Tag Archives: Tax receipts

The National Debt Is Now More than Ten Times Annual Tax Receipts, by Ryan McMaken

Federal debt relative to tax receipts has never been higher. From Ryan McMaken at mises.org:

Politicians from Alexandria Ocasio-Cortez to Dick Cheney are united in their agreement that deficits don’t matter. Of course, that’s exactly what a politician would say. Politicians score points by spending other people’s money, so naturally, they don’t want to hear anything about how prudence suggests it might be a good idea to not spend that extra 800 billion dollars they don’t have.

But there is apparently little concern in Washington, DC as the annual deficit — for a single year, mind you — approaches one trillion dollars for the first time since the hit-the-panic-button days of the Great Recession. Except that now huge deficits are coming during “good” economic times.

Moreover, as the Congressional Budget Office has forecast, the debt load is expected to rise to 125 percent of GDP over the 20 years. That’s higher than the US debt-to-GDP ratio during World War II.

This, of course, assumes no major geopolitical or economic disruptions, whicih would make things far worse.

For those who believe huge debts are no big deal, however, there’s still no need to worry. After all, they say, actual debt payments are still only a minor issue. In fact, they’re still lower than where they were during the early 1990s.

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Oh, So You Think Exponents Don’t Matter? by Karl Denninger

For the record, SLL is not part of the crowd which thinks that exponents do not matter. From Karl Denninger at theburningplatform.com:

For roughly 75 years — since WWII — our “governing masters” — whether they be Fed officials, elected politicians or otherwise have run this general line of crap that indefinite forward expansion is not only possible, it’s likely and good.

As I pointed out in Leverage, and have made a lot of noise in regard to both before and since, that’s a lie.  It’s a knowing, provable lie, which can be easily demonstrated using nothing more than basic mathematics.

You see, this rock we live on has fixed size, mass and resource.  It is very large, and its resources are vast, but neither is infinite and yet that’s the requirement for indefinite forward compound expansion to be possible.

We therefore argue not over whether such a paradigm is possible, but merely over when the failure to do so will be recognized, and who will recognize it first.  Will it be recognized because some material subset of the population figures it out and decides to stop participating, or will it be recognized by hitting the wall on a societal basis resulting in the deaths of billions?

Then there are the secondary issues, such as will those who promoted this lie be held to account and, if so, how?  Will it through some sort of civil process, or will it be much less lawful and much more-violent?  Most-likely will be some combination; there will be places where civility will remain and due process respected, and then there will be places where it will not.

There are many charlatans who think they can argue for this or that means of evasion — becoming an expat, for example, or hiding in a hobbit hole somewhere.

But I argue that among some reasonable subset of the population, at least in the United States and a number of other developed countries, recognition has already come — quietly — to very substantial subsets of the people.

To continue reading: Oh, So You Think Exponents Don’t Matter?

The Most Important Chart You’ve Never Seen: Tax Receipts Top-Tick the Stock Market, by Charles Hugh Smith

From Charles Hugh Smith at oftwominds.com:

This time is always different just before a bone-crushing decline.

This may well be the most important chart you’ve never seen. Courtesy of longtime analyst-correspondent B.C., this chart reveals that real per capita tax receipts have reliably top-ticked the stock market since 1973.

Note that this is specifically real (i.e. adjusted for inflation) state and local income tax and sales tax receipts–not federal tax receipts–and that the chart show annualized changes smoothed over three different time frames: seven quarters, 6 years and 9 years.

Anyone who sold stocks once the 6-year annualized change in real local/state tax receipts started declining would have been spared the horrendous, bone-crushing losses of the Bear markets that subsequently shredded stocks.

This indicator even worked reliably to identify Bear market rallies that briefly boosted tax receipts before rolling over: the stock market rally of 1975 to 1977 reversed the annualized decline in tax receipts but when tax receipts rolled over in 1977, that was a reliable top-tick of a market that subsequently fell 25%.

The annualized 6-year change nailed the top of the market in 1989, 2000, 2008–and now, in 2015. This leaves current bulls with the task of explaining why an indicator that has reliably top-ticked every previous market top for over 40 years is suddenly and magically wrong in 2015.

This time is always different just before a bone-crushing decline.