I don't think Trudeau was grovelling. Canadian premiers wanted him to go. Trump demands grovelling, and no country can afford not to try to ameliorate the situation. The US causes this unprecedented threat to an ally; no need to blame the victim.
Trump's ability to travel to certain countries will likely depend on each nation's willingness to allow him entry. We’re in uncharted territory, so we’ll see.
Why am I so musically naive? I’m a musician a singer/songwriter and yet I’ve remained in a cave. I recognize the 1980s hits but I’m just discovering them as
Paul brings out these great groups.
Thank you, Paul. It’s not too late to expose an old dog to new tricks.
So instead of applying Confucian "rectification of names," we are seeing "rectification of numbers" (but in this case not in an attempt at more accurate description so much as an exercise in ... creative visualization).
As to Trump. I fear we may safely assume he does not care about how tariffs wil affect the Midwest. Personally, he has no more elections to worry about.
Of course he will. After all Trump has ceded control to Musk and Project 2025. As lon as he can golf, watch Fox, and have rallies with his cult he doesn't care.
A lot of dairy products were sold to China. China hit back on US tariffs and targeted US dairy. They aren't billionaires so they didn't get any of the 16 billion Trump came up to pay off farmers that got hurt. No subsidies.
When the prices of milk goes up, the farmers don't make any more money. It's all middlemen.
This was my thought as well. Since the Rs aren’t screaming about his desire to eliminate the debt ceiling, he will be more than happy to subsidize those in states that voted for him so he can make himself a hero of tariffs.
Two things to keep in mind re potential tariffs: (1) the direct impact is on American importers as opposed to Chinese exporters and (2) Trump’s boundless greed and venality. It’s entirely plausible that the representatives of various affected businesses and sectors* will approach the administration seeking “exceptions.” Under this scenario, Trump will hold out his hand and say “gimme.” Then it’s a matter of negotiating how much and making sure that the relevant congressional Republicans get their taste. Suddenly, the proposed tariffs aren’t so sweeping.
These exceptions are another cost of doing business. These negotiations are going to be done by non-standard channels. The first indications will be in the wording and execution of the tariffs. Trump will likely break up the US into Blue/Red economies and use the tariffs politically to squeeze fealty from Blue states. That isn't a perfect weapon, but perfect will not hold back the bad.
As I’m reading this I’m also thinking that buying Trump crypto will be a cost of doing business too. The Trump family will make a huge amount of money over this and can threaten to dump crypto if other countries or companies don’t comply with his wishes. He’s a mobster.
While reading your newsletter this a.m. I realized why I so enjoy it each day, apart from the information and concepts you present. You write with clarity and targeted precision, of course, but say the unspoken part out loud - the bottom-line, bitter truth about trump and his actions. This is what is missing from MSM in these times as the "sane-washing" takes over all supposed reporting. Thank you.
Trump is an idiot convinced he is a genius, and a stable one at that. Unlike the first reign of error where he at least surrounded himself with actual smart people for a while, this time he is surrounding himself with idiots, yes men and other sycophants. The shit is going to hit the fan at some point and there is not a one of them that will have a clue about what to do. But the will be quick to blame immigrants, gays, trans kids, the Deep State and Democrats for the mess they will have made.
The Canadian response to Trump’s economic aggression— offering to instead make the west coast states and New England states new Canadian provinces— might have the Midwest clamoring to get on the bandwagon. I bet midwesterners would like the health care too.
Agreed, but as a Canadian I would happily see the absorption of Vermont after a suitable referendum. The state of Washington would be tasty as well, but obviously the name would have to go.
How much will inflation rise once rebuilding starts in LA? I would think demand would cause the price of building materials to shoot up nationwide, and tarrifs on Canadian lumber would exacerbate the inflation effect.
We are should pause to consider the difference between inflation and rising prices due to other things, like say shortages or surges in demand due to things like earthquakes, fires, hurricanes, inventions, demographic change and plain old changes is consumer preferences. Prices for plywood on the west coast yes, probably will go up. Will that be due to inflation ?
Inflation is a monetary phenomenon. Unfortunately, this understanding has been lost for the ages. Every time someone sees higher prices for anything they think it is due to inflation. Then they have someone to blame for it. Whoever they feel like blaming.
COVID was not a monetary event and did not result in inflation. But when the government makes more money by borrowing it from the central bank in order to pay every American to stay home from work, that should result in inflation, if words mean anything. Because that pretty much meets the definition of it. Messing around with the money supply in such a way that there is too much chasing too few goods.
Your definition of inflation as a “monetary phenomenon” is incorrect (in short, Milton Friedman was wrong). It’s a money-flow phenomenon. All the things you say aren’t inflation are, in fact, inflation. The macroeconomic measurement of inflation is determined by adding up all the microeconomic measurements of inflation.
I am a political guy. I don’t want to discuss monetary policy with my neighbors. Rising prices=inflation in the minds of voters. Thanks for making the distinction, though.
The reason the British media is so much worse at economic reporting is the majority of owners of their most influential papers are conservatives. There was a lot of cheerleading for the disastrous Brexit which is evidence that British conservatives are just as deluded about economic policy as Republicans. The Tories even intimidated the BBC, doing things like threatening its funding and putting a right winger on its board.
I am concerned because we live in the Midwest and depend so much on Canada's oil and gas. I recently read that the U.S. is the world's top oil producer. Why do we rely so much on Canadian oil and gas?
The US produced ~13 million barrels of oil per day (BPD) in 2024 according to the EIA. The US consumed ~19 million BPD in 2024. The US is both the largest producer and the largest consumer of oil.
You are correct but the way this is written it is likely to mislead the average reader.
The US runs a surplus in petroleum products. While it does import crude oil, it exports more refined products than comes from those imports.
We could consider that our imports of oil are only used for the purpose of exporting refined products. But that is not true either, as there is a lot of complexity in terms of logistics (pipelines), oil grades, what refineries are set up to process, etc. So the whole situation is complicated and does not lend itself to pithy soundbites that are accuate.
Our refineries are built to refine a different kind of crude oil than much of the oil we produce, so we import the kinds we can refine and export the kinds we can’t.
And since the aim is to make money by doing so, it makes sense that these exports would be in the form of refined products. These are either finished goods or intermediaries for chemical manufacturing. In both cases there is value added to them. And money is made from doing that. That is what the oil business is about. The trick is to make sure that your refining capacity does not exceed the supply of feedstocks available because refineries are expensive to build and run. You don’t want to be a small fish in a big pond either.
I don’t care what some say about your economic analyses (just kidding)…..Your choices for your musical codas are….impeccable. I look forward to both each morning. Thank you.
This wouldn’t be the route you would choose to growth, no, but much of China’s growth in recent decades has been obtained by turning peasants with extremely low productivity into factory workers with much higher productivity (and workers building ghost cities…that’s another factor). So you can possibly limp through the current situation until you can’t. I don’t think you can avoid it long term, but I also don’t think you can correctly time a China short.
I'm glad you picked up on Trudeau's spineless visit to the berghof. Why, exactly, did he feel the need to do this, especially given that he was about to resign ?
Trump doesn't do summits the old-fashioned way, where policy and agreements are worked out in advance. He's holding court. Trudeau was wise enough to understand Trump's intentions better. The relationship is vital to both countries. Canada and Mexico need to listen and respond.
That's my take, and it means very little. Your question is a good one and speaks to Trump's dysfunction in economic and diplomatic relations.
Plus he is a skilled diplomat and he's extremely charming, and erudite, and can befuddle trump with actual knowledge of the issues, I mean the man can eloquently discuss physics in two different languages, and trumpolini barely grunts out one.
I don't think Trudeau was grovelling. Canadian premiers wanted him to go. Trump demands grovelling, and no country can afford not to try to ameliorate the situation. The US causes this unprecedented threat to an ally; no need to blame the victim.
Claudia Sheinbaum Pardo showed how unnecessary groveling is. Trudeau should have used the telephone.
And a couple of well-produced videos that cleverly ridiculed the Orange Felon's nonsensical blustering.
Plus, as a felon, CFDT can’t enter Canada.
Trump's ability to travel to certain countries will likely depend on each nation's willingness to allow him entry. We’re in uncharted territory, so we’ll see.
Point, counterpoint.
Thank you so much…also for the musical codas!!!
They're great!
Why am I so musically naive? I’m a musician a singer/songwriter and yet I’ve remained in a cave. I recognize the 1980s hits but I’m just discovering them as
Paul brings out these great groups.
Thank you, Paul. It’s not too late to expose an old dog to new tricks.
Love the music choice!
That was great, I need to rewatch Darko
So instead of applying Confucian "rectification of names," we are seeing "rectification of numbers" (but in this case not in an attempt at more accurate description so much as an exercise in ... creative visualization).
As to Trump. I fear we may safely assume he does not care about how tariffs wil affect the Midwest. Personally, he has no more elections to worry about.
Trump WASTED $12 billion providing graft to Midwest farmers for lost corn sales resulting from his previous CHI-INA tariff debacles. He’ll willingly waste our tax dollars again.
I wonder if he’ll spend our tax dollars flying to and fro from DC to Florida every weekend to play golf like last time?
Of course he will!
If pigs could really fly….
We’d all save a ton of travel money!
Of course he will. After all Trump has ceded control to Musk and Project 2025. As lon as he can golf, watch Fox, and have rallies with his cult he doesn't care.
I have a friend with a small dairy. The tariffs trashed their business. Still, she's an ardent MAGA. The things you do for love.
A lot of dairy products were sold to China. China hit back on US tariffs and targeted US dairy. They aren't billionaires so they didn't get any of the 16 billion Trump came up to pay off farmers that got hurt. No subsidies.
When the prices of milk goes up, the farmers don't make any more money. It's all middlemen.
Did they get subsidies?
This was my thought as well. Since the Rs aren’t screaming about his desire to eliminate the debt ceiling, he will be more than happy to subsidize those in states that voted for him so he can make himself a hero of tariffs.
And the soybeans will have to be in perpetuity those markets won't come back.
#45’s ideas about tariffs makes you wonder how he “graduated” from the Wharton School of Business.
How about the many Rs with degrees from good universities who continue to insist that massive tax cuts for the uberweatlty pay for themselves?
🤬🤮🤬🤮🤬
He didn’t. He attended classes there. He graduated from Univ of Pennsylvania.
Money talks!
He cares about NO ONE else!
Two things to keep in mind re potential tariffs: (1) the direct impact is on American importers as opposed to Chinese exporters and (2) Trump’s boundless greed and venality. It’s entirely plausible that the representatives of various affected businesses and sectors* will approach the administration seeking “exceptions.” Under this scenario, Trump will hold out his hand and say “gimme.” Then it’s a matter of negotiating how much and making sure that the relevant congressional Republicans get their taste. Suddenly, the proposed tariffs aren’t so sweeping.
* This could play out similarly with immigration.
Paul,
These exceptions are another cost of doing business. These negotiations are going to be done by non-standard channels. The first indications will be in the wording and execution of the tariffs. Trump will likely break up the US into Blue/Red economies and use the tariffs politically to squeeze fealty from Blue states. That isn't a perfect weapon, but perfect will not hold back the bad.
Thanks for this reminder.
Tim
As I’m reading this I’m also thinking that buying Trump crypto will be a cost of doing business too. The Trump family will make a huge amount of money over this and can threaten to dump crypto if other countries or companies don’t comply with his wishes. He’s a mobster.
Just as Canada is working on a strategy to target tariffs to red states.
I am so glad Paul Krugman has started writing here. I have read his books, and actually understand some of what he writes!
I love him!
While reading your newsletter this a.m. I realized why I so enjoy it each day, apart from the information and concepts you present. You write with clarity and targeted precision, of course, but say the unspoken part out loud - the bottom-line, bitter truth about trump and his actions. This is what is missing from MSM in these times as the "sane-washing" takes over all supposed reporting. Thank you.
Trump is an idiot convinced he is a genius, and a stable one at that. Unlike the first reign of error where he at least surrounded himself with actual smart people for a while, this time he is surrounding himself with idiots, yes men and other sycophants. The shit is going to hit the fan at some point and there is not a one of them that will have a clue about what to do. But the will be quick to blame immigrants, gays, trans kids, the Deep State and Democrats for the mess they will have made.
The Canadian response to Trump’s economic aggression— offering to instead make the west coast states and New England states new Canadian provinces— might have the Midwest clamoring to get on the bandwagon. I bet midwesterners would like the health care too.
Canada does NOT want Jesusland!
Agreed, but as a Canadian I would happily see the absorption of Vermont after a suitable referendum. The state of Washington would be tasty as well, but obviously the name would have to go.
I live in Vermont, and I have Canadian relatives. I'm fine with joining up.
How much will inflation rise once rebuilding starts in LA? I would think demand would cause the price of building materials to shoot up nationwide, and tarrifs on Canadian lumber would exacerbate the inflation effect.
We are should pause to consider the difference between inflation and rising prices due to other things, like say shortages or surges in demand due to things like earthquakes, fires, hurricanes, inventions, demographic change and plain old changes is consumer preferences. Prices for plywood on the west coast yes, probably will go up. Will that be due to inflation ?
Inflation is a monetary phenomenon. Unfortunately, this understanding has been lost for the ages. Every time someone sees higher prices for anything they think it is due to inflation. Then they have someone to blame for it. Whoever they feel like blaming.
COVID was not a monetary event and did not result in inflation. But when the government makes more money by borrowing it from the central bank in order to pay every American to stay home from work, that should result in inflation, if words mean anything. Because that pretty much meets the definition of it. Messing around with the money supply in such a way that there is too much chasing too few goods.
Your definition of inflation as a “monetary phenomenon” is incorrect (in short, Milton Friedman was wrong). It’s a money-flow phenomenon. All the things you say aren’t inflation are, in fact, inflation. The macroeconomic measurement of inflation is determined by adding up all the microeconomic measurements of inflation.
I am a political guy. I don’t want to discuss monetary policy with my neighbors. Rising prices=inflation in the minds of voters. Thanks for making the distinction, though.
I love that you used “dog’s breakfast” (with a strike over.) That was the original title of my newsletter, renamed in November to Embodied Resistance.
Liz Truss failed to outlast a head of lettuce... what a visual!
The reason the British media is so much worse at economic reporting is the majority of owners of their most influential papers are conservatives. There was a lot of cheerleading for the disastrous Brexit which is evidence that British conservatives are just as deluded about economic policy as Republicans. The Tories even intimidated the BBC, doing things like threatening its funding and putting a right winger on its board.
That says bad things re the prospects for US newspapers' economic reporting.
"... owners of their most influential papers are conservatives."
WashPost- MAGA owner
LATimes- MAGA owner
Baltimore Sun- MAGA owner
Wall Street Journal...
NYTimes- ????
Phila Inquirer-Nonprofit corporation.
WSJ Rupert Murdoch propagandist extraordinaire and owner of Fox propaganda channel and the tabloid trash NY Post. FIFY
I am concerned because we live in the Midwest and depend so much on Canada's oil and gas. I recently read that the U.S. is the world's top oil producer. Why do we rely so much on Canadian oil and gas?
The US produced ~13 million barrels of oil per day (BPD) in 2024 according to the EIA. The US consumed ~19 million BPD in 2024. The US is both the largest producer and the largest consumer of oil.
You are correct but the way this is written it is likely to mislead the average reader.
The US runs a surplus in petroleum products. While it does import crude oil, it exports more refined products than comes from those imports.
We could consider that our imports of oil are only used for the purpose of exporting refined products. But that is not true either, as there is a lot of complexity in terms of logistics (pipelines), oil grades, what refineries are set up to process, etc. So the whole situation is complicated and does not lend itself to pithy soundbites that are accuate.
I don’t see what is misleading about it. But your comment enlarges our understand of the subject by adding qualifying details.
Our refineries are built to refine a different kind of crude oil than much of the oil we produce, so we import the kinds we can refine and export the kinds we can’t.
The United States exports about three-fourths of the oil and gas produced here.
https://www.eia.gov/tools/faqs/faq.php?id=727&t=6
And since the aim is to make money by doing so, it makes sense that these exports would be in the form of refined products. These are either finished goods or intermediaries for chemical manufacturing. In both cases there is value added to them. And money is made from doing that. That is what the oil business is about. The trick is to make sure that your refining capacity does not exceed the supply of feedstocks available because refineries are expensive to build and run. You don’t want to be a small fish in a big pond either.
I don’t care what some say about your economic analyses (just kidding)…..Your choices for your musical codas are….impeccable. I look forward to both each morning. Thank you.
China: if you combine a shrinking workforce with 20% youth unemployment doesn't that add up to recession? As in any other country on the planet?
This wouldn’t be the route you would choose to growth, no, but much of China’s growth in recent decades has been obtained by turning peasants with extremely low productivity into factory workers with much higher productivity (and workers building ghost cities…that’s another factor). So you can possibly limp through the current situation until you can’t. I don’t think you can avoid it long term, but I also don’t think you can correctly time a China short.
I'm glad you picked up on Trudeau's spineless visit to the berghof. Why, exactly, did he feel the need to do this, especially given that he was about to resign ?
Chenda,
Trump doesn't do summits the old-fashioned way, where policy and agreements are worked out in advance. He's holding court. Trudeau was wise enough to understand Trump's intentions better. The relationship is vital to both countries. Canada and Mexico need to listen and respond.
That's my take, and it means very little. Your question is a good one and speaks to Trump's dysfunction in economic and diplomatic relations.
Tim
Not to mention the amazing thinness of his skin!
And hunched over stature. It appears he is shrinking from the few photos I’ve seen of him.
He's got osteoporosis would be my bet.
Plus he is a skilled diplomat and he's extremely charming, and erudite, and can befuddle trump with actual knowledge of the issues, I mean the man can eloquently discuss physics in two different languages, and trumpolini barely grunts out one.