Other than some minor regulatory relief, Trump’s policies have hurt more than helped the US economy. From David Stockman at internationalman.com:
International Man: Trump’s America First economic policy seemed to help him win the 2016 election. He promised to renegotiate America’s trade deals and bring jobs back to the United States.
As president, Trump has used tariffs and other protectionist measures to try to reduce the trade deficit.
What do you think of Trump’s trade policies and tariffs?
David Stockman: The trade policies are idiotic. They haven’t improved the trade deficit. And have caused other problems.
We got the numbers in now for 2018 and we had the largest trade deficit in history!
The first point is that his trade policies are not accomplishing anything. In fact, it’s thrown many sectors under the bus. Manufacturers that import components from China are now paying much higher prices because of the tariff charge.
Farmers have gotten thrown under the bus in a major way. The whole agricultural export system that was patiently developed over many, many years has essentially been destroyed through retaliation.
Posted in banking, Business, Debt, Economics, Economy, Foreign Policy, Geopolitics, Government, Politics, Trade
Tagged central bank policies, Federal Reserve, National Debt, President Trump, Tariffs
Massive debt at the top of the business cycle is nobody’s idea of good economics, but that’s what the US is doing. From David Stockman at internationalman.com:
Doug Casey’s Note: David Stockman is a former congressman and director of the Office of Management and Budget under Ronald Reagan.
Now, anyone with connections to the government should elevate your suspicion level. But as you’ll see, David is a genuine opponent of government stupidity. Although his heroic fight against the Deep State during the Reagan Administration was doomed, he remains a strong advocate for free markets and a vastly smaller government.
We get together occasionally in the summer, when we’re both in Aspen. He’s great company and one of the few people in this little People’s Republic that I agree with on just about everything. This absolutely includes where the US economy is heading.
I read his letter the Contra Corner every day, and suggest you do likewise.
International Man: Trump is calling for a weaker dollar and negative interest rates. What does this tell you about Trump’s understanding of economics?
David Stockman: It tells you that he has no understanding of economics at all!
I think Trump is not even a primitive when it comes to economic comprehension. His views are just plain stupid when it comes to exchange rates. He seems to think it’s some grand game of global golf, where the strongest player gets the lowest score.
What sense does it make tweeting as he did recently in attacking the Fed?
According to Trump, the US economy is so much better than the rest of the world’s economies, and therefore we should have the lowest interest rate as a result. It has nothing to do with economic logic or with principles related to sound money. I think he’s just thrashing about trying to create a warning that if things go badly, it’s the Fed’s fault.
Posted in banking, Business, Cronyism, Debt, Economy, Financial markets, Government, Science
Tagged Climate Change, Fed Audit, Federal Reserve, Inflation, interest rates, National Debt, Stock Market
Welfare-state governments are reaching the point where they can’t squeeze any more out of their economies and taxpayers but cutting spending is politically difficult to impossible. From Patrick J. Buchanan at buchanan.org:
As that rail and subway strike continued to paralyze travel in Paris and across France into the third week, President Emmanuel Macron made a Christmas appeal to his dissatisfied countrymen:
“Strike action is justifiable and protected by the constitution, but I think there are moments in a nation’s life when it is good to observe a truce out of respect for families and family life.”
Macron’s appeal has gone largely unheeded.
“The public be damned!” seems to be the attitude of many of the workers who are tying up transit to protest Macron’s plan to reform a pension system that consumes 14% of GDP.
Macron wants to raise to 64 the age of eligibility for full retirement benefits. Not terribly high. And to set an example, he is surrendering his lifetime pension that is to begin when he becomes an ex-president.
Yet, it is worth looking more closely at France because she appears to be at a place where the rest of Europe and America are headed.
If bringing one’s country to fiscal ruin were an impeachable offense, you’d have to impeach the entire city of Washington. From David Stockman at lewrockwell.com:
On December 16 the gross Federal debt breached a new level to $23.1 trillion, while the net debt after $401 billion of cash weighed in at $22.71 trillion. The latter monstrous figure is notable because on June 30, 2019 it stood at $21.76 trillion.
So what has happened in the last 167 days is a $948 billion increase in the Uncle Sam’s net debt, which amounts to a gain of $5.7 billionper day – including, as we like to say, weekends, holidays and snow days.
Worse still, not a single dollar of that gain got absorbed in government trust funds. The Treasury float held by the public actually rose by $953 billion.
So why in the world do the knuckleheads on bubblevision not understand where the spiking rates and ructions in the repo market came from?
The law of supply and demand is still operative, and the US Treasury is literally flooding the bond pits with new supply. Even at the bottom of the Great Recession, Uncle Sam did not drain $5.7 billion per day from the bond market.
But nary a soul down in the Imperial City has noticed this borrowing eruption at the tippy-top of the business cycle, which now teeters on borrowed time at a record 127 months of age. Instead, this very day the Congress is busily engaged in what is a fair approximation of abolishing the election process at the heart of American democracy.
Posted in banking, Business, Collapse, Debt, Financial markets, Government, Intelligence, Investigations, Taxes
Tagged Bond Market, central bank policies, interest rates, National Debt, President Trump
The federal government’s debt growth has reached banana republic proportions. From MN Gordon at economicprism.com:
There are many falsehoods being perpetuated these days when it comes to money, financial markets, and the economy. But when you cut the chaff, three related facts remain: Uncle Sam needs your money. He needs a lot of your money. And he needs it bad!
According to the Congressional Budget Office, the federal budget deficit for the first two months of fiscal year 2020 is $342 billion. This amounts to $36 billion more than the deficit recorded during the same period last year. At this rate, Washington’s going to add over $1 trillion to the national debt in FY 2020.
Still, the figures from the CBO aren’t all bad. Revenues in October and November of 2019 were 3 percent higher than they were in October and November of 2018. Regrettably, outlays for these two months were 6 percent higher in 2019 than they were in 2018.
Jacks and Jennets both know from experience that taking three steps forward and six steps back is an inefficient way to lose ground. They also know that the longer this goes on the more ground you lose. So, too, they know that the more ground you lose the harder it is to make up.
All the so-called economic growth we’re getting is debt-funded. From John Mauldin at interest.co.nz:
John Mauldin sees an ugly conflict coming soon to the US as their official debt levels become unsustainable and they face a “Great Reset”. Will a better wealth and policy balance rise from the impending shambles?
Nothing is forever, not even debt.
Every borrower eventually either repays what they owe, or defaults. Lenders may or may not have remedies. But one way or another, the debt goes away.
One of Western civilization’s largest problems is we’ve convinced ourselves debt can be permanent. We don’t use that specific word, of course, but it’s what we do and is why government debt keeps rising. We borrow faster than we repay previous borrowing—and I mean governments everywhere, China as well as the US.
Our leaders have no real plan to reduce the debt, much less eliminate it. They just want to spend, spend, spend forevermore. And most citizens are okay with that. As I will note below, the Republican Party I grew up with, which back then seemed to constantly talk about deficits and debt, is now comfortable with 5% (and growing) of GDP deficits.
The government borrows more money than the actual growth of the economy. In other words, a dollar’s worth of debt no longer buys a dollar’s worth of growth, even by the government’s screwed-up definition of growth. From Chris Hamilton at economica.blogspot.com:
Since 2007, marketable federal debt has exploded by $12 trillion while Intragovernmental debt has risen a relatively gentle $2 trillion…all while the Federal Reserve directed Federal Funds Rate has been pushed to zero. And after a short respite from ZIRP, another push to ZIRP is almost surely in process, or even a furtherance, moving into NIRP and the paying of lenders to undertake loans. But why?