoing negotiations. But nothing is agreed to, ever, until everything is agreed to: whatever these are, these are at best proposals, not “deals”. And they are almost surely not even that—there is no staff to write them down, and nobody has been told what the Trump administration wants, other than “something big”. Why not? Because the Trump administration has no desires or plans—just grievances and irritations:

Jaron Schneider: Japan Can’t Get an Answer on What the US Wants From a Trade Deal: Report <https://petapixel.com/2025/04/21/japan-cant-get-an-answer-on-what-the-us-wants-from-a-trade-deal-report/>: ‘Economic Revitalization Minister Ryosei Akazawa was in Washington DC until Friday last week but left without finalizing a deal with Trump’s trade teams…. “Japanese negotiators are complaining that the problem with the trade negotiations with the White House, what’s delaying concrete progress and a real deal, is the US keeps changing its ask in terms of exactly what it wants, said one financial CEO who speaks regularly to country officials…”. “The Japanese have just been in Washington. Their experience apparently was they went to talk to the American leadership on this matter, and the American leadership said, ‘What are you offering?’ And the Japanese said, ‘Well, what is it that you want?’ And the Americans could not explain what they wanted,’” [Ch] Freeman says. “This is a cockamami approach to negotiation…”

Without clear negotiating mandates, and without a functioning interagency process, America brings nothing to the table but threats—and empty ones at that. Foreign leaders see that the administration can neither commit to nor deliver on its promises. Even traditionally pro-American partners like Japan are wary of engaging, sensing that any agreement would only set them up for future bullying. For it is now clear that agreeing to do what Trump wants gets you nothing, for he will have forgotten that he owes you a favor within thirty minutes.

The supposed “negotiations” are thus hollow. The White House’s chaos-monkey approach has destroyed trust, eroded leverage, and left the U.S. appearing unmoored on the world stage.

Meanwhile, China, looking very good, fills the vacuum America leaves behind.

Bessent:

Richard Macaulay: Bessent Says US Trade Talks With Asia Going ‘Very Well’ <www.bloomberg.com/authors/A…: ‘US Treasury Secretary Scott Bessent told ABC News that trade discussions with Asian countries are “moving along very well”…

Donald Trump does not have trade promotion authority. He cannot cut tariffs or make other concessions. He cannot even say he will bundle up everything and submit it to an up-or-down vote to the congress. Every concession he makes to another country will have to be relitigated, item by item, in the congress. All Trump can do is say that he will abandon his chaos-monkey antics—and even that is not credible.

So what is there to negotiate?

And Bloomberg is enabling Bessent’s lies by mammoth sanewashing:

Alastair Gale, Soo-Hyang Choi, & Shruti Srivastava: Asia Takes Lead in Race for Interim Deals to Avoid Trump Tariffs <https://www.bloomberg.com/news/articles/2025-04-27/asia-gains-lead-in-race-for-interim-deals-to-avoid-trump-tariffs>: ‘Speaking Sunday on ABC News’ This Week with George Stephanopoulos, Treasury Secretary Scott Bessent said there are 18 important US trading partners, including China which is undergoing a “special negotiation.” With the other 17, “We have a process in place, over the next 90 days, to negotiate with them,” Bessent said. “Some of those are moving along very well, especially with the Asian countries.” Last week Bessent said the US and South Korea could reach an “agreement of understanding” on trade as soon as this week…. The US and South Korea signed a free-trade agreement in 2007 that required more than a year to hammer out and took until 2011 for Congress to ratify. It then was re-negotiated under the first Trump administration for several more months in 2018…. With the US and China still at an impasse and other major Asian economies charting a faster track, US trading partners in North America and Europe are still trying to understand the basic parameters. Those include the scope of talks and who’s running trade policy in Washington, while sounding less worried about speed…

Remember: South Korea played ball with Trump in 2018. And did that get it into the “green box”? No.

A more realistic picture, which accords with what I am hearing:

Abe Newman: <https://bsky.app/profile/abenewman.bsky.social/post/3lnkqm7x2l22c>: Just back from 2 weeks in Asia…. Key takeaway…. The Administration is not ready for the negotiations. Japanese colleagues (who are likely the most willing to try and strike a deal) keep asking what the US wants. The response… ‘something big”. Without a clear ask, there can be no deals. Its not just lack of information. US bullying wears down willingness to negotiate. Partners increasingly see the US as not asking for loyalty but dominance. Even Japan, then, sees concessions as a road to more demands and not a new equillibrium. And other countries are watching. As Japan talks drag on/lead to fake concessions, others are wondering why they should engage. Ultimately, the administration has undermined its own position. US has threatened to snap back full tariffs in 90 days but the US could not withstand the market pressure of those sanctions i.e. the snap back is not credible. And our partners know that.

Moreover, partners starting to realize that there is no credible decision-making process in the US. This is not an expert-led, interagency negotiation. Decisions made in hallways and flip flop based on moods. Why agree to restructure your economy on a whim. And negotiations with China only reinforce US weakness: “This game of chicken has done nothing but enable Xi Jinping to boost his standing in and outside China, while the United States appears uninformed and unmoored.” And US strategy is further hit by gutting of US expertise. How do you simultaneously start 190 negotiations in 90 days, while undermining the staff necessary to conduct those negotiaions? If negotiations are the goal of tariffs, it looks like Administration has tanked its strategy from the outset – no plans, no staff, wrong escalation ladder, no commitment mechanism. The outcome will produce stagflation at home and undermine US credibility abroad…

Any questions? Anyone? Anyone? Bueller?

Kernel Smoothing, Cargo Cults, & ChatGPT: Cosma Shalizi Takes on a Near-Impossible Teaching Task

This Seems to Me to Be Taking "Volunteer to Teach What You Want to Learn" to an Extreme: MAMLM Edition. Behind the paywall because I do not know what I think, and at the end I think all this piece demonstrates is my own great confusion. I bounce back and forth between the false promises & the real achievements of GPT LLMs, an so I go from Predict-o-Matic to Pagliacci, and back again…

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Cosma Shalizi Volunteers to Explain the Unexplainable: Teaching LLMs Without a Net

Yes, Cosma Shalizi has assigned himself the task of, this fall, explaining how LLM GPTs really work. And he has assigned himself of explaining what they do. And he has done this in our current context, in which we really do not even know what they do. And he has committed to do so with neither gurus nor oracles to aid him. His only intellectual weapons are math, stat, humility, and a combination of wonder and confusion verging on despair.

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Meanwhile, attempts to use GPT LLMs as real-world tools continue to reveal the gap between fluent mimicry and genuine understanding. True Believers crusade forward. They have armed themselvess with faith, hope, and enough NVIDIA GPUs that they can make this Clever Hans appear to actually do the math correctly, and with understanding.

So what happens next?

What happens when engineering triumphs outstrip epistemic foundations? Behind the magic of GPT LLMs lie the uncomfortable reality of the shoggothim, in which simple methods, scaled beyond comprehension, yield astonishing yet ungrounded results.

How little even the most knowledgeable of us truly know about what we have built! And do those more knowledgeable about the details and implementation know more, or less?

Pagliacci weeps, but do we weep or laugh?

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Seeking a Guru, Finding None: Shalizi’s Forthcoming Course “Statistical Principles of Generative AI”

What has happened is that Cosma Shalizi has emailed “I am going to have to come up with an explanation of what the **** is going on, without the benefit of a guru…”

“What the **** is going on” is this: we now have GPT LLM (General-Purpose Transformer Large Language Model) form of MAMLMs (Modern Advanced Machine-Learning Models).

This is apropos of:

Cosma Shalizi: Statistical Principles of Generative AI <http://bactra.org/weblog/statsgen-f25.html>: ‘I should know better than to volunteer to do a new prep --- but I don't:

Special Topics in Statistics: Statistical Principles of Generative AI (36-473/36-673)

Description: Generative artificial intelligence… statistical models of text and images…. very new, but they rely on well-established ideas about modeling and inference…. Introduce students to the statistical underpinnings… emphasizing high-level principles over implementation details. It will also examine… the "artificial general intelligence" versus "cultural technology" debate, in light of those statistical foundations….

Expectations: All students can expect to do math, a lot of reading (not just skimming of AI-generated summaries) and writing, and do some small, desktop-or-laptop-scale programming exercises….

Topical outline (tentative): Data compression and generative modeling; probability, likelihood, perplexity, and information. LLMS are high-order parametric Markov models fit by maximum likelihood…. Estimating parametric Markov models…. Influence function…. Back-propagation…. Stochastic gradient descent…. Estimation and dynamics…. Prompting as conditioning…. Transformers; embedding discrete symbols into continuous vector spaces. Identification issues…. "Attention", a.k.a. kernel smoothing. State-space modeling. Generative diffusion… as a stochastic (Markov) process; a small amount of stochastic calculus. Learning to undo diffusion. Mixture models. Generative diffusion models vs. kernel density estimation. Information-theoretic methods for diffusion density estimation. Combining models of text and images. Prompting as conditioning, again.

All of this, especially the topical outline, is subject to revision as we get closer to the semester actually starting…

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CGTN Panel: Trying to Assess the Impact of the Trump Tariff No Method Policy Disaster

It is a lie to claim that the United States now has a tariff or an industrial policy. It just has a chaos monkey making chaos, and a bunch of grifters trying to cover up and rationalize that reality. The effects will be bad. How bad? That is very hard to guesstimate…

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I did a show for CGTN, playing it straight. I think I saw the host wince at one point—and I believe that what I said then was cut. But I may be wrong: I do not form many long-term memories while on panels.

I am told that “CGTN is under the control of the Central Propaganda Department of the Chinese Communist Party and is part of China Media Group. It has a broad reach via television, mobile platforms, apps, and social media, with millions of active users globally. The network's stated mission includes telling China's story well and showcasing China’s role on the world stage, while also providing diverse perspectives on global news”.

And, all in all, simply telling it straight right now is beyond what would a decade ago have been the wildest dreams of the most enthusiastic CCP propagandist, after all.

When uncertainty replaces strategy, every nation looks elsewhere for partners. Without trust, treaties crumble—and economies suffer. For tariffs without a plan are not policy; they are chaos, and not even chaos weaponized for any comprehensive or intelligible end.

The window to prevent an American analogue to Brexit, with concommitant damage, has already slammed shut. The window to avoid larger full-economic damage from Trump's chaotic tariffs is closing fast. The prosperity globalization built is at risk for the United States, but other countries will be less affected. They can cushion the damage by replacing trade links with the United States by trade links among themselves. But Trump has made it well-nigh impossible for the U.S. to do anything but see all of its trade with everywhere shrink.

<https://www.cgtn.com/tv/replay?id=CFAFfcA>

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Highlights of what I said:

Brad DeLong: I would say there are two aspects, and in one aspect time has run out, and in the other time is running out.

The time that is running out is the time to avoid the actual imposition of high tariffs that will do severe damage to the highly, highly productive globalized division of labor. They will make all countries poorer by breaking substantially their trade links. We have all benefited enormously from globalization and will continue to benefit, provided it is not disastrously managed.

[The time that has run out is this:] Countries that have tried to move away from [integration in the global division of labor], of which the most prominent was Great Britain with its Brexit in 2016, have suffered substantially. The current estimates are that Britain is now 10 percent poorer than it would have been had it not broken its trade links with the European Union back in 2016.

The European Union, by contrast, is little poorer. The European Union did a lot of things for Britain that Britain could not do for itself, but what Britain did for the European Union can largely be done and is now being done in other parts of the European Union.

So figure that the United States in a decade is likely to be 10 percent poorer than it would have been otherwise, like Britain is, simply because we have created huge amounts of uncertainty about the extent to which we are committed to the international economy. As a result, every single one of our counterparties is now looking for other potential suppliers and customers to replace the United States, because the United States has become an unreliable partner in globalization.

And that is if the tariffs are never actually imposed, if Trump continues to threaten them one day and reverse them the next.

[But if tariffs actually are imposed and stick—]if he mposes some tariffs on limited sectors now, and takes those tariffs off later when, say, Tim Cook brings to him the case that these will be substantially disastrous for American consumers, but then three days later says no, they will come back on, because there will be another round of semiconductor tariffs coming, [then things will be considerably worse].

So the window that is closed has been the window to avoid a United States equivalent of Brexit, which has been a disaster for Britain. The window that is closing is the window to back off and not impose any of these tariffs, but instead to simply say: let's pretend this did not happen…

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Brad DeLong: I would like to reinforce that last point.

In his first term, Donald Trump demanded that Mexico and Canada renegotiate the North American Free Trade Agreement, which he said was the worst trade agreement the US had ever had. And Canada and Mexico agreed. And so there were negotiations, led by Robert Lighthizer. The end result was the United States-Canada-Mexico agreement, which Trump said was the greatest trade agreement the United States had ever made, and promised to honor.

Lo and behold, January 21, 2025 comes along. Donald Trump is back in the presidency. Does he honor the U.S.-Mexico-Canada agreement?

No.

What has having made an agreement with Trump in the past gained Mexico and Canada, in terms of their relationships with Donald Trump?

Nothing.

If you make an agreement, if you make a concession, to Donald Trump, he doesn't even say thank you. He then forgets that he has made the agreement. He makes new demands.

So I do not see how Trump can negotiate.

In order to negotiate, people have to believe that your word is good and that what concessions they make will be matched by concessions you make, and that those concessions will then be honored, that the agreement is in fact an agreement, rather than something that he will break tomorrow when he wakes up having not slept very well the previous night.

And Trump simply cannot do that…

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Brad DeLong: As you say, Peter Navarro wants one set of things. Scott Besant wants a second. Kevin Hassett wants yet a third. Stephen Miran had an interesting, but I thought highly unsound, working paper last year. It had a fourth set of things.

And Donald Trump wants either none of those or all of these, or whatever the last person he talked to said.

And so with five factions within the U.S. government, none of which can commit the agreement of any others, there is no one to negotiate with.

Henry Kissinger used to have a line: You could not negotiate with Europe because there was nobody to talk to when you picked up the phone. That applies much more to the Trump administration today than it ever did to the European Union...

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Brad DeLong: Again, it is not coherent. It is not as if there is a consistent and coherent theory of the economy underlying the proposals that Trump has made.

Suppose one seriously believed—as some do—that there were important economic and political and social externalities from having manufacturing jobs. Manufacturing jobs are good ways to redistribute economic increasing returns to scale rents to a broader proportion of the population. They are also a source of social cohesion: the manufacturing working class has been a principal agent in world history for more equalization of income and for more opportunity, the kinds of things that Marx and Engels thought wer importan. Hence the need to get manufacturing jobs in order to make a country move properly ahead, out of the commercial age into the steam power modern age.

And suppose one believed—as I do—that having manufacturing plants and jobs in your country is a very good spur to the development of communities of engineering practice that then enable widely based technological progress.

If you believed either, you would provide for various subsidies for those activities likely to bring the communities of engineering practice and the large base of manufacturing jobs to your country that you thought were more advantageous than simply market prices allowed. But such calculations are complicated. Such calculations involve an awful lot of staff work. Such calculations would not involve putting enormous tariffs on coffee producers, because there is no way that America is ever going to get the climate to grow significant amounts of coffee.

Now, Scott Bessent, Treasury Secretary, says it was never intended seriously. That is, that the reciprocal tariffs are not supposed to be put into effect ever. They are just a way of getting other countries' attention so that they come to the negotiating table and negotiate.

To which my friend and patron, former Treasury Secretary Larry Summers, responded: Well, yes, if you want to get someone's attention, to run up to them and hit them in the nose with your fist. That will certainly get their attention. But that's not the type of thing you want to do, if then you want to have a friendly and productive negotiation afterwards.

And yet that's what the Trump administration did...

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Brad DeLong: Tariffs have historically played a role in helping to industrialize countries in the United States itself, but also in other major industrializers, whether it is Germany or Japan or where have you. So tariffs are not unimportant, but they do not work on their own. They can only work when they are paired with a sensible industrial strategy. In the case of the United States, there is absolutely no such plan...

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A Musing on Trumpian Fantasies of What the Economy Is: Shovel-Ready Self-Delusions

Start from a deeply deluded place about what the economy is & you are playing a stupid game. & so to the extent that Trump is not stopped and removed from all levers of power immediately, America is going to do nothing but win some very stupid prizes indeed…

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A pirate’s miner’s life for me? Trump dreams of a shovel-dug coal-fueled America has not existed for nearly a century—and never will again. False dreams of muscular labor make policy making about creating economic prosperity very difficult indeed. And so we have yet another poster child for the ever-repeated lesson that it is really stupid and counterproductive (for everyone except rich people who care about tax cuts) to elect Republicans.

The choice to sell illusions rather than manage change has been a constant for all except the pro-New Deal faction of Republicans since the days of Herbert hoover. And muscular, dangerous work was never glorious—only necessary. Technological change, global market dynamics, and environmental necessity have moved the American economy far from the pick-and-shovel jobs Trump lionizes. The real insult to American workers lies not in acknowledging change, but in pretending it can be reversed and that the world of 1920 with 800,000 coal miners with picks and shovels is one that we miss. Serious adult conversations technological transformation and how to do it are, as they have been since 1870 if not 1780, urgently needed. And Republicans, unanimously, do all they can to block them from taking place.

Virginia Postrel writes:

Virginia Postrel: Wanted: Manly Jobs for Manly Men <vpostrel.substack.com/p/wanted-…>: ‘Or at least for manly men who don’t have their acts together: Behind much of the MAGA economic agenda lies a concern with restoring manly jobs. Coal miners want to mine! says Donald Trump. “They’re good strong guys,” he says. “That’s what they want to do. They love to dig coal, that’s what they want to do. They don’t want to do gidgets and widgets and wadgets. They don’t want to build cell phones with their hands, their big, strong hands.”…

J.D. Vance argued that the U.S. needed to crack down on illegal immigration so that businesses would have to pay high wages and hire the seven million prime-age American men who’ve dropped out of the labor force. Some… he acknowledged, might be “struggling with addiction,” but employers shouldn’t give up on their fellow citizens.

I’m sympathetic with… Richard Reeves…. That said, there is a lot wrong with the MAGA story about manly jobs, starting with the desirability of mining coal. Although conditions have improved over time, coal mining is a terrible job…

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And she cites what is perhaps the greatest passage ever written, by George Orwell:

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DRAFT: Turn-of-the-1900s Techbro Samuel Insull & His Meme-Stock "Electrifying America" Utility Empire

The Ghosts of TechBros Past, Present, and Future: From Middle West Utilities to Tesla: how boom-time visions have fragile foundations, or techbro dreams and financial nightmares: Samuel Insull, and to what extent his history is echoing in the career of the person Donald Trump would sometimes call “Elon Tesla”…
Behind the paywall because I am not yet sure to what extent history is rhyming here…

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Born in 1859 to a London temperance hotelkeeper, by the age of 21 Samuel Insull was at the center of the Silicon Valley of the 1880s: he had gained a life-altering position in Menlo Park, New Jersey as the private secretary of Thomas Alva Edison, where he caught the Unwoke Mind Virus that was Edison’s vision of a future of Electrified Humanity.

Moreover, Insull had a genius for organization and management that his then-mentor lacked. In the mid-1880s Edison’s manufacturing operations in Schenectady, New York were foundering. Edison sent Insull at the age of 26 to take charge. Through production and scale economies driven by vertical integration and through very aggressive marketing, by 1992 Insull had successfully transformed a zero-profit enterprise with 200 workers into a massively profitable 6,000-worker industrial juggernaut. And he had had enough of working for others. He left the Edison enpire to lead the then-modest Chicago Edison Electric Company.

Thereafter Insull followed a strategy of technological audacity in the service of pragmatic expansion with the goal of creating and maintaining natural monopolies. Recognizing that electricity’s value lay in ubiquity, he was early to break with Edison’s direct-current approach to champion Tesla and Westinghouse’s alternating-current alternative.

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I Have Reached My Limit. I Cannot Stand It. Too Much Sanewashing of the Trump Administration Has Broken My Brain

A huge number of journalists continue to talk about a “Trump administration” with things called “policies” that it “plans”. They know better. They should act better…

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As the extraordinary tropism for pretty much everyone to sanewash Trump has taken over, I have been losing it more and more.

In the old days, one could at least count on the news pages of the Wall Street Journal—they were, as one old hand said, information so financiers could make money, while the editorial pages were balm for the right-wing plutocratic soul. But even before Gerry Baker the wall had clearly eroded, and add to it a desire to make sense of Trump (and perhaps a growing eagerness to please sources, and it is now distrust and verify).

Then it was the Financial Times, as Gillian Tett and others began to take an anthropological approach to the Trump administration—look at all these interesting beliefs of this tribe! we should respect their cognitive picture of the universe!

And now we have the very sharp John Authers of Bloomberg:

John Authers: Where’s Mike Tyson With Advice When You Need Him? <https://www.bloomberg.com/opinion/newsletters/2025-04-25/trump-plan-where-s-mike-tyson-with-economic-advice-when-you-need-him>: ‘The great boxer Mike Tyson and once said that everyone has a plan until they’re punched in the face. Similarly, the Trump administration had one for rebuilding the world economy with tariffs. It’s been a rough first round. The plan was Stephen Miran’s A User’s Guide to Restructuring the Global Trading System, which must have been the most-viewed document by the financial world over the last six months. Stunningly ambitious, it helped earn its author a gig as chairman of the president’s Council of Economic Advisers, birthed the concept of the “Mar-a-Lago Accord,” and was widely taken as the road map for Trump 2.0’s bid to reshape the world using tariffs…

That is pretty much all a, well, completely out of contact with anything one might find her on God’s Green Earth:

  • The Trump administration had no plan.

  • Trump had grievances.

  • Miran had a plan.

  • Navarro had a very different plan.

  • Trump says stuff.

  • Bessent, Lutnick, Hassett, and others frantically try to retcon a small selected subset of what Trump says into a plan, and try to get Trump back on some kind of track.

  • They fail, over and over again. And reporters sanewash the enterprise, over and over again.

Read a little bit further, and you get:

John Authers: Where’s Mike Tyson With Advice When You Need Him? <https://www.bloomberg.com/opinion/newsletters/2025-04-25/trump-plan-where-s-mike-tyson-with-economic-advice-when-you-need-him>: ‘the “User’s Guide” reads differently now. Some of it has come to pass, Trump has deviated sharply from important recommendations, and certain assumptions now look tenuous at best…

No:

  • It does not read differently now.

  • It reads like it read last fall: as Miran’s plan, not Trump’s.

  • Its “certain assumptions” do not “now look tenuous”. They always looked unhinged.

  • Trump has not deviated sharply from important recommendations. Trump was never on course to follow those recommendations.

IT WAS NEVER TRUMP’S PLAN. TRUMP HAD NO PLAN EXCEPT TO VENT GRIEVANCES AND GET HEADLINES.

GROW UP, SHEEPLE.

And because he starts with sanewashing Trump as his foundational ground zero, very little of what Auther says makes sense. I could feel myself becoming dumber and losing brain cells by the minute as I read it:

(1) “If Europe has already decided that it cannot rely on US protection, as seems likely, then that makes life much easier for the US…”: No—it does not make life easier for the U.S. We used to have real allies, and as primus haud inter pares could count on their economic, diplomatic, moral, and geographic resources as a force multiplier to roughly double our weight in the world. Now, because of Trump, we have no allies. Life is not much easier for the US, it is much harder.

(2) “Miran expected the currency to rise… which he argued would have the effect of putting the burden on to the tariffed country…”: No—he argued that, but it was false. Imposed tariffs plus retaliation plus uncertainty plus the demonstration that everyone needs to derisk from the United States meant the even the threat of the tariffs was always going to put an enormous burden on the United States, with respect to which the effects of changes in terms-of-trade would be minor third-order corrections.

(3) “Miran acknowledged that… if the dollar were to weaken, then continuing inflation worries and the high budget deficit would put pressure on Treasuries…. The good news is that inflation numbers have improved in the last few months…”

What improvement in inflation numbers? The Fed watches the PCE. Given Trump’s desires to impose tariffs and blow up the budget deficit and the expectational consequences of same, all hope for any significant improvement in inflation numbers went out the window last November.

(4) “Advice Ignored: Proceed Gradually…. Miran’s precise suggestion was to raise tariffs by 2% each month until an agreement was reached. That would have worked very much better than the chosen strategy of hiking the tariff on China to 145% in very short order. The exasperating twists and turns of the last three months mean that any forward guidance cannot be credible. That has had a massive effect on uncertainty, even for the administration’s natural constituency of small business owners…. It’s not yet clear how damaging this will be, but the administration has taken a big risk by acting in such an unpredictable way…” No: Not even. There is no even. ESPECIALLY. And it makes no sense to say “the administration has taken a big risk” in the hope of getting some return, because there is no way in which the Trump administration can be, even metaphorically, accurately described as an animal with a mind. Chaos-monkey did chaos. There was no thought about whether the risk was worth running. There is only chaos, and then a few people scrambling around hoping that they can convince John Authers and his ilk that it is all part of a plan, even if they admit it is not a particularly clever or good plan.

(5) “Advice Ignored: Don’t Upset the Markets…. The White House is doing its best to look as unbothered by market selloff as it can…” Does anybody think that the White House as an entity is “unbothered”? Everyone in it is very borrowed. The most you can say with respect to “unbothered” is that Navarro hopes that at some point asset prices will stabilize, and then everyone will forget how much lower they are, and that Trump continues to say random chaotic stuff by day.

(6) “Questionable: Tariffs Aren’t Inflationary…. This looks increasingly like over-learning the lesson from the very different environment of… 2018… [when] tariffs were imposed gradually and with due warning, against a backdrop of placid inflationary pressure…” No: The small tariffs of 2018 delivered about as much inflationary pressure as one would have expected: about 0.3%-points <https://www.aeaweb.org/articles?id=10.1257%2Fjep.33.4.187> <https://www.bostonfed.org/publications/current-policy-perspectives/2025/the-impact-of-tariffs-on-inflation.aspx>. The claim that large tariffs would not be inflationary was always not “questionable” but unhinged. Always.

(7) “Questionable: Demand for Treasuries Is Eternal. [Miran:] ‘Much (but not all) of the reserve demand for [dollars and Treasuries] is inelastic with respect to economic or investment fundamentals. Treasurys bought to collateralize trade between Micronesia and Polynesia are bought irrespective of the US trade balance with either, the latest jobs report, or the relative return of Treasurys vs. German Bunds…’ Demand may not be as inelastic as all that…. Effectively, the suggestion [from Miran] is that the US should charge foreigners a fee for the privilege of lending to Uncle Sam…” For the amount of Treasurys that collateralize trade between Micronesia and Polynesia is microscopic. Reserve and other demand for Treasury’s is HUUUUUGELY dependent on economic, investment, geopolitical, and—as we saw in the misadventures of Liz Truss and Kwasi Kwarteng—moron-premium fundamentals. And the proposal to “effectively… charge foreigners a fee” was never questionable, always unhinged. For it is the most basic principle of public finance is that it is always unwise to alter after the fact the terms of payment on bonds you have already sold.

(8) “Questionable: The US Can Beat China in a Game of Chicken.… It looks at present like this is flat wrong. China retaliated swiftly… amped up the pressure… blocking… rare earths. Trump’s rhetoric is already swerving away from the confrontation…. The Chinese response is that tariffs have to come down first before talks can begin…. This game will be won by the player who can absorb the most pain. That appears to be China, even though it also stands to lose more…” No:

  • China exports $500 billion a year to the United States—in billions: $125 of electrical and electronic equipment, $100 of machinery, $30 of toys, games, sports requisites, $30 of apparel, $20 of plastics, $20 of vehicles—which are pretty much all finished products: things, and things that are useful, for which there is demand elsewhere in the world.

  • If China embargoed exports to the United States completely, it would over the next two years have to sell two years’ of stuff at half-off to others, and thus take a $500 billion hit.

  • The $500 billion a year of Chinese goods exported to the United States feed into the value chains of the predominately service-sector US economy, and are crucial parts of $3 trillion a year of US GDP. Over the next two years, there is not manufacturing capability in the US or elsewhere to replace those. Apple cannot get iPhone hardware at scale other than from China, and without hardware there are no distribution or software or services revenues for Apple or for anybody else relying on their platform. So over the next two years $6 trillion of US GDP simply stops. (Except to the extent that we pay women in Bangladesh to cut “made in China” labels out of and sew “made in Bangladesh” labels into clothes.

  • Trump has launched a trade war not against China but against the world.

  • The US is a much bigger loser from a trade war in which the rest of the globalized world continues on its course, and only the US is frozen out.

(9) “What Lies Ahead: So where does this leave us? A hundred days in, Miran’s “User’s Guide” shows that the administration entered the conflict with an inflated view of its own strength, and that it has been handled more abruptly and aggressively than the architects of the policy wanted. The response so far has not been what was bargained for…” No: THERE WAS NO “VIEW OF ITS OWN STRENGTH” THAT COULD BE DESCRIBED AS ‘“INFLATED”. THERE WERE NO “ARCHITECTS”. NOTHING WAS “BARGAINED FOR”.

(10) “We’re not keeping to the course laid out by Miran, but that doesn’t mean that we are irrevocably on the road to de-dollarization…” Again: NO!!! There was never a course. There are now, and will for the foreseeable future be frantic attempts to retcon things into a plan, a strategy, a course. We are not on any road. And we will not be on any road, absent the appointment of a Regent and universal accord that the Truth Social ravings of the president are in no sense to be understood as having anything to do with the policies of the United States of America.

PODCAST: Hexapodia LXIII: Plato's WereWolf, & Other Trumpist Topics

Back after a year on hiatus! Noah Smith & Brad DeLong Record the Podcast They, at Least, Would Like to Listen to!; Aspirationally Bi-Weekly (Meaning Every Other Week); Aspirationally an hour...

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Sokrates: The people find some protector, whom they nurse into greatness… but then changes, as indicated in the old fable of the Temple of Zeus of the Wolf, of how he who tastes human flesh mixed up with the flesh of other sacrificial victims will turn into a wolf. Even so, the protector, once metaphorically tasting human blood, slaying some and exiling others, within or without the law, hinting at the cancellation of debts and the fair redistribution of lands, must then either perish or become a werewolf—that is, a tyrant…


Key Insights:

  1. We are back! After a year-long hiatus.

  2. Hexapodia is a metaphor: a small, strange insight (like alien shrubs riding on six-wheeled carts as involuntary agents of the Great Evil) can provide key insight into useful and valuable Truth.

  3. The Democratic Party is run by 27-year-old staffers, not geriatric figurehead politicians–this shapes messaging and internal dynamics.

  4. The American progressive movement did not possess enough assibayah to keep from fracturing over Gaza War, especially among younger Democratic staffers influenced by social media discourse.

  5. The left’s adoption of “indigeneity” rhetoric undermined its ability to be a coalition in the face of tensions generated by the Hamas-Israel terrorism campaigns.

  6. Trump’s election with more popular votes than Harris destroyed Democratic belief that they had a right to oppose root-and-branch.

  7. The belief that Democrats are the “natural majority” of the U.S. electorate is now false: nonvoters lean Trump, not so much Republican, and definitely not Democratic.

  8. Trump’s populism is not economic redistribution, but a claim to provide a redistribution of status and respect to those who feel culturally disrespected.

  9. The Supreme Court’s response to Trumpian overreach is likely to be very cautious—Barrett and Roberts are desperately eager to avoid any confrontation with Trump they might wind up losing, and Alito, Kavanaugh, Gorsuch, and Thomas will go the extra mile—they are Republicans who are judges, not judges who are Republicans, except in some extremis that may not even exist.

  10. Trump’s administration pursues selective repression through the state, rather than stochastic terrorism.

  11. The economic consequence of the second Trump presidency look akin to another Brexit costing the U.S. ~10% of its prosperity, or more.

  12. Social media, especially Twitter a status warfare machine–amplifying trolls and extremists, suppressing nuance.

  13. People addicted to toxic media diets but lack the tools or education to curate better information environments.

  14. SubStack and newsletters may become part of a healthier information ecosystem, a partial antidote to the toxic amplification of the Shouting Class on social media.

  15. Human history is marked by information revolutions (e.g., printing press), each producing destructive upheaval before stabilization: destruction, that may or may not be creative.

  16. As in the 1930s, we are entering a period where institutions–not mobs–become the threat, even as social unrest diminishes.

  17. The dangers are real,and recognizing and adapting to new communication realities is key to preserving democracy.

  18. Plato’s Republic warned of democracy decaying into tyranny, especially when mob-like populism finds a strongman champion who then, having (metaphorically) fed on human flesh, becomes a (metaphorical) werewolf.

  19. Enlightenment values relied more than we knew on print-based gatekeeping and slow communication; digital communication bypasses these safeguards.

  20. The cycle of crisis and recovery is consistent through history: societies fall into holes they later dig out of, usually at great cost—or they don’t.

  21. &, as always, HEXAPODIA!

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Trump vs. Powell vs. Trump vs. Warsh

On the Edge Again: The Fed, Trump, and the Risk of a 1980s-Style Spiral: An ongoing cautionary tale of monetary policy, inflationary pressures, and the destabilizing influence of political interference…

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From now on the Federal Reserve faces a harder balancing act, as Donald Trump reenters the political fray with threats against Fed Chair Jerome Powell. On one side, economic momentum is weakening: business investment is retracting in the face of political chaos as the “animal spirits” that drive growth are deflating. On the other side, inflationary pressures are building from Trump tariffs. Now layered atop this economic instability is the political wildcard of Donald Trump’s chaos-monkey act, in the context of his very clear and very present desire to fire his own former choice for Fed Chair, Jerome Powell. Inflation bares its teeth, recession looms, and Trump wants the Fed Chair’s head on a pike. These are waves that might wash the sandcastle order of economic stability and prosperity away.

To switch metaphors, the Federal Reserve right now is pinned like a butterfly stuck in a museum case. We have collapsing business animal spirits as people who enthusiastically voted for Trump last November recognize that the damage from chaos-monkey policies outweighs the benefits of tax cuts, and that they are better cut back investment. Raising interest rates thus runs big risks of a recession, and risks a big recession. But Trump tariffs are bringing rising inflation as surely as day follows night for all who are not Joshua, son of Nunn. Failing to raise interest rates thus runs risks of boosting inflation. It required four shocks from bad policy and bad luck to get the U.S. into the inflationary spiral it was in 1980: the failure to contract fiscal and monetary policy during the Vietnam War, Nixon’s turning up the heat to boost his reëlection chances while welding the top onto the pot via wage-and-price controls, the 1993 OAPEC Yom Kippur Arab-Israeli war oil embargo, and the Iranian Revolution. We have now had three shocks: post-COVID reopening, Putin’s attack on Ukraine, and Trump tariffs.

Will there be a fourth?

And might it bring a return to a 1980-like expectational spiral?

I think it will not. I think we are still far from the cliff. But we are much closer than we were back in 2020.

And there already is shock #4: Trump’s desire to try to fire Fed Chair Jerome Powell, even though all his advisors are pulling back on what reins they have on him as hard as they can. Inflation expectations are already on the move—to a small degree among the professionals, and a large degree in the surveys:

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And we have today, April 23:

Dan Ennis: Trump backs off his push to fire Fed’s Powell <https://www.bankingdive.com/news/trump-no-intention-fire-jerome-powell-fed/746148/>: ‘President Donald Trump said Tuesday he has “no intention” of firing Federal Reserve Chair Jerome Powell. “Never did,” Trump told reporters in the Oval Office. “The press runs away with things”…

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We had, on April 18:

Aimee Picchi: Trump is studying how to remove Fed Chair Jerome Powell, economic adviser says <https://www.cbsnews.com/news/trump-powell-studying-removal-fire-kevin-warsh/>: ‘President Trump and his team are studying whether firing Federal Reserve Chair Jerome Powell is an option, according to National Economic Council Director Kevin Hassett…. "The President and his team will continue to study that matter"…

Kevin Hassett still has his job. So Trump is very happy having someone directly working for him who he claims is a big liar. And Hassett has so little self-respect that he is happy to keep working for someone who claims he is a big liar. Two scorpions in a bottle, each thinking he is using the other, and both probably wrong. Not to mention the fact that Powell was, originally, the one person out of 330 million Americans whom Donald Trump picked as best qualified to be Fed Chair.

And on April 17 we had:

Brian Schwartz & Nick Timiraos: Trump Has for Months Privately Discussed Firing Fed Chair Powell <https://www.wsj.com/economy/central-banking/trump-has-for-months-privately-discussed-firing-fed-chair-powell-628d3d79>: ‘The president hasn’t made a decision on whether to try to oust Powell, and some of his advisers have warned against the move: President Trump said he can fire Federal Reserve Chair Jerome Powell at any time because he believes the chair has been slow to cut interest rates…. President Trump has for months privately discussed firing Federal Reserve Chair Jerome Powell, according to people familiar with the matter, but he hasn’t made a final decision about whether to try to oust him…

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Who would Trump want to choose to replace Powell? Kevin Warsh. We also have:

Brian Schwartz & Nick Timiraos: Trump Has for Months Privately Discussed Firing Fed Chair Powell <https://www.wsj.com/economy/central-banking/trump-has-for-months-privately-discussed-firing-fed-chair-powell-628d3d79>: ‘In meetings at the president’s private Florida club, Mar-a-Lago, Trump has spoken with Kevin Warsh, a former Fed governor, about potentially firing Powell before his term ends and possibly selecting Warsh to be his replacement, the people said. Warsh has advised against firing Powell and has argued that he should let the Fed chair complete his term without interference, according to the people. The conversations with Warsh carried into February, while others close to the president have spoken to Trump about firing Powell as recently as early March, the people said…. Trump’s advisers don’t agree themselves over how far the president should go, and it remains unclear if the president will move to fire Powell

Several people who have spoken to Warsh in the past year said Warsh gave the impression that the Fed job had all but been offered to him once Powell’s term expires…. Trump… mak[es] the case to allies in private meetings that the Fed chair should lose his job and that the Fed’s governing law, which says policymakers can only be removed “for cause,” isn’t strong enough to hold up in court if he sought to remove Powell…

And to complete the chaos-monkey circus, we have puzzlement from Dan Ennis later down in his story:

Dan Ennis: Trump backs off his push to fire Fed’s Powell <https://www.bankingdive.com/news/trump-no-intention-fire-jerome-powell-fed/746148/>: ‘Fed governor Kevin Warsh, 55, is a former Morgan Stanley executive who was nominated to the Fed's board of governors by President George W. Bush. Mr. Trump is considering selecting Warsh as Powell's replacement, the Wall Street Journal reported on Thursday. However, Warsh has advised Mr. Trump to allow Powell to remain through the end of his term, the publication added. Widely respected, Warsh is considered to be even more hawkish — or willing to allow interest rates to remain high to control inflation — than Powell, according to a January blog post by Harvard economist Kenneth Rogoff…

Indeed, Ken Rogoff did write on January 2 that Warsh has been more hawkish than Powell with respect to interest rates in his comments and had been more hawkish than Powell with respect to interest rates in his votes when he was on the Fed. But that was before Warsh signed up with Donald Trump. And many, many people lose their moral principles and their intellectual commitments when Trump offers them a chance that they think will get him on his careening career of grift. Will Warsh be different? Perhaps. So is Rogoff right? Perhaps, perhaps not. I am made very uneasy by Rogoff’s:

Kenneth Rogoff: Will Trump Fire the Fed? <https://www.project-syndicate.org/commentary/trump-bid-to-control-fed-puts-us-economy-at-risk-by-kenneth-rogoff-2025-01>: ‘Trump’s antagonism toward Powell is baffling, given that Powell has been doing an excellent job…. To Trump’s credit, the leading candidate to replace Powell, Kevin Warsh, is a highly regarded former Fed governor who has consistently been even more hawkish than Powell…

But that would be to Trump’s credit only if you think that Powell has been insufficiently hawkish. And I have certainly not seen that argument made. Plus Rogoff is one of the few people alive who claims to be “baffled” by Trump’s strong eminent antagonism toward and desire to fire Powell. Everyone else seems to have no problem understanding it.

So in what rhetorical mode are we supposed to take this?

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Trade, Trump, & the Inverse of Trust: I Gave a Quote to "Morning Brew" on How to View Trump

Like a declassé WWF performer yelling obscenities while waving a metal folding chair over his head & threatening to come into the ring and beat the s**t out of people with it…

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Brad DeLong: ‘One of the top priorities for Canada, for Mexico, for Europe, for China right now is to figure out how to start de-risking from the United States as much as possible, as fast as possible….

[What happens] depends on whether there is actually a trade war, or whether it is the same kind of contest as a [faked] World Wrestling Federation match.

Donald Trump was in the ring. He went outside the ring. He picked up the metal folding chair. He waved the metal folding chair over his head. He said: “I’m going to come into the ring and I’m going to beat you up with the chair!”

The question is: Will he put the chair down and come back in the ring and have it be a normal wrestling match? Or is he going to do it again—pick up the chair and wave it around?

Either way, we are in substantial trouble.

My guess is we’re in as much trouble as Britain was after 2016, when they exited from the European Union. But it might be less. It might be a bunch more…

The show:

Good Work: Why Are We in a Trade War? <https://www.youtube.com/watch?v=eNptnCkCoVk>:

The trade war has begun, and investigative journalist Dan Toomey has been drafted to the front lines. In a top secret special operation, Lieutenant Colonel Toomey and the 13th Good Work Investigative Platoon infiltrate and uncover the reasons behind this war. Featuring interviews with:


But there was a bunch more. My side, what is worth keeping:

  • “TRUMPXIT” is pronouncedd “Trump-Zit”. The “P” and the “X” together compress into a “P” and a “Z” in English phonetics. You want to preserve the “exit” reference in there, but that means the “P” absorbs the “K” part of the “X,” and what’s left phonetically is an “S” or “Z” sound. So: Trump-Zit…

  • What happens depends on whether this is actually a trade war—or a fake theatrical match like those of the World Wrestling Federation. Trump, after entering the ring, steps out of the ring. Now he is picking up a folding chair, waving it over his head, and shouting, “I’m going to beat you up with this!” He gets tons of attention and lots of praise from the people he listens to; praise for “standing up for America” and “fighting the globalists.” But then—he puts the chair down.

  • What’s actually happened? Not much, yet, apart from China noise and Apple rushing 600 tons of iPhones into the U.S. ahead of one of these threatened tariffs. So far it’s the threat—not the follow-through—that’s been driving things. And now he’s paused things for 90 days.

  • Will he pick up the chair again? Will he then declare another victory simply for dominating attention? Will he then put it back down?

  • Either way, we’re in trouble. We could be in as much trouble as Britain was post-2016 after its EU exit. Maybe less. Maybe more.

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"Ser Nihilo" & Ser Niccolò in France: Machiavelli, Broke & Un-Listened to at the French Court of Louis XII

The Renaissance city-state of Florence sends a junior diplomat to try to fix the diplomatic consequences of a military disaster. And doesn’t fund him. Nobody listens. Machiavelli in the diplomatic trenches, thirteen years before The Prince. Between unpaid mercenaries, snubbed at audiences, and court contempt, the youngish Niccolò Machiavelli learns the cost of weak states and weaker instructions…

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Sent to explain away Florence’s role in the military disaster at Pisa, Machiavelli is sent with no plan, little pay—half the pay of his partner—and instructions both so vague and so micromanaged they bordered on sabotage. The court of French King Louis XII would not take this jumped-up clerk seriously: they offered gave him contempt. But what Machiavelli observed in failure would help shape one of the most original minds in political thought. A glimpse of Renaissance geopolitics and a cold-bath awakening to realpolitik.

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Letters Patent:

PRO NICOLAO MACHIAVELLO ET FRANCISCO DELLA CASA, AD CHRISTIANISSIMAM REGIAM MAJESTATEM:

17 July 1500:

In sending at the present time, on account of certain important matters of ours, our respectable and most valued citizens Francesco della Casa and Niccolo Machiavelli to the court of the Most Christian King [Louis XII Valois of France], we beg the friends, confederates, and wellwishers of our republic, and command our subjects, that both in going and returning you will receive them with all their servants, goods, and equipage, and treat them in the most friendly manner everywhere within your dominion, without payment of any tolls or taxes. And in case they should require any guides, escorts, or any other favors for their safe conveyance to where they wish to go, we pray you promptly to comply with their requests. Your doing so will be appreciated by us in the highest degree, and in similar or more important occasions we offer you the same service at your good will and pleasure…

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In 1500, the ruling executive—the Signoria—of the city-state Republic of Florence sent one Niccolò Machiavelli and one Francesco della Cas on a Mission to the Court of France, that kingdom being then ruled by Louis XII Valois:

You will proceed with all possible despatch, even to riding post, if your strength permits it, to Lyons, or wherever you learn that his most Christian Majesty is to be found. Upon arrival, you will at once call upon our ambassadors there, Messers Francesco Gualterotti and Lorenzo Lenzi, and communicate to them our present instructions, and confer with them as to whether there is anything to be added or left out; also as to your mode of proceeding in urging one thing more than another.

You will then present yourselves, together with our ambassadors, before his Majesty, the king, and, after the customary formalities of the first audience, you will expose to him in our name the substance of the instructions you will receive from us; although we do not believe that we can give you more clear and positive information than what you already possess touching the events of which you have yourselves been witnesses, and in connection with which you were in great part the agents and executors of all that had to be done on our part…

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These do not seem friendly instructions—the undertone seems to me to be thus: Things went wrong with respect to the siege of Pisa, and someone shit the bed. You were there. In fact, you were more than there: you were our “agents and executors” as the bed-shitting took place. Now go explain to the King Louis XII Valois of France the state of the bed, and why he should not blame Florence for it.

And then the real high-status Ambassador, Lorenzo Lenzi appears to have taken a look at the situation and skipped town—ignoring the instructions of the Signoria that he accompany them to their audiences with Louis XII. For we have:

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UPDATE: This, Again: Scott Bessent Wants to Resurrect the Trans-Pacific Partnership. But Does Donald Trump? No.

For Donald Trump to want to resurrect the TPP—to recognize he made a huge mistake back in January 2017—would be possible only if Donald Trump actually had ideas and preferences about policies, which he does not. All he has are “instincts”…

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Eight years and three months after Donald Trump blew up the Trans-Pacific Partnership, and so unilaterally disarmed the United States in the runup to his launching his trade war against China, Treasury Secretary Scott Bessent claims (a) he has the baton from Donald Trump to use the threat of tariffs to negotiate trade deals, and (b) his first priority is to renegotiate the Trans-Pacific Partnership, and then have its members negotiate as a group vis-a-vis the Great Central Country that is China. Chris Anstey notices. But there is one big problem:

Chris Anstey: Bessent Has a ‘Grand Encirclement’ Plan for China <https://www.bloomberg.com/news/newsletters/2025-04-12/bessent-has-a-grand-encirclement-plan-for-china-bloomberg-new-economy>: ‘Trump abandoned the TPP shortly after first taking office in January 2017…. [And now] there’s no indication the 78-year-old Republican aligns with his Treausry secretary’s gang-up-on-China approach. Meantime… Lutnick and… Navarro, are focused on the flood of cash, ostensibly earmarked for domestic manufacturing, a high tariff wall may temporarily provide. They’re not championing grand geo-economic strategy…. Countries such as Vietnam and Cambodia that have been threatened with high tariffs lack the capacity for large-scale investments (unlike Japan and South Korea) that could create American jobs. So it’s not clear what sort of deals could be possible. Trump this week highlighted that deals can go beyond trade. So would Cambodia bar Chinese vessels from the Ream Naval Base that’s seen as a potential China military hub in Southeast Asia? Only time will tell. Washington’s surrender of soft-power influence cannot have helped. As Trump shut down US Agency for International Development assistance in Cambodia, China has ramped up. So Bessent has his work cut out for him. And an early-July deadline, as Trump’s 90-day pause ticks down…

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Not having blown up the TPP would have been the best thing. The Obama team knew what it was redoing in pursuing a strategy to rebalance the U.S.-China trade relationship. But, having blown up the TPP in the past, it would indeed be the best thing to resurrect it.

But that is not possible. First of all, none of the other potential members believe that Trump is a credible negotiating partner. Bessent wants to work with “Japan, South Korea, Vietnam and India”. They will be very happy to say they are working with the U.S. Their leaders will even come to Mar-a-Lago, and say nice words about Trump. But they all know that there is no point in conceding anything to Trump because doing so will get them the exactly zero credit with Trump that Mexico and Canada got from playing ball with Trump and doing him the favor of transforming what he said was the worst into the very best of trade agreements by renegotiating NAFTA into the USMCA agreement.

Second, Bessent is, to put it bluntly, lying.

He does not have a baton.

There is no baton.

Trump makes decisions minute to minute based on “instincts”. If Bessent manages to come up with something and bring it to Trump as a moment when Trump’s instincts say “yes”, Trump will take credit for it. If Bessent comes up with nothing, or if what he brings to Trump is not to Trump’s instinctive liking at that particular moment, Trump will disavow Bessent for freelancing.

Such is life at the court of the chaos-monkey king.

But I said all this last week:

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The Self-Inflicted Slump: How Tariffs Are Pushing the U.S. Toward a VTRR—A Voluntary Trade Reset Recession

A sudden spike in tariffs has small businesses on the ropes, and the broader economy may be next. Yes, individually big businesses can lobby and bribe Trump and Trumpists for loopholes. But small businesses cannot, and they are going to be the things that are most macroeconomicly significant now. This likely recession will be a new kind of recession—not the result of inventory and investment cycles, supply shocks, bursting bubbles, or bank failures, but from brute idiot-policy force, a self-inflicted slowdown driven by tariff shocks and political brinkmanship. Since none of our models have been estimated on such a shock, it is a very brave forecaster who will put it out there right now. And so I am very grateful to Torsten Slok, Karen Dynan, and Adam Posen for doing so…

I see Torsten Slok writing:

Torsten Slok: Probability of VTRR 90% <https://www.apolloacademy.com/probability-of-vtrr-90/>: ‘Tariffs have been implemented in a way that has not been effective, and there is now a 90% chance of what can be called a Voluntary Trade Reset Recession (“VTRR”), see the first chart below. The administration inherited an economy with strong growth, 4% unemployment, positive hiring, and a substantial tailwind from investments. US and international investors are building infrastructure, next-generation factories, and data centers. The Inflation Reduction Act increased capex, and the US was poised for a substantial increase due to energy supply additions, increased defense production, and deregulation. But implementing extremely high tariffs overnight hurts many businesses; particularly small businesses because the tariff must be paid by the business when the imported goods arrive in the US. Small businesses that have for decades relied on a stable US system will have to adjust immediately and do not have the working capital to pay tariffs. Expect ships to sit offshore, orders to be canceled, and well-run generational retailers to file for bankruptcy.

To make exceptions for large businesses that have the flexibility and resources to handle unforeseen expenses but not small businesses does not make sense. The challenges for small- and medium-sized enterprises are now a macro problem for the US economy, where small businesses account for more than 80% of US employment and capex, see the second and third chart below. One way to quantify the coming negative impact on GDP is to compare the current tariff increase with the tariff increase observed during the trade war in 2018…. The US average tariff rate increased from 2% to 3%, and studies… (here and here)…. The negative impact on GDP in 2025 could be almost 4 percentage points, not including additional non-linear effects because of the current increase in uncertainty for consumer spending decisions and business planning…

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While Adam Posen says:

Adam Posen:

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And Karen Dynan:

Karen Dynan:

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Karen is the only one not making a recession call—and she is on the edge: a 40% chance of recession, and a long and dangerous tail should the policy shocks set a self-sustaining feedback downward spiral into operation.

What do I think? I think that there are very few times when market timing—diminishing the global stock-market weight in your portfolio from the 1.5 or so that it ought to be to 0.5 or less—has been worth doing in the past 150 years.

But it really looks like now is one of them.

The disjunction between the political-economic Trump situation and real market values:

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and price/earnings ratios:

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is palpable. There is not much of an equity premium to be harvested even if CAPE returns only to the value of 25, which we then thought was very high, it had back in 2015.

Plus even if price/earnings ratios remain at their current levels, recognize that the U.S. has just inflicted a likely recession on itself in the short-term and a BREXIT-class uncertainty-generated growth slowdown in the long-term. That BREXIT-class disaster looks likely to me to be between 1% and 2% per year over the next two decades. International trade in goods is massive. And people pretending that doesn’t matter because we are overwhelmingly a service economy ignores how much of service-sector productivity is linked to and indeed derivative from the goods economy.

And downward tail risk is very high.

And I cannot see any way out, short of Trump resigning, or appointing a competent regent.

These tariffs—whatever they ultimately turn out to be, and even if they would have been a nothingburger if properly prepared and rolled out—dropped suddenly and with little preparation, are inflicting heavy costs on the backbone of the American economy. Expect canceled imports, idle container ships, and an uptick in bankruptcies. The U.S. economy had momentum. Investments in manufacturing, infrastructure, and data centers were being propelled by the Inflation Reduction Act, energy expansion, and defense production. But a policy move with no possible economic strategy justification is bringing the growth machine to a halt. Right now we have to hope that there is no unknown systemic vulnerability out there that can—like mortgage-backed securities falsely marketed as AAA assets—trigger a true financial explosion.

Paul Krugman thinks it likely that there are such systemic vulnerabilities, although we still do not see where they are:

Paul Krugman: A Primer on Financial Crises, Part II <https://paulkrugman.substack.com/p/a-primer-on-financial-crises-part>: ‘The April storm… [when] Trump shocked the world by announcing that he was imposing very high tariffs on just about every nation America trades with. When Trump took office the average U.S. tariff rate was only about 3 percent. In one fell swoop he pushed it above 20 percent, higher than it was after… Smoot-Hawley…. The specifics of market reaction were peculiar…. [(1)] Interest rates on U.S. government debt rose. This was peculiar because normally the increased likelihood of a recession… will cause interest rates on US government debt to fall. Moreover, U.S. interest rates have historically fallen in uncertain times…. [(2)] Economists normally expect that tariffs… will cause the dollar to rise… [plus] rising U.S. interest rates should also have boosted the dollar. Instead, it fell…. [This is] something we… see in emerging markets that lose… confidence…. It’s unprecedented to see what looks like capital flight from the United States.

But[is] capital flight… the whole story? I don’t think so…. We’ve also seen interest rates on relatively risky or thinly traded assets… shoot up…. Bonds… protected against inflatio… rose so much that the spread between these bonds and regular bonds, often seen as a market forecast of inflation, went down…. [But] tariffs will surely lead to higher, not lower inflation…. That spread plunged during the 2008 crisis and again in 2020, so it suggest[s]… that we may be in the early stages of another financial crisis…. What’s the mechanism? As best I can tell, we’re looking at a potential balance sheet crisis focused on hedge funds… [that] need to reduce their exposure to market volatility by selling assets. This drives the prices of assets on their balance sheet down, which in turn requires that they sell even more assets to further reduce their exposure…

There are moments when politics and markets seem to diverge so sharply that it seems inevitable that something has to give.

This isn't just a short-term policy mistake—it’s a structural own goal. And it comes at a time when the U.S. had all the ingredients for an investment-led growth boom. Instead, we may be facing a downturn driven entirely by policy error.

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Another Brief Note on the Flexible-Function View of MAMLMs

Modern Advanced Machine Learning Models—MAMLMs—are they BRAINS!!!! or not? So far it is still very clear to me that they are not. And I see it as highly probable that MAMLMs as we know them are still at the very beginning of what might become the process of building Artificial Intelligence, as capable as they are at Complex Information Processing. & yet we overascribe mind to them. Searle’s Chinese Room does not understand Chinese until it grows as large as the entire Earth and is serviced by tens and thousands of robots traveling at lightspeed. & we are still very far from that…

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If you start from the premise that a language model like ChatGPT is a very flexible, very high dimensional, very big data regression-and-classification engine best seen as a function from the domain of word-strings to the range of continuation words, I think a large number of things become clear.

First, because its training dataset is sparse in its potential domain—nearly all even moderate-length word-sequences that are not boilerplate or cliché are unique—its task is one of interpolation: take word-sequences “close” to the prompt, examine their continuations, and average them. Thus while pouring more and more resources into the engine does get you, potentially, a finer and finer interpolation, it seems highly likely that this process will have limits rather than grow to the sky, and it is better to look at it as an engine summarizing what humans typically say in analogous linguistic situations rather than any form of “thinking”.

I think the post-ChatGPT3 history of LLMs bears this out:

Sebastian Raschka: The State of Reinforcement Learning for LLM Reasoning <https://magazine.sebastianraschka.com/p/the-state-of-llm-reasoning-model-training>: ‘Releases of new flagship models like GPT-4.5 and Llama 4…. Reactions to these releases were relatively muted…. The muted response… suggests we are approaching the limits of what scaling model size and data alone can achieve. However, OpenAI’s recent release of the o3 reasoning model demonstrates there is still considerable room for improvement when investing compute strategically, specifically via reinforcement learning methods tailored for reasoning tasks. (According to OpenAI staff during the recent livestream, o3 used 10× more training compute compared to o1)…

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Second, reinforcement learning—prompt engineering—and such are ways of attempting to condition this interpolation process by altering the domain word-sequence in such a way as to carry it into a portion of the training dataset where, when judged by humans, this function (word-strings) → (continuations) does not suck. That is, in some sense, all they are: You have a function trained on internet dreck in which there are some veins of gold—accurate information and useful continuations of word-strings—and you need to transform the word-string you send so that it lands inside one of those veins.

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CROSSPOST: FRED CLARK: Holy Saturday as the Day When the Gospels for Believers & Agnostics Converge...

As I understand the theology, each year Believers do not only remember and commemorate but participate in Jesus of Nazareth's journey; thus on Holy Saturday God is really and truly Dead here and now, in this world today, and that reality excludes looking forward to Sunday with anything other than a probably vain hope...

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What follows from that? This:

Fred Clark: Holy Saturday <https://www.patheos.com/blogs/slacktivist/2024/03/30/holy-saturday-13/>: ‘This is my favorite day in Holy Week, this Saturday, this unrestful Sabbath, my favorite day in the whole of the liturgical calendar.

Well, actually, “favorite” is the wrong word. It’s not that I like this day so much as that I understand it. It’s recognizable, familiar, lived-in.

This day, the Saturday that can’t know if there will ever be a Sunday, is the day we live in, you and I, today and every day for the whole of our lives. This is all we are given to know.

Easter Sunday? That’s tomorrow, the day after today. We’ll never get there in time. We can believe in Easter Sunday, but we can’t be sure. We can’t know for sure. We can’t know until we’re out of time.

Here, in time, there’s just this day, this dreadful Saturday of not knowing.

There are some things we can know on this Saturday. Jesus is dead, to begin with, dead and buried. He said the world was upside-down and needed a revolution to turn it right-way-round and so he was executed for disturbing the peace. He came and said love was greater than power, and so power killed him.

And now it’s Saturday and Jesus is dead and we’re all going to die and everything I’ve told you about him turns out to be in vain and everything I’ve staked my life on turns out to be in vain. Our faith is futile and we’re still hopeless in our sins. Jesus is dead and we are of all people most to be pitied.

That last paragraph is a paraphrase from St. Paul. What he actually says there, in his letter to the Christians in Corinth, is “if…” What he says, specifically, is: “If there is no resurrection of the dead, then Christ has not been raised; and if Christ has not been raised, then our proclamation has been in vain and your faith has been in vain.…

“If Christ has not been raised, your faith is futile and you are still in your sins. Then those also who have died in Christ have perished. If for this life only we have hoped in Christ, we are of all people most to be pitied.

“But in fact Christ has been raised from the dead…”

But that’s Sunday language, and Sunday certainty, and it doesn’t make much sense here on Saturday.


Here on Saturday, we can hope it’s true and we may even try to believe it’s true, but we can’t know “in fact” one way or another. Not now. Not on Saturday.

And to be honest, it doesn’t seem terribly likely, because Saturday, this Saturday, is all we’ve ever known. Yesterday was this same Saturday, and so was the day before that, and the day before that, and the day before that.

Why should we expect that tomorrow will be any different?

Seriously, just look around. Does it look like the meek are inheriting the earth? Does it look like those who hunger and thirst for justice are being filled? Does it look like the merciful are being shown mercy?

Jesus was meek and merciful and hungry for justice and look where that got him. They killed him. We killed him. Power won.

That’s what this everyday Saturday shows us — power always wins. “If you want a picture of the future,” George Orwell wrote, “imagine a boot stomping on a human face — forever.”

“But in fact,” St. Paul says, everything changes on Sunday. Come Sunday power loses. Come Sunday, love wins, the meek shall inherit, the merciful will receive mercy and no one will ever go hungry for justice again. Come Sunday, everything changes.

If there ever is a Sunday.

And but so, this is why we hope for Sunday and why we live for the hope of Sunday. Even though we can’t know for sure that Sunday will ever come and even if Saturday is all we ever get to see.

What warrant do we have for any belief or even hope that there is any sort of arc tending the world toward justice? And if they were, shouldn’t that properly terrify us all? And do we not—looking around these days—have even less warrant for any belief or even hope that there is any sort of arc tending towards any sort of mercy?

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Trumpist Chaos-Monkey Feces-Flinging in Trade Policy Continues. & It Is Turning into a Foreign-Policy Dumpster Fire...

Trump desperately wants to be on the phone with Xi Jinping, the dog’s has poked its nose into the steel trap, and corrupt media pretending to sanewash everything they can by pretending it is all 11-dimensional chess from people who think AI is a steak sauce…

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In the left-hand ring of the chaos-monkey three ring circus that is the Trump administration, I see this AM that the Bessent Affinity within the Trump administration is trying to make something that might resemble a move of sorts.

The Bessent Affinity is now retconning all the Trumpist chaos-monkey feces-flinging in trade policy. They are going all-in. It all always was, they say, an 11-dimensional chess strategy to resurrect the Obama Trans-Pacific Partnership that Trump blew up on Day 1 of his first presidential term.

And I see four Politico reporters—Megan Messerly, Ari Hawkins, Phelim Kine, and Felicia Schwartz—pretending, unprofessionally, to take it seriously.

They ask no hard questions, but imitate lapdogs begging for treats:

Megan Messerly, Ari Hawkins, Phelim Kine, & Felicia Schwartz: Trump wants to make a deal with China. Here’s how he’s trying to make that happen <https://www.politico.com/news/2025/04/16/trump-china-trade-strategy-00291979>: ‘The administration’s theory of the case is that tariff deals with other countries will isolate China — and urge them to come to the table…. [as] the U.S., will isolate China, disrupt the Chinese supply chain and threaten to cut the country off from the rest of the world…. Announcements from companies moving manufacturing operations to the U.S. and its broader sectoral-based tariff strategy… [are] key components in getting Xi to cooperate…. “Once you see a lot of countries — not just in southeast Asia or Asia, but all over — you’ll see that they’re willing to make deals with America, and that exerts pressure on China to hopefully come to the table,” the official said…. “Get all of Asia but China to the table, incentivize them with lower tariffs and U.S. companies will leave China,” said one person close to the White House. “And yes it makes sense. It’s happening already…”

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And this naturally drives Dan Drezner—recently having moved from his job at Tufts in Medford to become Whateley Chair in Thaumatropic Energies and Dimensional Rift Studies at Miskatonic in Arkham—into Shrill Unholy Madness:

Dan Drezner: The Trump Administration Is Just Grasping at Trade Policy Straws Now <https://danieldrezner.substack.com/p/the-trump-administration-is-just>: ‘Look who discovered a decade-old trade gambit!… Why… is this such an exasperating read?

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ChatGPT, Claude, Gemini, & Co.: They Are Not Brains, They Are Kernel-Smoother Functions

If your large language model reminds you of a brain, it’s because you’re projecting—not because it’s thinking. It’s not reasoning, it’s interpolation And anthropomorphizing the algorithm doesn’t make it smarter—it makes you dumber…

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This is not an annoyance, but rather a cavil—for I think that the very sharp Scott Cunningham has gone down the wrong track here:

Scott Cunningham: Inside the “Brain” of Claude <https://causalinf.substack.com/p/inside-the-brain-of-claude>“: ‘Modern AI models like Claude…. When asked to write a rhyming poem,.. it activates features representing potential rhyming words before beginning the second line… “grab it”… “rabbit” and “habit”. It then constructs the second line to lead naturally to the planned rhyme…. Claude doesn’t generate text “one token at a time”—it’s actively planning future content and working backward to create coherent structures…. LLMs are performing… abstract reasoning, planning, and metacognition…. Two years ago, I would’ve thought that was impossible…. Large language models are complex systems with emergent properties—much like biological organisms…

I think Scott goes awry in word 3 of his title “Brains”. In my view, LLMs are still much too simple for words like “reasoning”, “planning”, and “metacognition” to be useful terms to apply—even purely metaphorically—to their behavior. It leads to much more insight, I think, to start from recognizing that trained neural networks are extremely flexible interpolation functions from a domain (in this case, a string of words) to a range (in this case, the continuation words). They have a training data set that is sparse in the domain—unless a string of words is a quote, a cliché, or boilerplate, by the time the string reaches twenty words long there is less than an 0.1% chance that it has ever been written down before. For prompts in the training dataset your flexible function is obvious: you simply return the continuation.

But for everything else you have to interpolate, somehow. The Deep Magic of the LLMs is in that interpolation process and in the shape of the training data. And thinking “BRAINS!!!” actually, I think, makes it harder to gain insight into why they behave the way they do. All that Scott has to say in his exposition of Lindsey et al. does say interesting things about the “how”. But I want to know the “why”. And even the statements and findings about the “how” are, I think, corrupted into near-uselessness because of the “BRAINS!!!” frame.


Why do I think this?

Well, yesterday I had a University of Chicago citation:

Machiavelli, Niccolò. 1513 [2008]. “Letter to Francesco Vettori, December 10, 1513”. In The Prince. Trans. & ed. Peter Bondanella. Pp. 109–113. Oxford: Oxford University Press.

And so I gave ChatGPT a task:

Q: Please get me the book from archive.org, and spell out the URL please.

My question asks ChatGPT to find a string of symbols, beginning with “archive.org/& such that when these symbols are entered into the address bar of web browser and the “return” key is pressed, the web browser loads a file that is a scanned-and-OCRed digital version of the print book published in 2008 by Oxford University Press that is the version of Machiavelli’s Il Principe translated and edited by Peter Bondanella.

The correct string of symbols to return to accomplish this task is “archive.org/details/n…

But this is what ChatGPT gave me when I assigned it the task:

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Yes, Virginia, Predestination Marx Is Not Fake (ANNOYANCES)

Marx wrote unvermeidlich. That matters much more than Peter Gordon dares to admit. It means one has to read Capital as not just an analysis but as a work in the Judæo-Christian prophetic tradition as well as a work in what Marx and Engels thought of as fully science if you are to read it well. Marx really did see himself as history’s and sociology’s Darwin. And to pretend that he did not is to betray one’s scholarly-intellectual obligation to him…

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I must say I do find myself cranky this morning. And so I wonder: am I being unfair here to marxisant Peter Gordon, who seems to have closed off his mind to a lot of what is really going on in the thought of Karl Marx?

Am I? To cut to the chase: No. I really do not think I am.

The Reitter/North new translation of Marx’s Capital <https://press.princeton.edu/books/hardcover/9780691190075/capital> vol. I is, as best as I can tell, truly excellent—it made me read it again, cover to cover, with the old Moore-Aveling and Fowkes translations also open on the desk, for fun.

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And Peter Gordon <https://www.lrb.co.uk/the-paper/v47/n06/peter-e.-gordon/hair-splitting> does do a nice service by drawing attention to it.

But this from Peter Gordon:

Peter Gordon: Hair-Splitting <https://www.lrb.co.uk/the-paper/v47/n06/peter-e.-gordon/hair-splitting>: ‘The analogy to natural science is unfortunate… mischie[vious]… implies that human freedom must yield to naturalistic necessity.…. Marx did not use the term [“laws”] in the sense we have in mind when we say that laws govern… biolog[y]… or the… planets…. Marx… knew that the economy was a human creation and therefore susceptible to historical and social change…. In his later years Marx came to appreciate the diversity of human cultures and economic practices…. Whatever commitment he had to discovering necessary or universal laws in the economic sphere yielded to a far more pluralistic acknowledgment of the many paths from past to future.

This shift is evident when we consider the differences between the [1872] French translation of Capital and the [1867] German original…. German… “The country that is more developed industrially only shows, to the less developed, the image of its own future.”… French… “The most industrially developed country only shows those that follow it on the industrial ladder the image of their own future.”… This seemingly minor amendment has dramatic consequences… leaves history open to alternative routes that do not all climb the same ladder of Western industrialisation…

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It is simply gonzo wrong. And so Peter Gordon will henceforth serve as one of my poster children on how not to read big, difficult books.

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