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Even though the U.S. has managed to avert a debt crisis and perhaps a ratings downgrade, there remains a stain on our reputation, a scarlet “A” for budgetary “Abuse,” that will not disappear. The whole world was watching, and what they saw was a dysfunctional government taking its country to the financial precipice and backing off at the very last moment. [That being said, what options does the U.S. government have to reduce/eliminate its current $10 trillion of outstanding Treasury debt and an unfathomable $66 trillion of future liabilities? I have identified 4 likely courses of action all of which will lower the standard of living of every American.] Words: 1374
July 31st, 2011 | Posted in Debts/Deficits,Economy | Read More »
The Obama administration and Congress will eventually have to agree to some watered-down measures that will enable the debt ceiling to be increased to ensure that the country’s creditors continue to be paid on time but that will only be a short-term political deal. The medium-term fiscal plans brought forward by Republicans (ready to slash spending but unwilling to consider tax increases) and by the White House (heavy reliance on sustained economic growth to reduce future deficits) currently fall well short of fiscal sustainability…[The bottom line is that] increases in taxes, combined with fundamental program redesign and a reduction in benefits, will eventually be required. Words: 744
July 21st, 2011 | Posted in Debts/Deficits,Economy | Read More »
The ceiling will be raised from its present horrendous $14.3 trillion – that’s 14.3 plus 11 zeros (00.000,000,000). That’s guaranteed! [Otherwise,] the alternative would be the U.S. defaulting on its debts, losing its Triple A credit rating [and being] unable to pay the seniors their benefits, or the military [or its] creditors beyond Aug. 2. [There's more! Read on.] Words: 565
July 18th, 2011 | Posted in Debts/Deficits,Economy | Read More »
Most economists see the latest Q1 GDP stumble as a blip, something we shouldn’t worry about because the economy is still on track for recovery…[but] another way to look at it is that the economy is being harmed by monetary inflation and we are seeing massive distortions in the economy as a result of this intentional Fed policy – economic growth is stalling and industrial production, manufacturing, non-manufacturing, durable goods production, retail sales and employment is flattening-to-declining… I think this is the correct way of looking at things and, [as such,] Q1 is not a temporary blip on the road to recovery… [but another mile down the road to economic stagflation, price inflation, lower real estate prices, continuing high unemployment, a weaker dollar, higher taxes and more - much more! Let me explain.] Words: 2997
June 5th, 2011 | Posted in Economic Overview,Economy | Read More »
Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills. What it can and must do is radically simplify its tax, health-care, retirement, and financial systems, each of which is a complete mess… otherwise we are going to see dramatic increases in taxes, interest rates and consumer prices [with a resultant major decrease in our standard of living] and a dramatic increase in [the number of Americans living in abject] poverty. Words: 835
September 30th, 2010 | Posted in Debts/Deficits,Economic Overview,Economy | Read More »
The past several quarters of improving real GDP may be nothing more than an interlude in a more sustained economic downturn, with further negative quarters still ahead. Such an outcome will suppress inflation further and quite possibly lead to deflation. Words: 1986
July 27th, 2010 | Posted in Economy | Read More »
The uber-Keynesians that are in control of our economic policy clearly do not think that large tax increases matter, or if they do think so they are not speaking out about them. They are conducting an experiment on our economic body without benefit of anesthesia. Here’s a prediction about which I can feel confident: if we do slip back into recession, they will blame some factor other than the tax increase and call for massive stimulus. In fact, they will probably say that the lack of stimulus was the problem in the first place. Paul Krugman will be the head cheerleader. Words: 841
July 4th, 2010 | Posted in Economy | Read More »
The U.S. caused the 1930s deflationary depression and is again the cause of the current contraction. Although similarities exist between the two, the differences between them insure a far more consequential outcome today than in the 1930s. [Indeed, the world] now finds itself on the edge of a growing deflationary sinkhole created by the sequential collapse of two large U.S. bubbles, the dot.com and U.S. real estate bubbles. Words: 1549
July 4th, 2010 | Posted in Economy,Inflation/Deflation | Read More »
There is an ongoing debate among global policymakers about when and how fast to exit from the strong monetary and fiscal stimulus that prevented the Great Recession of 2008-2009 from turning into a new Great Depression. Germany and the European Central Bank are pushing aggressively for early fiscal austerity; the United States is worried about the risks of excessively early fiscal consolidation. Words: 957
June 23rd, 2010 | Posted in Economy | Read More »
The market basically doesn’t want a recovery right now. It loves high unemployment and a bad economy because it allows the Fed to keep rates at zero which is highly profitable for Wall St via the games that I described above. Of course our crippled economy is an absolute nightmare for the rest of us as we lose our jobs and our homes as Rome continues to burn. Words: 1248
June 15th, 2010 | Posted in 2011-12 Forecasts,Economy | Read More »
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