2024 Must be a Year when Facts Matter: The Significance of Jan 6
On the anniversary of January 6, we look back at what we view as the end of facts and the death of expertise.
We review our short list of Top 5 biggest factual voids in economics, policy, and financial markets that have been bandied about in the running political stupid-a-thon.
In light of Biden’s Valley Forge speech, we take a look back at some visuals from January 6, 2021 that remind us that facts count. To quote De Niro from Deer Hunter, "This is this. This ain't something else. This is this."
This will be a year when objective metrics should be used more often and viewed through a conceptual framework that does not allow the risks to be completely ignored.
Backward looking facts and trends always factor into tomorrow’s scenarios for economics and finance, and the forward path of political and policy risks ahead should not be completely disconnected from what came before – and a lot has come before that needs to be pondered.
“The ideal subject of totalitarian rule is not the convinced Nazi or the convinced Communist, but people for whom the distinction between fact and fiction (i.e., the reality of experience) and the distinction between true and false (i.e. the standards of thought) no longer exist.” – Hannah Arendt
The quote above is from Hannah Arendt 1951 (Sourced from Strongmen: Mussolini to the Present by Ruth Ben-Ghiat). This struck me as a good way to sum up what is going on in the US right now and Arendt’s history has relevance to January 6.
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We thought we would honor the January 6 anniversary with a very short list of our favorite deviations from market and economic reality in a year when politics will determine who calls the shots on policy starting in January 2025. That is when there will be a fresh bite at the apple for UST default. Under some low probability long-tailed scenarios, this could set the stage for someone who might have “President-for-Life” ambitions. A constitutional amendment to the 22nd amendment is a pole vault without a pole (i.e., not a high jump), but not impossible subject to the election.
We also include a few visuals from Jan 6 to remind ourselves of what reality looks like but is sometimes evaded by those who no longer see a need for “the distinction between true and false.”
Top 5 Trumpian Declarations of Nonsense
Nonsense Declaration #1: I built the greatest economy in US history…perhaps ever.
This one has been heard more than a few times by anyone who listens (estimates of who listens varies). We have picked over this one for recreational purposes more than a few times before (see Tale of the Tape: Trump vs. Biden 12-4-23, US Debt % GDP: Raiders of the Lost Treasury 5-29-23).
Buying that line of nonsense involves pretending the 1980s and 1990s did not happen, when markets and growth boomed under both parties in the White House. Reagan’s and Clinton’s records in the economy and markets crush Trump (and Bush, Obama, and Biden).
During 2018, if we look at the returns on the benchmark indexes for equities and debt, the year 2018 had the worst performance by the #1 asset class (in that case, it was cash) since the invention of bond indexes. 4Q18 was a disaster. Low returns on cash won that year during an expansion. That does not earn bragging rights.
The 2019 asset class performance rebounded nicely, but it was helped by three Fed cuts in the face of weakening corporate fixed asset investment (just go back and read the FOMC statements). Then came COVID in 2020 and a return to ZIRP and QE and active bipartisan stimulus from Congress. 2017 to 2020 was a period that I watched closely. What the objective facts indicate is very different from Trump’s claims.
The “I and I alone built the greatest economy” theme involves ignoring economic facts such as GDP, consumer spending, asset returns, widespread industry evolution (tech, energy, banking, etc.) that happened under bipartisan leadership.
The facts show that Trump had one of the worst performances of Presidents using a wide range of indicators looking back 50 years. That will get relitigated soon enough, but it is a reminder of why Trump ducks GOP debates. His base might ignore Biden in a debate, but there is a chance that they might listen to Trump’s GOP opponents. This is why he did not sack up and participate. Weak. The fact is, he would not be able to counter the facts since he seldom considers them.
Nonsense Declaration #2: I collected “billions” in tariffs from the Chinese.
Trump collected zero from China in tariffs (maybe his hotel/golf businesses collected some cash, but that’s a different story). This is not that important since the facts don’t change, but the simple reality is that Trump will not say the words (“buyer pays tariffs”).
Trump is allowed to skate around that fact and never gets pressed on it by the media. It is a simple lie. Another explanation is that he lives in a dreamworld or took economics in a rubber room. The tariff fact would just be a petty political peeve if he had not recently proposed a universal 10% tariff on all imports.
The trade war ended up hammering farmers (who love the guy) and ended up with a bailout more expensive than the auto bailout. And it was self-inflicted.
Nonsense Declaration #3: I made the US energy independent, and Biden ended that.
We don’t like Biden energy policies much either, but the reality is that market forces still drive oil and gas despite regulatory inefficiencies and barriers put up by Biden policy.
2023 saw record oil production, record natural gas production, record liquids production broadly, and record oil and natural gas exports. Someone should ask Trump what he thinks of that. I saw a recent interview on CNBC of Rick Perry, Trump’s Secretary of Energy, who was going off on US energy dependence. He was then called out on the facts…to which he basically replied, “Ooops” and his segment wrapped quickly.
The White House and congressional action can adversely impact oil and gas production and undermine infrastructure investment (that is a separate discussion), but oil and gas production soared to record levels under Obama first – not Trump – and Obama approved exports.
The fact is that Biden will not counter Trump’s ignorance on this issue since that will alienate Biden’s base and the “I-hate-carbon” crowd. So, Trump is lying, and Biden has folded on the topic.
There are plenty of things to criticize on Biden energy policy, but the Trump claims are a part of fact denial as he searches for themes. After all, if you can convince someone you won the election after losing by many millions and are 0 for 2 in popular votes (he claimed fraud in the vote even when he won), I guess you can sell anything.
Nonsense Declaration #4: I did more for Israel than any President in history
I know Trump is not a big reader (it is like a Star Trek episode: Scotty, divert all power to the mouth from the eyes and ears!), but there was a guy named Harry Truman who was a bit involved back in 1948 (recognizing Israel as a nation on the day it was established by David Ben-Gurion).
There was also Nixon, who stoked up DEFCON and mobilized the military to almost have a nuclear war in 1973 in defense of Israel. And then there was Carter who got Egypt and Israel together to get peace in place.
Trump could have avoided the “fine people on both sides” moment in Charlottesville when his supporters were chanting “Jews will not replace us!” They also chanted “Blood and Soil.” The “blood” topic has come up again of late in a separate context. Nazi imagery and ideology are never good ideas.
Nonsense Declaration #5: I am the best on the military and know more than the generals!
While his evasive tactics in avoiding the enemy (i.e., the draft board) were clearly on display in 1968 during the peak of the Vietnam War, his approach to the military fits in with the Dictator 101 handbook. The dictator wannabe handbook (large print pamphlet for Trump) is control the military leadership’s views and actions. Since they work for you, the leverage is that you can ruin them if they don’t play ball. Make sure they follow you blindly. If they don’t, attack and undermine.
The same is true in foreign policy and intelligence. Put followers in place and not advisors. This gets back to whether you believe the story that he calls war heroes and KIAs “suckers” and those maimed in war as unpleasant visuals (see Political Economy: The Contrasts are Not Hard to Find These Days 10-3-23).
The anti-globalist theme Trump spins can be translated as:
“I want to be the sole contact (or handpick followers) with global leaders. I hate institutional dilution of my influence. I want complete control of the narrative. I like working with dictators since I can build a bilateral relationship. I need more love letters from more dictators and rising autocrats. I can also make friends with the guy who controls sovereign investment funds. I love those guys. So does Jared.”
Breaking up NATO would also play to the narrow network of personal relationship building and not dealing with blocs in trade or geopolitics. The end game might be a network of autocrats. It is like a cheesy made for TV movie, but it is not far-fetched these days with so much support for Putin and a deal always to be cut with China. Not to mention Orban and Erdogan. The Autocrats Gang. They could get new lids. They could double up on hat inventory: Make Autocrats Great Again. Made in China.
On that note, below we recap a true believer’s discussion while spectating Jan 6 replays. The reactions might also demonstrate how a spineless, moral and ethical amputee in Congress might view the Day of Insurrection.
With artificial intelligence such a hot topic these days, we cannot neglect the very real lack of human intelligence that has become an epidemic.