Thursday, December 21, 2023

Biden's Stock Market vs Trump's

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The Cautious Optimism Economics Correspondent has seen a few stories like the one below lauding the Dow Jones Industrial Average hitting a record high (although the S&P 500 and Nasdaq still have not) and cheering on all the "optimism" Americans have now regardless of polls that reflect the very opposite.

Read "Americans haven't been this optimistic about stocks since 2021" at:

There are also plenty of TDS-comments about how "My 401k has done great under Biden. Notice how silent the Trump people are."

As usual the press and these commenters aren't very good at math.

Since Joe Biden's inauguration the Dow Jones average has risen 20.9% from 30,930 to 37,404.

However in that same 2 years and 11 months inflation has pushed the official CPI price level up by 17.6% (assuming you believe the official number).

Therefore adjusted for inflation the Dow is up 2.8% or a measly annualized real return of 0.9%.

Now Donald Trump. In his four years in office the Dow Jones rose 56% from 19,827 to 30,930 while CPI rose 8.2% in four years.

Therefore under Trump the Dow's four year inflation-adjusted gain was 44.2% or an average of 9.6% per year after inflation.

Up an inflation adjusted 2.8% versus up 44.2%. If these commenters could do math maybe they'd realize why Trump's supporters are happy to let them keep talking.

And Trump's stock market numbers exclude the huge surge that began right after Election Night in response to news that a business-friendly candidate would become president. By the time of his inauguration the Dow had already steamed ahead 19.3%, nearly seven times more in ten weeks than Biden in three years when adjusting for inflation.

Adding those ten weeks to Trumps' four years and the Dow rose 72% or 58.9% after inflation for a compounded real rate of return of 11.6%.

So now after inflation Biden is up 2.8% versus Trump up 58.9%.

But reading the press one would think the Biden stock market is the greatest thing to happen to America since the Russia Collusion investigation.

ps. Trump also had to contend with Covid and most U.S. states shutting down their economies near the end of his term, while Biden took over right as the economy had bottomed out and was reopening. But sure, Biden has been so much better for America's  401k's, right?

Wednesday, December 20, 2023

A Political and Economic History of China, Part 7: The Yuan Dynasty (1279-1368), Kublai Khan and Marco Polo

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7 MIN READ - The Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff marches on through Chinese history, this time posting the middle entry of his trilogy on the Mongol Yuan dynasty.

Marco Polo: Venetian merchant, Yuan official,
and confidant to Kublai Khan
In the previous installment we discussed how Genghis Khan died over half a century before the final Mongol conquest of China and his grandson Kublai Khan established the Yuan dynasty as its first emperor.

The short-lived Yuan dynasty is largely the story of Kublai Khan’s reign, for after his death (1294) the throne was occupied by a string of short-lived and unremarkable emperors. By the 1330’s the Black Death was spreading throughout China, already sowing the seeds of the Yuan’s eventual downfall. Hence today we’ll focus mostly on Kublai Khan’s time in power.

Popular media portray the Mongols as mindless barbarians (has anyone ever seen the Genghis Khan in “Bill and Ted’s Excellent Adventure?”) and indeed they were quite ruthless towards those who resisted their rule. John Gabris, one of Cautious Optimism Nation’s most esteemed citizens, even commented on this last week, asking for more information on how the Mongols paid for their conquests of faraway lands.

While the Correspondent doesn’t have many details about Mongol compensation and benefit packages, it is significant to point out their methods of conquest were absolutely brutal. Cities that surrendered were generally treated well—by Mongol standards—but those who chose to fight or rebel were slaughtered mercilessly. Every living thing in cities—women and children, horses, even cats and dogs—was massacred to send a clear message to prospective next targets: it would be better for you to lay down your arms and surrender. Modern day Iraq still regards conquering Mongols as the 13th century version of Nazis for their 1258 siege and massacre of Baghdad.

Note: similar tactics were used by Chinese communist rebels against Chiang Kai-Shek’s nationalist forces during the 1945-1949 civil war, laying five-month siege to the Manchurian city of Changchun and deliberately starving 150,000 civilians to death. The communists made sure to leave a few survivors who could relay the horrors to neighboring cities which then surrendered immediately, allowing Mao Zedong’s forces to take over without a fight.

Today literature on the Changchun siege and famine is censored by the Chinese government.

But back to the ruthlessness and barbarity of Mongol conquerors… Once the Yuan dynasty was established Mongol administration of China became surprisingly more restrained, even more civilized than their legalist Song dynasty predecessors.

The early Yuan was also marked by expansion of foreign trade, a moderation of torture and capital punishment, and Kublai Khan himself was an intellectually curious leader who leveraged both knowledge and people from faraway kingdoms to manage his empire. He also successfully transformed the occupying Mongols from tribes of nomadic raiders to sedentary administrators of a large country.


After ascending as Great Khan in 1260 Kublai moved his capital south from Karakorum in Mongolia to Shangdu (sometimes called “Xanadu”) near the modern-day Chinese border. Once it became clear he would soon rule large numbers of Chinese Kublai moved again in 1270 to the old Jin capital of Zhongdu, renaming it Khanbaliq (or “city of the emperor” in Mongol).

150 years later, long after the Yuan was overthrown, the Chinese Ming dynasty emperor Yongle would rename the city “Beijing” which means “northern capital” in mandarin.

Kublai’s decision to move his capital deeper into China was guided by a more comprehensive strategy, for he knew the Mongols not only had no experience governing what was the largest and most complex economy on earth, but they were also greatly outnumbered by their Chinese subjects. Therefore Kublai adopted a program of sinicization, or becoming more Chinese to gain acceptance from the ethnic Han people.

Kublai conferred a Chinese name to his dynasty (the “Da Yuan” or “great origination”), embraced Confucian principles and Buddhist religion while allowing religious freedom to thrive, and permitted Chinese to serve in lower government positions. In a nutshell Kublai largely allowed Chinese daily life to go on as usual.

However there were some changes. Han Chinese were not allowed to serve at the highest state levels, the new social order placing Mongols and foreigners in higher strata than their conquered subjects.

Knowing good and well the new Mongol rulers were not exactly popular with the locals Kublai relied heavily on non-Chinese advisors, preferring to import them from other parts of his vast empire. Employing a strategy that would be mimicked by a later dynasty of foreign invaders (the Qing Dynasty: 1644-1912) Kublai was ever-suspicious of ethnic Chinese officials who he believed would attempt to undermine and eventually expel the Mongols if granted too much power. Instead Islamic scholars from Central Asia were often appointed alongside Mongols to administer the state, and Kublai eagerly utilized what few Europeans he could find whenever available.

In fact Kublai was extremely curious about the cultures, sciences, technologies, and histories of faraway kingdoms, and his affinity for recruiting outsiders led to a remarkable relationship with Italian merchant Marco Polo which we’ll devote a last few paragraphs to in a moment.

Mongol law was also more restrained than that of the previous Song dynasty. Under Kublai Khan executions fell dramatically and torture was almost (but not quite completely) abolished. In lieu of arbitrary executions Mongol law declared government officials must present evidence before handing down capital sentences. It wasn’t exactly a template for constitutional U.S. civil liberties, but it was very civilized for 13th century Asia.

Ultimately Chinese civilization flourished in the early Yuan. Kublai ordered the repair and restoration of key infrastructure that had dilapidated under Song dynasty hyperinflation and neglect. Chinese irrigation, agriculture, and seafaring improved markedly and Kublai encouraged Silk Road trade with other regions of his empire and western Europe. The first Gutenberg Bible printing press is believed to have originated from movable type printing imported from China.


Marco Polo’s story would require a series of articles in and of itself, but at minimum he deserves a short mention here.

Marco arrived in Khanbaliq with his Venetian merchant father and uncle in 1275. During their first meeting with Kublai the Great Khan took an instant liking to the young Italian whom he judged as intelligent and capable. Eventually Kublai appointed Marco Polo as a mid-level government official, a position he held for many years, traveling extensively as a diplomatic emissary and possibly tax collector, but also gathering information about the far reaches of the empire which he relayed back to Kublai personally. Once again, Kublai distrusted ethnic Chinese who he believed were determined to overthrow the Yuan and likely to manipulate or lie to him.

Marco Polo remained in China in the service of Kublai Khan for seventeen years. During that time he was awestruck by the riches, the exoticism, and the enormous scale of the Great Khan’s dominion (compared to the small, bickering European states of that time) and kept a journal. Keeping in mind how limited intercontinental travel was for everyday people in 1275, Macro Polo’s adventure was a unique epic for an entire era in history.

When Polo returned to Italy in 1295 he was arrested by the city-state of Genoa which was at war with Venice. Serving time in a Genoese prison, Polo recounted details of the Yuan to his cellmate, Rustichello da Pisa, who luckily turned out to be a romance writer. Details of his more than two decades in Asia were published in “Book of the Marvels of the World” or “The Travels of Marco Polo” which, despite copies having to be painstakingly handwritten, became the 1300’s equivalent of a blockbuster best seller. Not only were Europeans fascinated by detailed accounts of the remote, vast Chinese kingdom but also drawn to the lurid details of Asian sexual mores—like reading tabloids or gossiping with one’s hairdresser during the puritanical repression of the late Middle Ages

Polo was released from prison in 1299 and eventually became a wealthy merchant. Despite selling countless copies, both Marco Polo’s notes and da Pisa’s translations contained a handful of errors and there was public skepticism about his story. Some scholars believed he had never even visited China and simply written from stories he had heard while in Persia. On his deathbed Polo was asked repeatedly to retract much of what he had written to which he replied “I did not write half of what I saw, for I knew I would not be believed.”

As centuries passed after Polo’s death, more and more of his book was authenticated by growing numbers of western travelers to China. His description of star patterns in the South China Sea sky was confirmed by European sailors, and historians who pored over Chinese annals of the by-then defunct Yuan dynasty discovered meticulous records and dates of events that matched many of Polo’s memoirs. Today there is little doubt that Marco Polo did, in fact, visit China for seventeen years and worked in the service of Kublai Khan’s government although a few scholars maintain he exaggerated his role within the dynasty.

ps. The Correspondent recently stumbled across a Netflix series on Marco Polo’s service to Kublai Khan, aptly named “Marco Polo.” While the first two or three episodes were somewhat interesting it didn’t take long to realize the series is historical fiction with heavy emphasis on the word “fiction,” sometimes “wildly outlandish fiction,” and he would not recommend it to anyone looking for an accurate account of Polo’s experiences in China.

Thursday, December 14, 2023

A Political and Economic History of China, Part 6: The Mongols before the Yuan Dynasty of 1279-1368

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5 MIN READ - The Cautious Optimism Correspondent for Economics Affairs and Other Egghead Stuff continues his series on China, this time in three parts focusing on the Mongols who invaded the Middle Kingdom and established the Yuan Dynasty.

The Mongol Empire before the invasion of Song China

In the last segment we discussed the Song Dynasty (960-1127) that was eventually pushed out of northern China by Jurchen Manchurians from the north, and the later Southern Song Dynasty (1127-1279) that was overrun by the Mongols who had also conquered the Jurchens just 45 years earlier.

Hence 1279 marks the official start of the Yuan Dynasty (1279-1368) when all of China was ruled by the Mongols.


The Yuan Dynasty was the first instance of China being completely conquered and governed by a non-Chinese invading people, but not the last.

However before we get into the details of the Yuan it’s helpful to briefly discuss the Mongols themselves, particularly in their runup to the conquest of China.

At the start of the 13th century China viewed the Mongols as just another “barbarian” horde to the north, a tribal people who lived in a relatively small area that included part of modern-day northern Mongolia and Lake Baikal in southern Siberia.

The infamous Genghis Khan (1162-1227) unified the multiple squabbling Mongol tribes in 1206, and from there armies of Mongol horsemen expanded outwards, conquering vast—albeit sparsely populated—areas of central Asia. At the time of Genghis Khan’s death in 1227, the Mongols were warring on northern China (which by that time was ruled by the Jurchen Manchurians) and the empire already stretched from modern-day North Korea to the Caspian Sea—an annexation of several million square miles in just 21 years.

Genghis Khan’s heir Ogodei Khan completed the conquest of northern China and then turned his sights on invading the Southern Song Dynasty, dying before the lengthy conquest was completed. It was Genghis’ grandson Kublai who would finish the job, requiring another nineteen years after inheriting the throne of Great Khan in 1260.

By the time the Southern Song finally fell in 1279, the four corners of Kublai Khan’s empire stretched from northern Vietnam and Burma in the southeast, all of Korea and the Sea of Okhotsk coastline in the northeast, Iraq and eastern Turkey in the southwest, and eastern Poland, the Baltics, and extreme southern Finland in the northwest (with Moscow serving as a vassal state, something Vladimir Putin recently commented on).

It was and remains the greatest contiguous geographic empire in world history.

Yet despite the Mongols’ enormous empire—if one considers the limited population, landscape, wealth, and culture of their territory—the conquest of Southern China and the Southern Song would serve as the crown jewel of their domains, hence Kublai’s obsession with subduing all of China.

But not before attempting to invade Japan first.


Cautious Rockers may already be familiar with the story of Kublai Khan’s attempted invasions of the Japanese islands since the tale is often integrated into World War II history and Imperial Japan’s kamikaze suicide pilots.

In the late 1260’s Kublai Khan sent several emissary missions to Japan requesting friendly albeit unequal relations that the Japanese rejected, eventually even denying permission for Mongol diplomats to set foot on their shores. Incensed by Japanese intransigence, Kublai Khan built an invasion fleet believed to have consisted of several hundred ships and perhaps 30,000 warriors which departed Mongol Korea in 1274. 

Japanese samurai, who were greatly outnumbered and negligibly prepared for a large invasion, fought ferociously on the landing beaches of the southernmost islands, denying the Mongols a secure beachhead to Kyushu and sending them back to their ships every night to rest and regroup.

After probing several more landing areas and encountering similarly fierce resistance Mongol losses began to accumulate and the fleet retreated back to Korea. The attempted invasion was a failure.

Hearing of his defeat Kublai Khan sent envoys again, giving Japan one last chance to surrender, but the emissaries were beheaded. Thus Kublai committed to try again with a much larger invasion force, but first he needed to concentrate on his final push to finish off the Southern Song dynasty.

Having finally defeated Song forces five years later (1279), Kublai shifted his focus back to Japan a full seven years after his first invasion attempt, building an even larger navy composed of two fleets, one in Korea and one in the Yangtze delta region of the China coast. Best estimates tally 4,000 ships with 140,000 warriors or roughly five times the size of the 1274 invasion. Japan also added samurai warriors but remained greatly outnumbered.

The two Mongol fleets set sail in 1281 to complete unfinished business, departing in May to avoid the typhoon season.

Working against Kublai’s plans was the pause between invasions itself. The 1274 attempted invasion having alerted them to the Mongols’ plans, the Japanese used the seven year delay to prepare for another invasion, building defensive walls on the perimeters of key strategic southern beaches. The Japanese also prepared small raiding boats for samurai to attack larger, slower Mongol ships, hoping to set them afire or even board them.

Due to lack of coordination between the two Mongol fleets, the Korean fleet arrived first and unsuccessfully attempted to invade and occupy several key islands and Kyushu itself. The fleet then retreated, finally rendezvousing with the Chinese fleet upon which the combined fleets returned to the invasion theater. However this delay pushed the operation into typhoon season.

As the combined Mongol fleets attempted to invade Japan, the new samurai defenses proved formidable. Archers’ arrows fired from behind defensive island perimeter walls frustrated Mongol plans to establish beachheads, sending them back to their ships day after day. Then small, fast samurai craft harassed the Mongol fleet stationed offshore, complicating their invasion plans and dragging out the operation.

After several weeks of bloody stalemate on both land and sea an enormous typhoon entered the area. The samurai and their small boats had friendly islands they could retreat to, but the Mongols were largely still anchored in harbor or out at sea and the typhoon devastated their fleet. Enormous waves sent anchored ships crashing into one another or flung them upon rocky shores where they were shattered. Countless Mongol soldiers drowned and the Japanese samurai celebrated the sight of their invaders’ ships being sent to the bottom, watching from ashore and cheering “kamikaze!” or “divine wind.”

What remained of the Mongol fleet retreated back to the continent and whatever surviving Mongols washed ashore were quickly executed by their samurai captors.

Kublai Khan never attempted to invade Japan again, and as most war history students already know the Imperial Japanese government resurrected the kamikaze cult in an attempt to halt the relentless advance of the American navy during World War II. Although typhoons twice struck American Pacific fleets in 1944 and 1945, damage was limited and did effectively nothing to forestall Japan's defeat.

The Japanese government also attempted to create their own divine wind, the suicide kamikaze pilots who, if they weren’t shot down first, attempted to fly their bomb and fuel-laden planes into American ships.

While the 20th century kamikazes inflicted more damage on the U.S. fleet than the two typhoons, and instilled a great deal of fear into American sailors, their impact on the war was also minimal. Allied forces still successfully invaded the Philippines, Iwo Jima, and Okinawa, blockaded the home islands while firebombing Japanese cities, and the imperial government was ultimately forced to surrender after the atomic bombings of Hiroshima and Nagasaki.

In the next installment we'll dive into the Yuan Dynasty itself.

Saturday, December 9, 2023

San Francisco Thieves Drive into a CVS, Take ATM

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The Cautious Economics Correspondent for Economic Affairs may be experiencing one of CO's own "Magnificent Mile smash and grab" moments. 

(anyone remember that?)

The Correspondent's bicycle route through his better-than-average neighborhood has taken him by this San Francisco CVS countless times, but on Thursday night a few of the local residents (from Nextdoor)...

"...stole a truck and crashed it into the front entrance. They backed their van up and took the ATM."

(see pic below)

Of course San Francisco has many progressive holdouts who, like Baghdad Bob, insist that nothing has changed or gotten worse in their city while simultaneously suggesting poor people have no choice but to steal entire ATMs:

"I hate to tell you but this kinda of smash grab is nothing new. But I agree with the no accountability. Desperate people do desperate things."

Assuming for the moment Bay Area Baghdad Bob is right, that leads to a logical question: If decades of San Francisco left-progressive socialist policies are so successful then why are so many of its residents so desperate?

Thursday, December 7, 2023

California 2024-25 Forecasted Budget Deficit Widens to Record $68 Billion

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The Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff reported in January of this year that, despite having the nation's highest taxes, California has projected a deficit of $22 billion for the 2023-24 fiscal year.

At the time he commented that if the state is running large deficits in a full employment economy, what happens if/when the widely anticipated recession hits and tax revenues nosedive?

But no need to wait for that. By May the deficit projection was raised to $32 billion (links to past deficit stories in the comments section).

This week state budget officials announced the projected deficit for fiscal year 2024-25 has swelled to a record $68 billion.

And this fiscal forecast assumes no recession, so again: where does a record $68 billion deficit go if recession hits and unemployment climbs?

Keep in mind California had a major budget crisis in 2009 when the Great Recession cut into tax revenues. Then governor Arnold Schwarzenegger compromised with legislative Democrats to impose a "temporary" income tax rate hike from 9.3% to a nation's-highest 13.3% (for higher earners) until the crisis was over. 

In 2016 California voters agreed with Jerry Brown's recommendation and approved making the tax hike permanent. Liberals predicted/promised that making the wealthy "pay their fair share" would produce balanced budgets and surpluses forever, snidely lecturing skeptics that "see, you need taxes to run a government."

At the time the Correspondent told his conservative friend (the second of only two conservatives in San Francisco) that "when the next recession hits it will be budget deficit crisis again and they'll call for yet another tax hike."

Those predictions have yet to materialize, but with a full-employment deficit projection of a record $68 billion it's pretty much a guarantee that an average to worse-than-average recession will soon-after generate news headlines of budget crisis in California--despite still imposing America's highest income tax rate and highest overall taxes.

Read New York Times: "California Faces $68 Billion Deficit Amid Steep Revenue Decline" at:

ps. Left progressives have been circling the wagons around California yet again with the old "It's the fifth largest economy in the world" line, as if size equals fiscal and economic health (think Japan from 1990 to present-day).

Well California is projected to sink to 6th largest sometime next year, and it wasn't that many years ago that leftists were bragging that California was the world's fourth largest economy. Meanwhile in the same span Texas has silently risen from world's 12th largest economy to 8th (just two spots behind California) despite having only three-quarters the population and a much lower cost-of-living.

California to Fine Stores Without Gender-Neutral Toy Sections

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The Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff is relieved to see California governor Gavin Newsom working tirelessly to improve the business climate and economy of his state while helping working Californians with their everyday cost of living struggles.

Read "Calif. retailers that refuse gender-neutral toy sections will be fined up to $500 under new law" at...

Friday, December 1, 2023

Biden Confuses Lower Inflation With Lower Prices

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The Cautious Optimism Economics Correspondent realizes this is like shooting senile fish in a barrel, but Joe Biden doesn’t seem to understand that “lower inflation” means prices are still rising, including costs for evil corporations. If he really wants to see companies lower prices he should urge Democrats in Congress to change the Federal Reserve’s mandate to abandon its +2% annual inflation target, pursue mild "deflation" (i.e. lower prices), and slow its expansion of the money supply over the long term to something below the rate of growth of real goods and services. 

Meanwhile here's reminding Joe that "lower inflation" means "prices are still rising, but the rate of increase is slower than it was before."

Read "Biden says inflation is down and companies should lower costs: 'It's time to stop the price gouging'" at...