ScratchPad 2024-07-31 We:
A scratchpad…
CryptoGrifters: It did not take very much actual $$$$$$ to move Trump from “seems like a scam to me” to offering BitCoin holders a bit of hope for an actual use-case—selling their BitCoin to the federal government:
Duncan Black: The Strategic BitCoin Reserve: ‘There is something almost too perfect about the demand from The Bitcoin Community for the federal government to buy up hundreds of billions of their libertarian fake money. Gimmetarianism every time <https://www.eschatonblog.com/2024/07/the-strategic-bitcoin-reserve.html>
Harrison Miller: Bitcoin Reserve, Fire SEC’s Gary Gensler, Trump Makes Campaign Vows: ‘Trump… promised to make the U.S. the “crypto capital of the planet” and create a bitcoin “strategic reserve”…. He also repeated his campaign promise to commute the sentence of Ross Ulbricht, founder of the online black market, the Silk Road…. Robert F. Kennedy Jr. also pitched a national bitcoin reserve while speaking at the conference Friday. Kennedy said he would sign an executive order for the U.S. Treasury to purchase 550 bitcoin a day. Kennedy’s goal is to establish a strategic reserve of 4 million bitcoin to match the country’s gold stake… <https://www.investors.com/news/bitcoin-price-trump-bitcoin-reserve-gary-gensler/>
Economics: Dan Davies observes a bad start to the Starmer-Reeves government in the UK:
Dan Davies: ‘Cancelling investment programs as a means of achieving a deficit target is bad. (It’s one of the key things they teach you in business school that investment and financing decisions have a separation theorem – you can’t make a bad investment good by leveraging it, and a good investment doesn’t become bad if it needs to be debt-financed). And so, if the news speculation is right, Chancellor Reeves is about to do a dumb thing…. The problem is that in order to continue with those projects, she would need to raise taxes. Not necessarily in a “how are you going to pay for it?” sort of way, but in the sense of “the overall contribution of the government sector to demand has to be neutralised to avoid making the budget inflationary” sense. And as it happens, our Chancellor has boxed herself in by pledging not to raise any of the big important taxes that could achieve this goal during the election campaign… <backofmind.substack.com/p/the-present-t…>
ُThe underlying principle, I believe, is this: do not make promises during an election campaign that commit you to do stupid policy afterwards.
Economics: Again: this is just stupid:
Nick Timiraos: A Fed Rate Cut Is Finally Within View: ‘Central-bank officials meet in the coming week looking ahead to a September rate cut to maximize chances of a soft landing…. One reason officials aren’t likely to deliver a cut this time despite the growing case for one is that it would likely be the first reduction in a sequence to recalibrate rates lower. Officials have been surprised by inflation in the past and want more evidence it is truly cooling before crossing the rate-cut threshold… <wsj.com/economy/central-banking/fed-nea…>
Cutting interest rates does not mean that you are committed to cut them again in a month, or two, or three. Alan Greenspan had no worries about cutting interest rates once in the summer of 1995 by 0.25%-points, waiting to see what would happen, deciding to cut them again in the winter of 1995-1996 by 0.50%-points, and then stop. Yes, the Fed has trained markets to believe that the first rate cut will be “consequential”. But it did not have to do this. It was a stupid thing to do. Moreover, Powell could reset by coming out of the FOMC meeting and say: “We view this situation like 1995. We have cut, we will look around, we might cut again, we might not. Remember, the next move after the winter of 1995-1996 was a single 0.25%-point increase in the spring of 1997…”
Neofascism: Martin Wolf joins me in saying: plutocrats think kleptocrats are their friends, but kleptocrats know plutocrats are their prey. I presume this column of Martin’s is directly addressed to Steve Schwartzman, Marc Andreesen, Peter Thiel, & Elon Musk—and others:
Martin Wolf: Naïvety about Trump threatens all our futures: ‘Plutocrats must understand that wealth is only a source of power if it is protected by a law-governed state…. Wealth is a source of power if and only if it is protected by a law-governed state. Under a despotism… wealth… is the tyrant’s plaything…. The US is not Russia. Donald Trump is not Putin. Nevertheless, Trump has made it clear that he would like to use the office of president to punish his enemies. Indeed, he has specifically referred to former representative Liz Cheney, President Joe Biden and vice-president Kamala Harris as his targets…. In the past, the power of the US president has been contained by a strong civic morality, by the decency of its senior political figures, by an independent judiciary and by independent political parties. But much of this has been eroded. Given all this, the re-election of Trump will have global implications… <ft.com/content/a3958b80-02d4-4d8c-a58c-…>