Fooled by the Brexit Scam

Larry Summers call Brexit the worse political decision since WWII.

"The British vote to leave the European Union is the worst political misstep in Europe since World War II, former Clinton Treasury SecretaryLarry Summers said Tuesday."

"The EU won't crumble, but it becomes a "less sound experiment" without the influence of the United Kingdom, he argued."

"The fallout of Thursday's referendum could send Britain into recession, Summers told CNBC's "Squawk Box," pegging the chances of that at about 50-50."

"World central banks have little firepower to throw at potential global economic unrest created by a Brexit, the former Obama administration economic advisor said, calling the current environment the "moment of least capacity" for policymakers to make a difference."

"With the European Central Bank in stimulus mode and the U.S. Federal Reserve with only one interest rate hike since 2006 under its belt, Summers said there's not much room to ease monetary policy further if necessary."

See this is where at least on a comparative basis, Sumner's Market Monetarism is preferable to the current conventional wisdom on monetary policy.

Sumner of course would retort that there is plenty monetary policy can still do. But because the conventional wisdom thinks that monetary policy is already very easy, they believe there is nothing left they can do.

Of course, in the US one obvious thing that could be done is lower interest rates. That is the conventional understanding of monetary policy. Sumner is for unconventional stuff like NGDP.

Krugman wants to raise the inflation rate to 3 percent.

And indeed, now others are arguing that the odds have increased for the Fed to cut rates this year.

Previously, the whole debate was when and how much the Fed raises rates.

"It seemed like not so long ago the Federal Reserve was telling markets to expect as many as four interest rate hikes this year."

"Now, traders are beginning to give serious consideration to a rate cut before 2016 is over."

"In fact, it really wasn't long ago that the U.S. central bank was gearing up for a substantial round of policy-tightening. At the Federal Open Market Committee's December meeting, officials indicated through the so-called dot plot that quarterly hikes were in order. The Fed enacted a quarter-point move at that meeting, the first hike in 9½ years."

http://www.cnbc.com/2016/06/28/chance-of-a-fed-interest-rate-cut-this-year-is-on-the-rise.html

Again, the one advantage of Sumner's approach is he doesn't see the ZLB as the end of what can be done.

"However, a moribund U.S. economy combined with global rumblings — not least of them last week's Brexit vote — has changed the Fed's positioning. Where the bank was hoping to begin normalizing policy, markets now expect it to be on hold or even dialing back."

The mistake, he'd argue is in not seeing that zero interest rates are the new normal.

In any case, the Brexit scam is a disaster. We have stories of the British people googling the EU and Brexit after they had voted for it.

Chris Hayes doesn't like poking fun at the voters-though I don't think it's a joke, just very sobering.

http://www.vox.com/2016/6/27/12030188/brexit-elitism-xenophobia-experts

Is it impossible to say the voters were wrong? The voters also voted for Hitler. Could you criticize them then? Or is anything the voters decide Holy.

Voters certainly can be uninformed. Now Hayes in the past has worried that this attitude is an argument for literacy tests, etc. No. You can believe in the right of the vote and still admit that sometimes voters are very uninformed.

http://inthesetimes.com/article/3185/whos_afraid_of_democracy

http://economistsview.typepad.com/economistsview/2007/05/christopher_hay.html

Listen, you can't blame the voters totally in Brexit as the Brexiters lied to them so systematically.

And now that Brexit is reality, we find that the Brexiters themselves are in the same camp. Furiously googling to figure out what this means and how to do it. You know, how you eliminate thousands of different individual trade agreements.

Boris Johnson's sister says no one has a clue what is going on. I'm assuming she knows Boris Johnson. So the presumed next PM of Britain has no clue what's going on.

"Apart from ashen-faced, mumbled statements from the Vote Leave headquarters on Friday, Boris Johnson and Michael Gove have also ducked the limelight; Mr Johnson is meeting friends and allies today, June 26th, at his house near Oxford in what are believed to be talks about his impending leadership bid. Neither seems to have the foggiest as to what should happen next. Today Mr Gove’s wife committed to Facebook the hope that “clever people” might offer to “lend their advice and expertise.” And Mr Johnson’s sister, Rachel, tweeted: “Everyone keeps saying ‘we are where we are’ but nobody seems to have the slightest clue where that is.”

http://lastmenandovermen.blogspot.com/2016/06/the-british-donald-trump.html#comment-form

Brilliant. Before getting behind this and manipulating it for political reasons-like he wants to be the next PM-Boris Johnson might have googled it himself.

Let's hope that Eugene Robinson is right and that this is a cautionary tale in the US for the follies of Trump.

http://www.realclearpolitics.com/articles/2016/06/28/brexits_cautionary_tale_for_trump_supporters_131030.html

As bad as the whole Brexit thing is turning out, Trump would be worse.

http://www.huffingtonpost.com/entry/donald-trump-recession_us_5769539ce4b0a75709b7c788

http://www.cnbc.com/2016/06/24/heres-why-trumps-economic-plan-would-spark-a-recession-moodys-mark-zandi.html