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Old 04-20-2018, 03:47 AM
Danny B Danny B is online now
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,271
Fiscal gap,,, yield curve,,,smoke and BS

There is definitely a lot going on but, it is difficult to see past the fog of BS. When Trump tries to make America first, he is forcing globalism out of the top spot. The globalists don't like this. They will break and ignore ANY law if it helps to bring down Trump.

The British House of Lords is making a big move to rescind Brexit. European socialism is crashing so, the answer is to raise taxes.

The person who produces a good or service wants to protect and store the value of his labor. The person who produces nothing of value must steal from the producer. Paper money is the vehicle for this theft. Socialism is an organizational tool to do this most effectively.
The socialists in Venezuela put their cronies in charge of the oil industry,,, ejecting the experts. Unfortunately for the Venezuelans, the price of oil fell badly. The socialists failed to pay the oil workers and, they hyper-inflated the money supply. The results were predictable.

"the IMF again recommended that countries raise taxes and lower public spending to decrease annual borrowing and get the burden of debt on a firmly downward path now that there is no need for fiscal stimulus."
"In fact, reading the IMF report between the lines, it is nothing more than advance scapegoating for the inevitable global debt crisis that is coming, and which not even the IMF is hiding any more. What is most comical - if completely expected - is that the IMF is now blaming it all on Trump: not on generations of economists who steered the world to the point where there is more than $3 of debt for every $1 of GDP, and not on central bankers who flooded the world with debt so that the richest 0.01% can be richer than their wildest dream. Nope: it's all Trump's fault."
"The IMF said that the interest burden has doubled in the past ten years to close to 20% of taxes,"

The IMF makes no mention of the fact that; the giga-tons of liquidity pumped out by the private banks is what got us to this point. The State did it's share of borrowing megatons of debt to buy votes and make wars.
The private sector was offered credit that it did not merit. They act surprised when the defaults hit.
The Global Economy Is Slowing, Credit Card Defaults Hit 6 Year High…. Saxo: The Word Economies Are Synchronically… Falling! – Investment Watch Blog

The worker wants to store the value of his labor. The parasite uses debt-money to steal it. This only works if the producer pays back the loan. The money-renting business got too crowded and, many debt creators loaned to people who could not repay. The mother of all defaults will be when the State can't repay.
Armstrong, "Trump is misguided on Trade, as every other politician has been since World War II. That has awakened the sleeping giant of China, whose debt to GDP exceeded 250% going into the end of 2017 compared to 103.7% for the USA going into the end of 2017."
Ben Carson’s claim that the U.S. owes $211 trillion beyond the reported federal debt
The more complicated figure he cites in his ad is the $213 trillion “fiscal gap” Carson claims is in addition to the $18 trillion debt. This figure comes from a Boston University economics professor, Laurence Kotlikoff, who put the number at $210 trillion, $3 trillion less than Carson’s figure.

"Take for example the estimate of the fiscal gap, which increased by one-third from 2015 to 2016.

The fiscal gap is a key snapshot of the government's financial health that estimates the tax increases and spending cuts required to maintain the current ratio of national debt to GDP. That's a more meaningful number than the national debt alone because it also takes into account money coming into the government's coffers, and the implications on future public policy."
"If entitlement obligations were counted, the true national debt figure would actually be around $100 trillion, as opposed to the government's current $20 trillion figure. The more holistic $100 trillion number breaks down to a $308,000 burden for every American taxpayer. These bills are real, and they'll come due one day."
So, cut out all entitlements and, we'll be good.

Here is a graph of the yield curve. Every time that it collapses, we get a recession.
You can get a feel for where we are now,

The crash is blamed on the failure of capitalism or the failure of democracy.
The pundits wouldn't dream of blaming it on low wages and automation.

4/19 China air force again circles Taiwan in ‘sacred mission’ – Reuters 3 guesses what they have in mind.
4/19 Apple jitters mount on concerns of waning smartphone demand – Bloomberg
No kidding. maybe that is because we are getting ripped off.
4/19 10-year Treasury yield tops 2.9% on better-than-expected economic data – CNBC
4/19 Store closures set to accelerate this year, warns Bloomberg – Financial Sense

More on global growth. Use ... control +... to make the tiny text larger.

"improving confidence has pushed leverage back to record levels, investors carry the highest levels of risk assets since the turn of the century, and yield spreads remain near record lows. It certainly seems as “things are as good as they can get.”
"The U.S. economy remains in robust shape, with growth in GDP, industrial production, and investment holding up well. In tandem with strong consumer confidence and employment growth"
"For investors, when things are “as good as they can get,” that is the point where something has historically gone wrong. It is always an unexpected, unanticipated event that causes a revulsion of risk assets across markets."

"In 1960, Robert Triffin brilliantly argued that ever-accumulating trade deficits, the flaw of hosting the reserve currency and the result of Bretton Woods, may help economic growth in the short run but would kill it in the long run."
"We believe the financial crisis of 2008 was likely an important warning that years of accumulating deficits and debts associated with maintaining the world’s reserve currency may finally be reaching their tipping point. Despite the last nine years of outsized fiscal spending and unprecedented monetary stimulus, economic growth is well below the pace of recoveries of years past. In fact, as shown below, starting in 2009 the cumulative amount of new federal debt surpassed the cumulative amount of GDP growth going back to 1967. Said differently, if it were not for a significant and consistent federal deficit, GDP would have been negative every year since the 2008 financial crisis. "

VERY good article explaining the relationship between the reserve currency, Bretton Woods, gold, and the dollar.
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