Trump Regime

Is This Why Trump is Considering Herman Cain?

JM Ashby
Written by JM Ashby

Yesterday I honestly couldn't think of a single reason why Trump would be considering former GOP presidential candidate and failed pizza mogul Herman Cain for a position on the board of the Federal Reserve, but I may have found one.

Cain appeared on the Fox Business channel this morning where he appeared to criticize the Fed for keeping a close eye on inflation rather than deflation.

WASHINGTON (Reuters) - Former pizza chain executive Herman Cain, who is under consideration for a seat on the Federal Reserve Board, said on Friday the central bank should be more concerned about deflation than inflation. [...]

“I would try to encourage the Fed not to make inflation a fear factor because deflation ... is more of a fear factor than inflation,” Cain said in an interview with Fox Business Network.

Deflation and inflation can both be a problem, but we're nowhere even close to seeing deflation in America right now.

The Federal Reserve and their chairman Jerome Powell (pictured above) were more or less forced to raise interest rates several times in 2018 to prevent inflation from increasing more than it already has. It's normal to see slow and steady inflation when the greater economy is in good health, but Trump's trade war and other economic policies contributed have to higher inflation as the cost of basic goods, health care, and housing have all increased more than they otherwise would have under a different president.

With very few exceptions, the United States has not seen a period of significant deflation in nearly 100 years, but Herman Cain may have told Trump exactly what he wanted to hear during his recent visit to the White House. There's no doubt in my mind that Cain spoke to Trump like one idiot to another; two men who have no idea how anything works but are still certain they know how everything works.

  • muselet

    “I would try to encourage the Fed not to make inflation a fear factor because deflation … is more of a fear factor than inflation,” Cain said in an interview with Fox Business Network.

    Huh?

    Investopedia:

    By definition, monetary deflation can only be caused by a decrease in the supply of money or financial instruments redeemable in money. In modern times, the money supply is most influenced by central banks, such as the Federal Reserve. Periods of deflation most commonly occur after long periods of artificial monetary expansion. The early 1930s was the last time significant deflation was experienced in the United States. The major contributor to this deflationary period was the fall in the money supply following catastrophic bank failures. Other nations, such as Japan (1990s), have experienced deflation in modern times.

    Deflation is caused by a number of factors but is largely attributed to two: a decline in aggregate demand (leftward shift in the aggregate demand curve) and increased productivity. A decline in aggregate demand typically results in subsequent lower prices. Causes of this shift include reduced government spending, stock market failure, consumer desire to increase savings, and tightening monetary policies (higher interest rates). Regarding productivity, companies operate more efficiently as technology advances. These operational improvements lead to lower production costs and cost savings transferred to consumers in the form of lower prices.

    Price deflation through increased productivity is different in specific industries. For example, consider how increased productivity affects the technology sector. In the last few decades, improvements in technology have resulted in significant reductions in the average cost per gigabyte of data. In 1980 the average cost of one gigabyte of data was $437,500; by 2010, the average cost was 3 cents. This reduction causes the prices of manufactured products that use this technology to fall also.

    [links omitted]

    Economists no longer think deflation is evil and must be avoided at all costs (you should pardon the expression), yet Herman Cain thinks we should all be afraid, be very afraid.

    (Old joke: At a parade, a group marches past a mother, who remarks to her husband, “Look, dear. Little Johnny’s the only one in the company in step.”)

    No wonder Cain is a frontrunner for a seat on the Federal Reserve.

    –alopecia

  • Kevin Krasnansky

    Read the first sentence of that last paragraph again.

    “Except when this has happened, this hasn’t happened.”

    Your argument is strong. That sentence makes it look dumb.

    • JMAshby

      The last time we saw deflation was a 0.14 percent drop in August of 2015. It’s one of the “very few exceptions.” There’s nothing wrong with that sentence.

      • Kevin Krasnansky

        The second clause says that it hasn’t happened in 100 years. The first clause says that it has happened. The sentence is self contradicting.

        It works for jokes, like Zap Brannigan bragging that with very few exceptions, he hasn’t gotten the entire planet murdered. Otherwise, stay away. Far away.

        I’d suggest something like “The U.S. has seen very few periods of deflation in the last 100 years.”

        I don’t like good arguments getting dismissed because of minor mistakes. That’s a minor mistake. The argument is good. The premise is accurate. The statement of the premise is questionable.

        • JMAshby

          I’d suggest you write your own shit.

          • Kevin Krasnansky

            Hell no. I can’t do what you do.

            I’m a shitty writer, but I’m a good editor, and I enjoy strengthening the arguments I agree with. I think I’ve commented here half a dozen times in the last…oh… 10 years? 15 years? When did Bob and Chez start collaborating?

            Whatever. Unsolicited advice is unsolicited advice.

            Keep up the good fight.