Did you ever play the board-game “Mousetrap” as a kid? I never actually played the game properly - rolling the dice, collecting cheese tokens, and moving the mouse around the perimeter of the board. Instead, I enjoyed putting together the elaborate and goofy Mousetrap: turning the rubber band powered crank, kicking the marble bucket, rolling down the chute, jumping the diver, and setting off the trap. It’s great fun.
The Mousetrap is a classic Rube Goldberg machine wherein a ridiculous set of cause-and-effect reactions are put together to solve simple tasks in convoluted ways. I’ve been thinking about these machines as I’ve been reading the tortured-logic economic commentators are using to explain recent economic policy.
The paraphrased argument goes something like this: President Trump didn’t get his preferred 50 basis point cut in the Federal Reserve interest rates so he purposefully escalated the trade war with China, adding $300 BN of new tariffs on Thursday during a supposed cease-fire between the world’s largest economies. This moderate escalation will slightly weaken economic conditions which should, in turn, guarantee additional rate cuts from the Fed. Once equity markets advance, Trump can undo his tariff threats which should pump the stock market into ever-increasing highs during the critical reelection season.
I loved playing Mousetrap as a kid, but I knew those machines where finicky and prone to error. I usually had to try several times to get the chain reaction to work perfectly. (I always had the most problems with the marble at the end of the long chute pushing up the “hand” which supported the large rubber-ball.) As an adult, I wouldn’t recommend these sort of convoluted solutions to support economic outcomes, where consequences are real.