2020 US Presidential Election

OK so, I saw some comments on the president's impact on the US economy. I also saw a lot of ignorance on basic macro economics principles. The president's impact on the economy is big. But the president does not have the biggest impact on the economy. Congress also does not not have the biggest impact on the economy. What entity has majority control over the US economy? The federal reserve has majority control over the US economy. How does the federal reserve have majority control over the US economy? To answer the previous question. One must first ask, how do you measure the total economic output in a country? As many already know. GDP is one way to measure the total economic output in a country. According to the quantity theory of money. A way to calculate GDP is by multiplying money supply (M) times the velocity of money (V). That is M*V=GDP (nominal). Where M is the total money supply in circulation for cash, coins, and balances in bank accounts. V is the rate at which money is exchanged in the economy. Both M and V are not constant, so ΔM*ΔV=GDP. One can get even more technical by making M and V into derivatives, but alas. Not going to get into derivatives here. In layman terms. Money supply (M) is generally an easier concept to understand. As M is simply how much money there is in the economy. Velocity of money (V) is how often the money is spent in the economy. Think velocity of money as the following simplified example. You buy a TV from Amazon. Amazon then uses the money sold from the TV to pay their employees. The employees buy more stuff in the economy. So on and so forth. The more people buy. The more it stimulates the economy. More transactions equals higher velocity of money (V). Then how does the federal reserve have majority control over the US economy? One mechanism the federal reserve utilizes to control the economy is through the federal funds rate. The federal funds rate is the interest rate which commercial banks borrow and lend their excess reserves to each other. The federal funds rate influences people's credit card rate, mortgage rate, student loan rate, car payment rate, government bond rates, and every other bank rate. In theory; the lower the interest rate. The more likely people are to take out loans. Which in turn increases the total money supply (M) in the economy. As M increases. In theory, so should GDP. Which leads to the following. Ever heard on the news president Trump blast the chair of the federal reserve? https://www.youtube.com/watch?v=2sq-PdEJ7vo&app=desktop https://www.youtube.com/watch?v=U_bJroWI4mg Even Trump knows that most economic power is not in the president's hand. Most economic power is held by the federal reserve or simply called the fed. But remember that GDP isn't only influenced by money supply (M). GDP is also influenced by the velocity of money (V). Remember that M*V= GDP (nominal). The federal reserve has extremely limited or virtually no control over the velocity of money (V). Velocity of money i.e. how often people spend their money is based off the psychological affect on how people see the economy. As an example: think of how many people are scared to go out and spend money because of COVID-19. Less money spent equals a decrease in the velocity of money. Another example is the 2008 financial crisis. In very simplified terms. The financial crisis of 2008 scared people to spend money. Which in turn decreased the velocity of money (V). Yet before the pandemic hit and even before the 2008 financial crash.The velocity of money has decreased since the 1990's. https://i.ani.me/0275/3111/velocity_of_money.png Is it very difficult to make people spend money when they're uncertain about the future of the economy. Federal reserve has virtually net zero control over making people spend money. Federal reserve has extremely limited control over the psychology to make people spend their money. Extremely limited control over how often money is spent. Extremely limited control over the velocity of money. Less economic transactions means a decrease in the velocity of money. Which means that an increase in money supply (M) is offset by a decrease in velocity of money (V). If the velocity of money is decreasing faster then the money supply increases, then GDP decreases. Now add quantitative easing (QE). I'm trying to ram an entire economics course in one post, Lol. But anyways, to overly simply it. Quantitative easing (QE) is nothing more then money created out of thin air, poof! QE should in theory stimulate the economy. Quantitative easing (QE) increases money supply (M) by injecting trillions of dollars into the economy. Yes trillions of dollars, not simply billions. https://i.ani.me/0275/3107/federalreservepumpstrillions.png But did the trillions dollars estimulare the economy? The answer is yes and no. Because of COVID-19. The decline in the velocity on money was so charp i.e. very few spent money. That it almost completely offset any increase in money supply (M). Trillions of dollars of helicopter money from the federal reserve could not completely bail out the US economy. In essence the federal reserve has a pseudo majority control over the economy. Pseudo control because the federal reserve can only control the money supply. But has no control over the velocity of money. As the chair of the fed sets standards for money supply. Unlike the fed; the president has net zero control for money supply and therefore limited economic powers to control the economy. For the health of the economy. It is arguably more important who is the chair of the fed then who is the president of the US. But just because the chair of the fed has pseudo majority control of the economy. Does not mean that the president does not have a high impact on the economy. It just means that the president's impact on the economy is less then the federal reserve's impact on the economy.

One might say, "I feel that the economy is doing better under president Trump, which is a Republican". Personal anecdotal evidence on the nations macroeconomics is very weak evidence. For a nation of 300 plus million people. A single person is statically irrelevant. A single person in the US economy is analogous to a single tree in a forest. The entire forest of 300 plus million people is the economy. If one tree is doing good. It does not automatically upscale that all trees in the forest are also doing good. There could be dry patches in the forest where people are not doing good economically. Take the coal industry as an example of a little dry patch in the economic forest. Remember how Trump said that he was going to save the coal industry? Even before COVID-19 hit. The coal industry lost about 1000 jobs. https://i.ani.me/0275/3103/coal_jobs.png Renewable energy continues to grab power market share. It is simple capitalist forces taking control. The source of power that is cheaper to produce is bought. Which only emphasizes the president's limited economic power to control the US' power sector. At the start of Trump's presidency. There were more or less 50,000 coal miners in the US. From a nation of about 328 million people. Coal miners make up about 0.015% of the US population. From a macroeconomic perspective. Even a group like coal miners are almost statically irrelevant. Just because you or a group of people is doing better or worse economically. Does not automatically upscale to the entire economy. For a comprehensive view of the economy. It is better to look at averages across the economy. Averages like GDP growth, avg median wage growth, debt per household, unemployment rate etc. Rather then your personal anecdotal economic outlook. Putting aside anecdotal evidence. Before COVID-19 hit. The US had an unemployment rate of about 3.5 percent, near a 50-year low. However, the unemployment rate had been dropping long before Trump went into office. But the fact still remains that a Republican president had a relative good economy with low unemployment and positive GDP growth. One might say that perhaps republican presidents are better for the economy? According to the paper Presidents and the Economy: A forensic investigation, it is objectively true that the economy performed better under democratic presidents then under republicans presidents. The study was a bit inconclusive as to why the economy performed better under democratic presidents then under Republican ones. It is partly due to luck that Democratic presidents experienced better oil shocks then republican presidents. Fed chairs under democratic presidents outperformed fed chairs under republican presidents. The chair of the fed is largely independent and nonpartisan. The feds better performance partly enabled democratic presidents to have better economic output then republican presidents. Which ultimately may mean that for the economy. It doesn't really matter if it's a democratic or republican president. But rather a good chair of the fed that has excellent control for the country's money supply (M).

ok i did the best i could and tried to read it, so forgive me if i get anything wrong in my response and please clarify my misunderstanding if the president has no real impact on the economy then what variable stimulates the economy if not president legislation?

what variable is the cause of this to debunk that democrat presidents dont actually help the economy and its something conservative that does it?

References: https://www.washingtonpost.com/business/2020/04/29/federal-reserve-has-pumped-23-trillion-into-us-economy-its-just-getting-started/ https://www.forbes.com/sites/chuckjones/2020/03/07/the-coal-industry-has-lost-almost-one-thousand-jobs-since-trump-became-president/amp/ https://www.investopedia.com/terms/v/velocity.asp https://www.investopedia.com/terms/f/federalfundsrate.asp https://www.federalreserve.gov/faqs/money_12845.htm https://www.princeton.edu/~mwatson/papers/Presidents_Blinder_Watson_Nov2013.pdf

Now, if what I said went completely over your head or you don't like to read. Then I highly recommend you watch the following video. Coldfusion does a much better job at explaining the federal reserve. He also goes into other topics like the history of the creation federal reserve, fractional reserve banking etc. https://m.youtube.com/watch?v=mQUhJTxK5mA

My personal favorite. I recommend this meme format explaining the fed in COVID-19. It is fucking hilarious, but not off from reality. Money printer go brrrr! Lol https://m.youtube.com/watch?v=GI7sBsBHdCk