What we are saying is there are no curbs to Wall Street's greed. One day they knock themselves down for losses, then back they are with reported superficial profits, and then the next day we prop them up for more greed. Politicians take their share of the profits, and government's greed excludes substantial taxes on gains. But never does our self-appointed 'genius' PotUS show concern for the American people paying excessive taxes. And worst of all, we allow it to continue. No pity for those who complain.
10
For the poor and working class in the USA all this theorizing and guessing is gibberish. What is not gibberish is the obvious unconcern by the wealthy and the policymakers for the long-term economic interests of the poor and working class when the economy tanks. Then it is every man and woman for him/herself.
12
I must say I find this whole thing exhausting and maddening!
I am tired of the taxpayers continually holding the ball and bailing out Congressional shenanigans-- shenanigans like deregulating the financial industry and passing a massive tax break for billionaires and corporations. When the economy crashes again, let the folks in Congress who enacted ridiculous laws like these that will ultimately tank the economy AGAIN, be accountable and personally liable for the next bailout! The middle class taxpayers will rebel otherwise! We get no benefit and get stuck-- time and time again.....
As the economy strengthens, this was a superb time to keep taxes where they were, get our fiscal house in order, and do a massive infrastructure overhaul creating a robust jobs programs at the same time for folks who have been dislocated by the shifting American economy and for our young.
We could have invested in our schools and make them the best in the world. Instead, our schools and cities are starved for funding-- a democracy depends on an educated, critical thinking citizenry. Smart, well-educated folks do not fall for fake news.
As I drive across this country, I meet wonderful folks who are struggling in places that look like the third world. Right here in America! That is not the best we can do!
23
24,000 , while fun, is not sustainable, it just isn't. When the fall comes, as it will, who's in the position to limit the damage and restore order? That's my concern.
5
Wow paying people a living wage will crash the economy. The payment of salaries, bonuses, stock options, toys (i.e. jets) to corporate giants and their boards hasn't collapsed the economy. Go figure
20
So when workers see a 2-3% raise in wages the Wall Streeters panic that it may lead to inflation. The top dogs have seen their wages rise by 900% without such fears. How about the Brokers and Bankers and CEO's let some of their huge increases be shared with workers instead of raising prices so inflation does not happen?
27
One possible cause for the mother of all recessions is on the minds of some central bankers in Europe: financial institutions failing to facilitate a smooth low-carbon transition by continuing to cling to carbon-intensive assets that may get stranded once the climate crisis becomes too big to ignore. The US, under the spell of the current Trump Administration, is doing everything possible to stop a low-carbon transition in its tracks. To say that the US is currently contributing to the growth of structural problems is an understatement.
13
The boom and bust cycle is one of the blessings of our free enterprise, deliberately unplanned economy.
But if empty storefronts and mass homelessness are the capitalists' idea of "recovery" what will their "downturn" look like?
17
The so-called normal recovery beginnng in the 1950s occurred during a population boom that had a considerable affect on economic growth. The current era has seen not only a birth rate that is below replacement levels, but the retirement of huge numbers from the earlier population boom. The earlier level did not in any sense represent a “norm”. The Federal Reserve has published numerous studies suggesting the effect of the population bust has reduced GDP growth by about 1%. Economists who continue to represent the baby boom era as the norm need to rethink this comparison. Based on the altered demographics it may be that the economy has actually been humming along very nicely thank you very much. And the gloomy take by many economists and market players that we are growing below potential may be completely erroneous.
3
The foundation for the next crisis or crash is now in place. Starve the government of funding while the top 0.01% receive an undeserved and unnecessary windfall. Rather than paying down the deficit, the Trump administration is in full deficit spending mode. All based on the assumption that all this new business activity and hiring more workers will make up the difference in revenue. In the meantime increase military spending and gut everything else. And do away with regulations that are designed to keep malfeasance in check. This is the Republican/Libertarian playbook for the last thirty years. Their power and influence peddling has distorted the very fabric of democracy and given rise to high levels income inequality. A few more decades of these policies and the US will look like the 19th century economically instead of the 21st century.
16
In place of policies favoring job growth the Democrats embraced identity politics and pro-immigration "reform." They were betting that by creating a new constituency of voters who were previously disfavored they could make up for their losses among the dwindling population of average American workers or the "deplorables" whose interests they betrayed. Their mistake was to categorize or to think of segments of the population as a rigidly defined voting bloc with incompatible interests instead of as a melting pot in which jobs were the greatest goal and all were willing to forsake their previous identities in search of success and economic prosperity. For "hope" the Dems substituted entitlement. For social "change" they substituted rigid group identity which caused bitter resentment by those who felt left out. In America jobs are the great leavening and leveling factor which brings everyone together. As a result, even the identity groups the Dems were counting on in the last election did not even show up at the polls because they do not define themselves according to the preconceptions of calculating politicians but go their own way in search of the American dream.
9
When you speak of “the Democrats”, are you talking of leadership, campaign strategists? A whole lot of Democrats who are ordinary people embrace our pluralism and our big tent. There is absolutely no need to forsake our identities to come together. Variety is the spice of life. We simply want everyone and that means everybody, to have an equal chance. In the past, groups were discriminated against and it is still going on—Democrats stand for equality and against discrimination. If that is the problem, then you are free to join a different party.
9
This article fails to mention the unprecedented levels of debt throughout the US and world economy, fueled largely be central bank policies post-2008. Casselman writes that, "many economists argue that the seeds of the next crisis are being sown today." In fact, the seeds of the crisis were sown post-2008 when Bernanke's Fed, Trichet/Draghi of the ECB and Shirakawa/Kuroda of the BOJ decided it was acceptable policy to provide liquidity on the backs of the next generation. Yes, the economy was stimulated, like when a fire is doused with lighter fluid. Now that the fluid is used up, can this economic fire be sustained? I have my doubts.
8
We should also talk about the probable effects of the 2018 tax "reform" law on the economy. I'm a widow living on my husband's social security and modest investment income. My tax preparer says my taxes are higher in 2018 than 2017, but I'm very much in the middle income group.
What happened to the middle class tax cut? Folks, we've been conned!
16
Higher inflation and lower productivity, both of which will result from Trump's economic policies, are good for the average American worker and the middle class but bad for the banks and the business elites who benefited too long from Obama's anti-worker policies. The banks and big business just loved the Fed's lower interest rates because they could get money for nothing and then lend it out at lower rates which encouraged both corporate and consumer borrowing (debt) but still preserved bank profit margins. The stock market boomed, but at the expense of savers, many senior citizens, whose savings earned less than half a percent. The economy was bad for the average worker but great for companies because high unemployment caused by Obama's foreign trade policies meant that companies could dictate how many workers they would hire and where they would locate e.g. right-to-work states with lower wages or in third-world countries where productivity is high but labor is cheap. Trump is criticized for favoring business but by lowering trade and ordering tariffs he is bringing jobs back to America. Companies can no longer pit worker against worker or state against state but must compete domestically for workers which means more jobs and higher wages and more spending and money circulating in the economy (inflation). With "Republicans" like Trump, we don't need "Democrats" anymore.That's why they're so ticked off at him.
Obama didn't create the problem Republicans did. They held both houses of congress.
13
The US Fed had no choice but to pump liquidity into the US economy during the financial crisis of 2008. Unfortunately, interest rates were driven too low and kept there for too long. It inflated asset prices worldwide. Stand-alone housing prices rose to unaffordable levels, killing the American dream, promoting the rise of populist leaders---and sowing the seeds of the next crisis.
4
Without higher wages interest rates had to stay low.
4
I agree! The only prosperity felt by the 98% were those positive cashflow issues felt from declining interest rates. Need a raise to help with your children’s education? Refinance your house. Riding interest rates down provided cash flow that allowed workers to feel a level of prosperity that was not showing up in their paycheck through earned income.
Earned income is still pretty flat but now workers will feel the pinch from rising rates. It may take a year or two but when it ends it will end badly. The Trump economy will be crushing!
5
Increasing consumer debt, tax cuts for the rich, financial deregulation, increasing federal deficit - how is this situation different than the lead up to 2007-2008? Maybe add a trade war, an unstable Executive Branch and environmental threats?
13
The trend among mid-cohort boomers is to downsize now. As we hit 65, we still need jobs. We are cashing in our chips and can’t comfortably retire yet, quite possibly beyond age 67. We need a recession like a hole in the head, as many of us didn’t recover completely from the last one. There are a lot of us and we vote.
12
Give Trump time and he'll drag US into the Slough of Despond.
6
Give Trump time and he'll cause another Great Recession. Get rid of him now and save the day.
9
"But many economists also argue..."
When did news turn into reporting the future instead of reporting the past?
3
The economic "recovery" seems to be benefiting the rich and the corporations. The average worker is not seeing increased wages. Prices are still going up, as are interest rates. Consumer may continue to use debt to buy things, and the Trumpists are going to roll back the rules to...yes, you guessed it...pre-financial crisis. More consumer debt that will crash, but Wall Street and Trumps 1%ers will get their next bailout.
16
I find Veronique de Rugy's statements both accurate and ironic. The intelligent voice in the room comes from a libertarian. However, the statement is intelligent for reasons outside the speaker's intention.
We are in fact ignoring structural economic issues. The United States has been failing in this capacity for at least 40 years. The suggested libertarian solutions however always involve a divestment of government intervention. As you can see, de Rugy's criticism is leveled as much at Republican interventionism as anyone else.
What I would argue as a counter narrative:
The United States needs to stop destructive interventionism. Republicans have essentially adopted this economic position as their modus operandi since at least Reagan and the destructive intent has only become more extreme over time. I think the 114th Congress lays plain my argument. I won't even remunerate on the 115th.
Democrats have their own demons. Obama never addressed the growing income divide and the 2016 primary illustrated the general Democratic disconcern.
However, Obama was at least responding to economic realities in order to advance debatable policy. Republicans have suspended all consideration of reality in order to advance politically favored policy.
I miss the days when Republicans would criticize Democrats over procedural process. The moment almost seems quaint. What I witness today is no process at all. If there's a better way to run an economy into the ground, I have yet to seen it.
5
“But many economists also argue that the seeds of the next crisis are being sown today [by current governmental policies], even if it is several years before they poke above the surface.”
Vote in 2018 and 2020.
7
The article focuses on the macro issues. To be sure, macroeconomic policy errors abound in TrumpWorld. But, don't forget households. This has been a consumer-led recovery. The savings rate has declined to a near-historic low. A spooked consumer, reducing consumption and increasing savings, could turn growth negative in a heartbeat. And what's to be feared? This is a fragile recovery, but not for the reasons the Trumpistas proclaim. It will be their recession and the Democrats' problem to solve, once the election cycles evolve.
7
It will be debt that crashes this economy. Each month we reach new levels of debt from falling tax revenue. By mid 2019, chickens will come home roost. This will squeeze the debt market, clog the housing and car market, suddenly make all the high credit card balances difficult to pay off and end this so called recovery. Moody's is just a breath away from downgrading US debt. They fired a warning shot two days ago.
I find it strange that every one ignores the truth that is not a job recovery per se. About 250K retire each month and an equal number enter each month. The reason why wages are not growing is because newer workers earn less. This is a house of cards and most US economies are.
10
The Federal Reserve's balance sheet is a mess since they basically printed money to stimulate the economy after the recession. They are trying to "uinwind" this debt and are making some slow progress, but there is a long way to go. The Federal Government was already deficit spending at over 600 billion a year (and that number includes social security receipts). Now that the Republicans have produced their new tax cut this deficit will go up to around a trillion dollars a year. Oh and the first round of tax cuts wasn't enough. They are talking second round of cuts now. Could go on and on, maybe a trade war or WW3 but I start getting too depressed.
3
Social Security does not run at a deficit, not does it contribute to the deficit. Please get your facts straight.
4
Nothing like strong news and the success of the American economy to bring out the hand-wringers, worry-beaders and naysayers. Buckle up, join the ride, and quit your whining. No upturn has ever lasted forever, but it sure would be nice to unhang the black crepe at a time when good news should be celebrated, not cast in a politically-drive, Trump-hating pall.
3
In good economic times we should be working hard to balance the budget. Instead we are racing the other way. That isn't complaining, that is just the fact. We are now locked in to serious pain in the future.
19
I cannot celebrate a bank deregulatory opioid epidemic after what I witnessed at FDIC bank closings nationwide for 20 years.
7
My broker suggested I dump a few utilities and buy bank stock to keep up with inflation. Way to rig a ship of fools, JP Morgan!
I clearly recall the insanity of the 1970's inflationary explosion. To call it a spiral is to pretend it didn't happen. Folks were calling dirt worth ten times what it is today. I say, let the whole ball roll! I'm in it for the long haul.
1
Ask your broker to give you a total on the worthless bank stock from 1985 - 2015 because the bank failed or was restructured. You would be amazed.
2
The GOP mantra of piling on debt and adopting policies — immigration restrictions, increased trade barriers, looser financial regulation — that many economists view as counterproductive. These tendencies are in full flower as they continue to shift national wealth away from the middle class and the less fortunate to the wealthy as they destroy unionization, pension funds, and our national safety net. It is what they do and have for the past fifty years.
15
The only thing that I know is
When RECESSION hits
I will NOT be the first 1 millionth person to know
1
Trump is surfing a wave on this Obama tide.
9
Ha! Say "unemployed" to Larry Summers and the first word that comes to his mind is "felon." He hasn't moved an inch out his own "traditional prejudices" against anyone who isn't a rich white male.
“It is shortages of labor that induce firms to figure out how to train felons, to move beyond their traditional prejudices, to figure out how to skill unskilled workers, to reach into distressed or depressed communities.”
2
All I will say is that I worked for the FDIC during Reagan's second term and until 2005. Before that I was in banking 15 years. People have forgotten or were not alive during Reagan's second term... there were massive bank failures nationwide. It takes time and an adding up of stupid mistakes, deregulation and criminal activity to cause bank failures to explode. Everything in my gut tells me we will have large numbers of bank failures but they will come later even possibly after Trump's second term should he get one. Trump is America's first "Bad Deal" president gutting what remains of the New Deal. We deserve a better deal. VOTE!
21
What could knock down the economy? Trump's devotion to his newly appointed head of the National Economic Council, Larry Kudlow. The article strangely fails to mention that Kudlow is a TV personality infamous for stating, on the eve of the devastating recession of 2008, that no recession was coming (and in his first few days, has already proposed another tax cut for the wealthy!) That's the kind of stupid thinking that - on top of Trump obstructing and lying about international trade - knocks down an economy.
18
"But many economists also argue that the seeds of the next crisis are being sown today" - from this piece
“Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.” - Warren Buffett
6
Please stop writing about Trump's re-election chances for goodness sake!
3
I see plenty of danger signs, most of them self inflicted. We have given China a reason to cause havoc
Our enemies could work in concert, Trump can’t see past the end of his nose.
But it takes time to work through the system,like eating a hot chili the burn is worse going out.
We are in trouble folks.
5
We saw the same thing under Trump instead of making hay when the dun was shining they were spending like no tomorrow. Yes we have a strong economy but because of foolish Republican sped but never tax policies we have 8 trillion more debt. Like Bush Trump is making a response to the next recession more difficult, Once again it will probably be the Democrats forced to clean up the mess and oddly bear the rancor of those who caused it.
8
Borrowing against the future-that's what the roaring economy is feeding on. We watch the Dow go up and up. If we had gauges on the Earth's living systems, we'd see them going down and down. Who doesn't understand this at a gut level?
12
Hold on. You are saying that Bernstein and Summers are in same camp as Kudlow and Teump. I don't buy it. Perhaps, they are dovish on inflation, but what about the fiscal side and the egregiously unbalanced tax bill? Are they in the same camp on that? Kudlow and Trump' hypocritical support of inflationary support only comes now that they are in office, where were they when Obama was in office?
4
Hello to all the Trump-bots who are "Democrat"-bashing in full force.
As for what will cause the next recession, does it occur to people who are complaining that economic cycles are a healthy thing, and we need occasional corrections to keep the system stable?
A helpful analogy for a national or regional economy is to think of it as a sports team in a competition. You have say 4 teams. One is from a place where they have 3 excellent, world-class players, and the other 7 are not very healthy. Team B has 8 well above average players and 1 excellent, one mediocre player. Team C has 10 average players and Team D has a motley collection of mediocre, scrawny and occasionally good players. Who will you place your odds on?
Team B will probably be the best on to bet on since it has 8 solid players and one exceptional one. A might be in favor, but the 3 good ones will have to pull up the 7 weak ones. And C and D have to pray that the others screw up if they are to have any chance.
In an economy having a solid middle-class which comprises 60-80% of the population is a winning team, because you will inevitably have another 5-10% who are exceptionally good and a similar number exceptionally bad, but it will work out due to the large middle. When we gut the middle-class in favor of the "job creator" class it is like having a weak team with a couple of exceptional stars. Eventually the team will do poorly compared to other teams which build a better middle core. Moneyball.
5
Things are going well, but they might collapse. Pre election messaging by the NYT?
Or a fiscally conservative outlook on the future based on large tax cuts and increased borrowing coupled with policies that may blunt economic activity. Go ask Kansas how those large tax cuts worked to stimulate the economy and fill the coffers to pay for services.
12
I'm waiting for Paul Krugman's next prediction. Whatever it is, if you trade opposite you're almost bound to make money.
3
Hmmm...?
The country is now sliding down the backside of success. What's to stop the crash at the bottom?
1
Trump and the GOP are concerned only about the next election cycle, not the long-term health of the economy.
8
Never forget this: whatever Larry Kudlow says, expect the opposite to happen. Every time. Impeccable track record... indeed.
8
Just keep funneling the money to the people who will spend it the most, the middle class on down. That means living wages at all levels. Keep giving it to the investor class and watch it all crash.
16
Economists can explain the past, and can say what Roosevelt should have done, or what mistakes Lyndon Johnson made.
The future? Even what's going on now? Like the rest of us, they don't know, and don't have the tools to find out. Could anyone really say how many people are actually working and making money right now? It may be a lot more than economists think, or it may be a lot fewer.
2
Social security numbers are issued at birth. People who work file tax returns. SSN's are included on tax returns--that's how the government knows how much everybody earns. They need to keep track of that data so they can provide each individual with social security benefits at retirement.
The data is out there.
3
Except for those who work under the table. It is estimated that 10% of the economy is under the table.
4
@CF - Economic activity takes a wide variety of forms. Suppose I spend weekends renovating my house, using materials from Home Depot. After three months of work, I have a house that is worth 50% more, and I have increased my net worth substantially. But the government has no record that any economic activity has occurred. Even if I sell my house for a good price, I don't even have to report it if my capital gain is under $500K.
1
I just read a report by Bain warning how robots, ai, and automation are going to eliminate 50 million jobs at a pace that outclips all past recessions making it impossible to reabsorb those workers back into a productive economy easily. That seems like a very real trend, yet this article mentions nothing about it. When robots increase production, but joblessness decreases demand, the economy will grind to a halt. The next recession is coming, faster than we think, fueled by our super-naive tech companies.
8
Nonsense!
The disruption of the technology revolution today is a replay of the industrial revolution that gave us depression, inflation, unemployment and 2 world wars.Anyone with the slightest bit of insight to human nature can recognise the trajectory we are heading to . If the masses cannot see the arms race building up as a indication which way we are going then for sure it will be so!
6
Real employment—the labor force participation rate—remains below 63%, and unequal distribution of wages continues to leave the bottom two-thirds of the population stagnant. Most Americans gain marginally or not at all from economic growth. Since consumer spending is 70% of the economy, our low demand for goods and services caps growth and will bring on recession. The concentration of wealth and power in the .01 percenters destroys people and in the long run is the snake swallowing its own tail.
8
Well, what is the ideal labor force participation rate? Surely it is unrealistic to expect everyone over 16 and under 65 to have a job.
It was actually lower in the 50s than it is today. The US was prosperous, and people could live well without as many workers. Of course, the retiree population that had to be supported was much smaller.
3
But the population of children was much larger in the 1950s as well--and they had to be supported, too. Why is the retirement of the baby boomers projected to be a crisis when the rearing of the baby boomers in the 1950s--with all the expenses of rearing and educating children--was not?
3
Once upon a time a man with a job in a steel mill could support his family, buy a home, and send his kid to college, with Elvis or Chuck Berry playing on the radio. Ask that guy's grandkids how they're doing.
5
It is very simple, most of those years of "recovery" really don't count. The recovery is only now happening at a reasonable rate.
3
Yes, we know. Anything bad that happens on the Democratic watch is their fault, and anything good had nothing to do with them. For the GOP, it’s the reverse.
6
Here is what could derail the economy: Democrat politicians in lock-step opposition to every single positive thing Trump attempts to do to improve the competitiveness and strength of our economy--along with their allies in the press talking down it's strength and all praying for a downturn.
These are the types of folks we've all known in our lives: they take pleasure in rooting against the other team--instead of cheering on their own.
8
Were was your outrage when Republicans oppose everything Obama did to rescue the gutted economy of Bush Do you have any memory at all, or do you just recite FOX NOISE nonsense.
13
@Jesse: so there was no lock step opposition By the GOP during the previous administration?
3
Bush handed Obama an economy in free fall. Obama handed Trump an economy which was steadily improving. With the huge taxcut/corporate give away and the recent budget resolution, down the road the deficit is going to explode. It is way to early to know what effect a Trump Administration will have on the economy. Better wait until 2020 before you start crowing.
3
Sounds like Democrats are once again rooting against the American economy. The two years of peace and prosperity since the 2016 election threatens them and now they would like fewer people to have jobs and the stock market to crash.
7
Not rooting, just explaining things. Meanwhile the GOP has is head in the sand pretending massive tax breaks to billionaires will make up great.
5
Peace? We are at war and have been for over 16 yrs. And one of those two years was under Obama, and the last year was just a continuation of the Obama policies.
But Trump's efforts to allow the corporations free rein will take effect this year. Already we are seeing the volatile stock market react.
And bubbles always burst.
6
Let's wait two more years. If you're proven right, I'll buy in.
"There is no sign that the rebound will end anytime soon. Unemployment is low, job creation is strong and the overall economy seems to be gaining momentum, not losing it. "
But oh DEAR GOD Trump did it...Something must be wrong..please please let the economy fail...
5
The economy has been on an upward trajectory since 2010. Trump had very little to do with it.
19
And unemployment is not really "low" only by the somewhat rigged measurement system, nor is job creation yet "strong" just stornger than it was under Obama.
3
Trump didn't do it. The economy is on a trajectory it has been on for years. Look at the graphs. Do you honestly think we were mired in deep recession up until the day Trump was sworn into Office. Forget FOX NOISE look at the economic data of the last 8 years. stop being stupid.
9
Casselman writes,"the United States is piling on debt", but then he never mentions debt again. He is reinforcing the idea that since debt is bad for you personal finances, it is bad for the federal government which is nonsense. Briefly:
1. We need money to conduct commerce.
2, As the economy grows we need more money.
3. Money can come to the private sector from 2 places--the federal government or from a favorable trade balance.
4. Money comes from the federal government in 2 ways--spending (fiscal) or from the FED to the banks (monetary).
5, The FED has sent a lot of money to the banks with little effect. The money has sat in the vaults of the banks or been lent to the Rich who use it to speculate.
6. Net federal spending is measured by the federal deficit, i.e. the deficit measures the net flow of money to people, businesses and state & local govs.
7. Thus in order to get the new money the private sector needs, the federal deficit must be larger than the trade deficit.
8. If the above is correct, periods of negative deficits, surpluses, which pay down the federal debt should lead to a bad economy. They have. There have been 6 such periods in which the debt was paid down 10% or more. They have ALL ended in a terrible real depression.
9. On the other hand, in 1946 we had the largest debt ratio in our history. The public debt ratio was 47% larger than today. We had deficits for 21 of the next 27 years. We increased the debt 75%.
And we had Great Prosperity.
4
Of course we had a huge debt in 1946, after the war. Governments shouldn't pile up debt in good economic times, especially when we have nothing to show for it, i.e. crumbling infrastructure, rising poverty and homelessness.
8
Susan read what I wrote. The 6 times we paid down the debt 10% or more all appeared to be good economic times (remember the roaring 20's?), but they all ended in utter disaster,
After WWII we did pile up the debt (75% increase from 1946 to 1973) and enjoyed 27 years of Great Prosperity. The way to fix the very real problems you mention is to get money to the private sector by fixing infrastructure, etc. The way we do that is by federal deficit spending since it does little good to pay Joe $1,000 to cut the White House lawn if we then tax it back from him.
2
Too bad the tax cuts went only to the rich then.
And we are not spending money on the things like infrastructure that we should be. We are spending it on military and tax cuts that don't help the economy.
5
The Fed has created the next disaster. Every trickle down from money printing has come with a multiple of inflated asset prices not captured by the inflation metric.
There is a huge problem with the inflation indices not capturing asset price inflation and it will simply make the next inevitable crash all the worse.
4
But the problem is not the printing of money. It is to whom the money is going.
It is obvious by now that the people who need money & would spend it if they had it simply do not have enough. We have just have 2 studies that showed if the typical American family had a real emergency & had to come up with some money, they couldn't do it. One said about half the people couldn't come up with $400 & the other that 2/3rds couldn't find $1,000. If you want even more recent data, look at today's retail sales report.
There are two reasons for this. One is the federal gov is not sending enough money to the private sector. It does this by deficit spending, but the deficit has fallen 75% since 2009. The other reason is that the money it and the FED HAVE sent is not very useful. Economist would say it has low velocity which means it doesn't change hands in domestic commerce very much. If you look at what has happened to the velocity of money since 2008, you see it has plunged.
Why is this? Because too much of the money is going to the people who do not need it & use it to speculate. If you compare the percent of money going to the 1% with the velocity of money (MZM), you will see the curves are almost precise opposite of one another since at least 1960.
The rise in the stock market is a symptom of this in which more & more money is chasing itself around uselessly.
THUS, while Trumps' polices may send some more money to the private sector, most of it will not be useful.
15
I find it simply amazing that, once again, there is no discussion on inequality or the suffering of so many in America. Extreme poverty, food insecurity (starvation), childhood poverty - none of these issues are covered in this glowing assessment of the so-called recovery.
For a view from the ground, from the view of ordinary citizens - not talking heads - take a look at the National Town Hall held yesterday by Sanders, Warren, Moore, Hamilton. This is "All the News that's Fit to Print". https://www.youtube.com/watch?v=-EV8XfM9CZo
13
We have starvation in the US??? Who knew???
2
No we just step over or around the bodies on the sidewalks.
2
The Left is pessimistic by nature, including the NYT Mr. Krugman who predicted a large drop in the stock market after the Trump election. The Right seems to be optimistic. The economy thrives on optimism. Get more Dems into office to cool, or crash the economy. Problem solved.
2
You are using "optimistic" as a euphemism for "gambler's mentality." The most recent recession, and the most serious since the Great Depression in 1929, came about because of your "optimism" under two terms of a Republican administration that fostered a false housing boom with its loose regulations. Mortgages that had no realistic prospect of ever being paid were punted around and speculated upon like hot potatoes. All your "optimistic" Republicans turned a blind eye to the problem until the bottom fell out, then taxpayers had to foot the bill for the mess.
3
If Larry Kudlow gets a job as the President's economic adviser bet on the opposite of whatever he predicts. (I hope I am not being unfair but I get the impression that his record really is that good.)
3
@Doug, you called it.
http://time.com/money/5197470/trump-pick-kudlow-predictions/
1
Economics is not only a gloomy science, but a dreadfully imprecise one, thanks to the human element. That is what makes articles like these, Feel-good #9. The loading of debt and a workforce that is already virtually at full employment, plus the automating of more and more manufacturing, a lack of job training for those left without a job--all these cause me to worry, rather than cheer.
7
Unemployment is low, because since the recession many dropped out of the labor market because of the lack of jobs, which was due to the lack of jobs, low wages and rising inequality.
Now Trump, Ryan and McConnell have unilaterally saddled us with a $1.5 trillion dollar deficit, feting loopholes to entities like NASCAR and craft beers, and lowering taxes for the wealthiest.
Trump and company is pushing for increasing our debt to an unsustainable level with the promise of infrastructure, to pile on further deficits.
Trump will put in 10%, and the bulk of the 90% will ultimately have to be paid for by the remainder of us. We are guaranteed that it will not be private industry.
Remember when local government was saddled by wall street before and during the recession with threats of bankruptcy when wall street came after municipalities for unpaid infrastructure improvements.
Carried interest is untouched, and the top 10% have received the lions share of the market's success. Kudlow, Trumps new successor to Cohn, along with Brady and Ryan, want to cut entitlements further than they have just done.
So, those on limited incomes and the rest of us will be further hurt financially, yet responsible to pay for the 1%'s deficit.
There is no secret, Dr. Feel Good potion, just irresponsibility.
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Rising inequality prevents jobs??? How interesting!!!
That is because the rich don't spend the money they get. And the country is a consumer economy. When the people don't have the money, they don't buy and the economy fails. So as the people get poorer and one segment gets richer, the rising inequality stops consumer spending and thus people get laid off.
Which is why the economy is growing so slowly and why so many people are not feeling the effects of the economy's growth. But the rich have benefitted quite well.
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vulcanalex....Businesses can't expand and hire unless there is someone capable of buying the products they produce. It follows that unless employment, salaries, and wages increase, there is no possible way for the economy to grow.
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There are extensive media reports of highly knowlegable
Jim Rogers and Larry Kotlikoff. both dumped their stock holdings after the election of Mr. Trump, reacting to fears of Mr. Trump's actions tanking the stock market after trade wars.
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Ahhh true genius there eh?
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Thank the Fed and central banks worldwide for the extended recovery. Politicians don't deserve credit but they will deserve the credit if they mess it up!
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This is another is a seemingly endless supply of fortune telling articles.
I read some of them, but have begun to avoid the ones that start with some version of "things look fine now but..."
This one falls into that category.
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If more people read articles like this and took it seriously in the mid-2000's, things might not have gone so poorly for this country in 2008.
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The wildcard is climate change. Good luck sustaining an economy in the face of ever worsening droughts, hurricanes, storms, forest fires and sea level rise. A government deep in debt is going to be very poorly placed to respond to threats that are no longer off in the future—they are present lived realities!
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Killing Dodd-Frank;pumping billions into the economy with tax cuts;exploding the national debt;destroying trust in America overseas. WHAT COULD POSSIBLY GO WRONG. Trump has 6 bankruptcies under his belt; America may be number seven. Ray Sipe
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I approached this article warily thinking there'd be the usual mantra attributing the upturn to Obama and the continuation of what was started by him, but was pleasantly surprised to find him not mentioned even once. There goes another piece of his dubious legacy which has slipped into irrelevancy as America moves on without him. It looks like clear sailing ahead unless the Democrats continue their mutiny.
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Mutineers face execution.
Mutiny, no we are trying to save the country from the rich.
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Hello Ed......For the record, more new jobs were created under Obama in 2016 than under Trump in 2017. The U.S. economy grew faster in both 2014 and 2015 than in 2017. The budget deficit under Trump in 2017 was larger than any of the past three years of Obama. The U.S trade deficit in 2017 was the largest it has been since 2008. The rate of inflation in 2017 was greater than in any of the preceding four years. Yes the economy is doing well, and yes the economy was also doing well when Obama handed it over to Trump....but don't go over board. Stick with the facts.
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Not one single word or thought devoted to the increasing wealth gap. The disparity between those plutocrats we call the 1%, the remnants of our once-mighty middle class who are now hanging on by means of leveraging assets and happenstance inheritances, and the poor is yawning ever bigger. A plutocratic president who has never known an unfulfilled wish, who wants to demonise the poor and who asks for the death penalty to execute those drug dealers most often stemming from a background of hardcore poverty, is not a person with any sympathy to those who have less than he does.
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I never found Hillary Rodham Clinton to be particularly full of the milk of human kindness running through her veins, either. Elizabeth Warren and Bernie Sanders do get it, and they would not dismantle consumer protection as President Trump is doing now with an able assist from the GOP majority congress.
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Spot on. No discussion of the rising inequality in the US.; seems there never is in the 'mainstream media'.
How about more column inches devoted to the multitudes of Americans who are struggling rather than light fare? The Time used to be a little more even handed in its reporting on ALL Americans.
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As Harry Truman said, "I wish i could find a two handed economist. Whenever I ask the response is always the same. "Well on one hand, sir...Yet on the other hand."
Trump will destroy the economy just like W did. Easy to see why; he is pursuing the same policies. PB
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Truman wanted a ONE handed economist.
Bingo!!! You reap what you sow.
It’s interesting how we cheerlead people working themselves to death. More productivity!! Yes we want more manufacturing jobs!! Endless growth!!! America doesn’t have the right ingredients to survive in the long term. Young love burns out
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Thanks, President Obama. Seriously.
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You can dismiss this and sat “oh here we go” and get back to your stock or face the reality that what will knock down the economy in the United States and the world is global warming and the irreversible pollution in the ocean. Combined they will eventually overwhelm our daily lives. The storms and weather catastrophes that have slammed the world are increasing. Areas we forget when they are far away are not rebuilt and with time will get hit again. The U. S. gulf, both coasts, Asia and everywhere will intensify. The polar ice cap is the air conditioner of the world. It is disappearing. If all the ice covering Antarctica, Greenland, and in mountain glaciers around the world were to melt, sea level would rise about 70 meters (230 feet). The ocean would cover all the coastal cities. And land area would shrink significantly. But many cities, such as Denver, would survive so to speak. They’d be there but so will the refugees from cities lost. Deserts increase, crops will diminish and fresh water will be increasingly scarce. The ocean is a garbage dump with more plastic particles than plankton and fish are eating the plastic particles. There’s no safe amount of mercury and we’ve know for 50 years it was increasing but nothing’s been done. Many fish species will be lost as they swim north from overly warm water. Diseases will increase. Personal wealth and the overall psychology that “oh it won’t get that bad. They’ll do something. The oceans so big” Nope.
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The economy, as it always has, is growing like a balloon. Traders buy and sell pieces of paper that are worth more with every trade. They will keep buying and selling until a catalyst comes along to burst the balloon, as the housing market did around 2008, or a tech bubble in 2009. Sometimes, the IS no catalyst. There is, instead, just a balloon getting bigger and bigger until it bursts under its own pressure. Which is more likely, that a very long history of booms and busts that are a defining characteristic of capitalism are going to continue to boom and bust, or that the economy will grow bigger and bigger, without end because some economists have that opinion? The second longest bull market won't pop soon? Because some economists say they can time the markets? How many of these economists suggest timing the markets? The same ones that 'think' it could last for years?
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This is a very polite article about "economic policy."
What we're really doing is allowing the oligarchs to steal the people's money, and inviting oligarch's from around the world to the feast on the carcass of American democracy.
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Government borrowing to fund the surging deficit because of absurd and unwarranted GOP tax cuts is already crowding out investment. That's the long-term trigger for economic woes to come.
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refernce?
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Starting a trade war with China is a very bad idea. Trade policy seems to be run these days by Peter Navarro, who clearly hates China for some reason, yet does not seem to understand the degree to which the economies of China and the US are linked. Over the past 20 years, the entire tech industry has morphed into a model in which China is the chief collaborator and outsourcer of work. Disrupting this overnight will literally stop many tech companies in their tracks. Pharmaceuticals, software, hardware, engineering firms, tool and die makers, ALL rely heavily on China. Stability and long term planning gives rise to a stable economy, something we had before Trump and Navarro started making their "gut" driven decisions that will be detrimental to the economies of both China and the US.
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Restaurant food has already increased by 37 percent since Trump's
inauguration.
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Is a recession even "avoidable", or are you just putting off the inevitable and risking an even worse recession?
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Low wages , low labor participation rate , older unemployed dying off with opioids . The glass is half empty.
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One can hardly blame a President for taking credit for a major upswing in the economy; that is normal politics. Bot looking back over the last decade, would it not be more accurate to refer to this as the "Obama-Bernanke" recovery?
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I have posted this before, and I am doing it again. I attended DePauw University, and during my time the Chairman of the History Dept Was Dr. Andrew Crandall.
His favorite expression was " Monkey with the tariff and you cause hard times."
And here we are. Whoever the writer was for the movie "Charlie Wilson's War"
I credit you with the following words spoken by Phillip Seymour Hoffman ,
"We'll see"
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"...economic expansions do not “die of old age.” Rather, they end because something — a policy mistake, an asset bubble, an outside shock — causes them to." With Trump what's the likelihood of a 'policy mistake' and/or precipitating an 'outside shock'?
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Trump imposes large tariffs on Chinese imports, Chinese stop buying USA gov't debt or even sell USA debt, interest rates spike upwards, end of recovery. One of many bad outcomes waiting in the wings with incompetent Trump.
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Why would China do that since it would make the US bonds they hold worth a lot less?
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This rather encouraging economic forecast does not take into account exogenous events.One would be foolish to ignore this possibility.We have a controversial president who is part of an investigation of foreign intrusion into our elections.There are many totalitarian world leaders who can start trouble.We are fracturing our alliances with allies who traditionally support us.Talk of nuclear weapons is pervasive and job and income inequality are growing in our country.The administration has already added to the debt and relaxed rules for banks .What could possibly go wrong?
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There is nothing about increasing our colossal national debt that makes any sense for me, my kids and especially my grandkids. What an awful game to play on the future of America. That future is our grandchildren. May they have the courage to denounce today's greed and put sanity back into our political process.
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What about the enormous war debt the greatest generation left to the following generation? As a percentage of the economy that debt was almost 50% LARGER than the debt today. What about that terrible burden?
Well, from 1946 to 1973, the GDP averaged a 3.8% growth and real median household income surged 74%. How did we do that? Did we pay down the debt?
NO! During that 27 year period the debt grew 75%. We invested in America. We grew the economy so that debt became insignificant.
(If you want to raise the "Europe was Rubble Myth,". look at http://piketty.pse.ens.fr/files/capital21c/en/pdf/F1.1.pdf which shows that the out put of Europe was about the same as the US in the Great Prosperity 1946 - 1973).
On the other hand, we also had a big war debt after WWI. Then we balanced the budget for 10 years and reduced the debt by 38%, In October of 1929, it was only 16% of the GDP. AND THEN WHAT HAPPENED?
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Every comment here is always anti-Trump, the economy is rolling, everybody has money, everybody has a job, this guy could cure cancer and nobody would give him any credit......
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Just one problem with this comment: it is factually inaccurate.
1. The economy is growing at the same pace it did after Obama took steps to kickstart the economy after the Bush era economic collapse - caused by the very same Republican policies Trump is just now implementing. Those rosy GDP growth predictions are nowhere in sight at this point.
2. Unemployment is not significantly lower than it was prior to Trump's inauguration; and average monthly job growth during his first year in office was in fact 10% lower than it was the year before.
Trump's 'economic miracle' is all sizzle. He has been very good at advertising his 'achievements.'
Alas, in reality there are no such achievements - it's all just PR nonsense. And the consequences of the changes he is able to implement, like protective tariffs, restrictions on legal immigration, rollbacks of financial regulation, environmental and consumer protection and other regressive policies, are yet to be seen. You don't turn a ship carrying 330 million people and the largest economy in the world around on a dime. It's a long, slow process... as the steady Obama-era recovery from the Bush economic fiasco demonstrated.
It's an evolutionary process the short attention span President and his sycophants apparently never had the requisite patience to observe, or chose to ignore because it didn't fit the narrative of virulent hatred of everything Obama.
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Some people have wider views of the world than Trump biases.
Facts and evidence are available to all.
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Well, Mr. Trump isn't going to cure cancer and he hasn't fixed the economy. He's just taking credit for a seven year economic expansion spurred by the policies of President Obama and the Fed. The only thing Mr. Trump has done is sign a tax cut that adds $2 trillion to the national debt.
And by the way, stocks in Britain, Germany and Japan are doing just as well as they are in the U.S.
Donald Trump taking credit for the economic expansion is like the rooster taking credit for the sunrise.
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And the number one threat to the economy is electing another Obama as president. Although the elite 1% would be real happy.
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Explain
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Zero interest policy has helped 1% only who could borrow at that rate and buy stock while we, the lower cast, could not.
Articles about economists never cease to amaze in just how effective they are in illustrating how useless that entire "profession" is.
"may be starting to worry...", "might be premature...", "It is possible...", "could force...", "could lead to inflation...", "could cause a recession...","could pour hundreds of billions...", "could also increase consumer prices...", "harder to assess...", "unlikely to have an much effect...".
Or, maybe not; it might not be premature, or maybe it isn't possible, and it might not lead to inflation after all. It could cause a recession, unless it doesn't...
"Economists surveyed...". Wait. What?
They're still surveying economists after the whole financial crisis in 2008 thing? Why don't they just read the entrails of a goat in the back room of a bodega in Washington Heights?
‘Wow, this is really long,’” ... “Or you can look at output and say, ‘It’s actually surprisingly weak.’”
Some economists say it is sunny. Others say it's raining. Studies show that it is cloudy, but more research is required to see if it will rain or snow, or get dark at night. The "economic literature" is not clear on this point.
But it will indeed be windy. Either headwinds or tailwinds. One or the other. There is some agreement among economists about that.
The chance of winds somewhere in between the head and the tail is negligible, according to the elegant econometric models.
Why would anybody in their right mind listen to anything these people have to say?
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That's a really funny response - made me burst out laughing.
There is a simple fact that all economists gloss over when they offer their rosy predictions. ( many are tied to the stocks they happen to own as well )
If there are no customers ( that can afford products ) then there are no businesses, no stock market and no economy. It is that simple.
So, the powers that be are going to bet ( with your money in the market and in the banks ) on this and that behind the scenes while you ( the little people ) try to scrape by and afford things for you and your family to just survive.
As soon as you ( en masse ) are no longer able to afford things, then that will be that. You will go back to the street while those at the top will be just fine with their golden parachutes from having skimmed the profits off the top before everything collapsed.
The vicious cycle continues as republicans will be thrown out of office and Liberals will be voted in yet again to clean up the mess. Nothing of substance will get done as republicans filibuster everything and then promise more tax cuts to fix everything yet again .
All of you that fall for this again and again and again are to blame.
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Recessions always occur. One can be assured the anti-free trade tariffs and political uncertainty in the United States will make it worse.
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It seems the US forgot the lessons of Vietnam when it allowed GW Bush to launch the invasion of Iraq. Now we are forgetting the lessons of the Bush tax cuts and the loosening of financial restrictions that brought on the Great Recession of 2008. Trump's Tax Cuts and Jobs act will have the effect of making the rich richer and giving the economy an artificial boost it did not need. Loosening restrictions on banks will help Trump with that sector and tariffs will help with white blue-collar works. We might not see the ill effects for years, but that is the least of Trump's worries.
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Fear of losing their wealthy donors took all the backbone out of congressional Republicans. Hence, their eager endorsement of deficit-exploding tax cuts during a time of rising profits.
Fear of being defeated in primaries by Trump's frenzied base took all the backbone out of congressional Republicans. Hence, their docile submission to Trump on protectionist tariffs, normally anathema to the GOP.
The common element, of course, is lack of a backbone.
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Hmmmmm....... the market just entered negative territory for the year. The Trade Warrior in Chief continues his quixotic quest to punish the Chinese for being the 11th largest supplier of foreign steel.
A couple of questions:
1) What happens if China decides to liquidate their holdings (currently 1.25 trillion) in our treasury bonds?
2) Why is is that our companies continue agree to sign on to technology transfer to gain access to the Chinese markets?
3) Why is it that absolutely nobody appears interested in negotiating direct bilateral trade agreements with the Trump administration?
A couple of answers:
1) In an extremely troubling move that went virtually unnoticed, China just sold out their entire holdings in Blackstone for largely unexplained reasons. If their goal is to disengage from the stock market, we may soon find out the answer to #1. And it ain't gonna be pretty.
2) Our companies continue to agree to Bejing's terms on technology transfer because........it's incredibly profitable. Not because anyone is forcing them to.
3) Nobody is interested in direct bilateral negotiations because if you're not the last man in the room, the Tantrum in Chief just might rip them up an hour later when Navarro slides in through the out door for another mood swing inducing fireside chat for two.
So there you have it. Are we ready for lift off or ready to step off the cliff? One thing's for certain.
This dude doesn't have a clue.
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CIC sold their 1.9 billion dollar stake in Blackstone. But they have $813 billion. So that may mean nothing.
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If all of the economists in the world were laid end to end they wouldn't (or couldn't) reach a conclusion.
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Inflation is the canary in the coal mine. First, it is NOT below the Fed's 2% target. As of the February reading, posted last week, it is now at 2.2% for the last 12 months. Further, even if the monthly inflation figure for the rest of the year equals the January + February monthly average (0.35%), inflation will hit 4% by the end of the year. The reason is that the low inflation figures for the last 12 months occurred in the 1st half of 2017. As those low months roll off the average, the average will increase. (Source data: St. Louis Federal Reserve).
Inflation at 4%, or even 3.5%, will be enough to spook the stock market, which could trigger a real downturn. The tax cut, flowing largely to corporations and the wealthy, isn't delivering enough gains to the consumer that drive the economy to sustain the momentum.
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I think inflation is unlikely while the Fed is net selling its mortgage assets and is currently not supporting the Government deficit with net government bond purchases. Although foreign held dollars can come into the country, the dollar index has been going down or staying about the same in recent weeks indicating that foreign held dollars are not coming into the economy.
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I understand that the steel and aluminum tariffs are under Trump's authority because he is invoking "National Security".
So how can he impose tariffs on China? By invoking "National Security"? That doesn't smell right. So when is Congress going to weigh in on THEIR authority on this?
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It has only been ten years since 2008. There are no excuses for the shameful tax cuts for the rich and big business slammed through by the GOP to add $2 Trillion to the national debt. There are no excuses for the destruction of our consumer and environmental protections by the mega rich donor class and their puppets in the Republican Congress. We need to kick the GOP out. We need to kick them out in a big way, so we can pass comprehensive political campaign reforms and restore this democracy to majority rule.
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Trump's economic policies seemed as dictated by Moscow as his ignoring Russia's attempt to control our elections, our electrical grid, our nuclear plants, our financial system, etc., not to mention Trump's neocon desire to have an utterly disastrous war with Iran, and maybe North Korea for dessert. This was an insane moment to goose an economy with full employment with the tax stimulus. Ditto the lunatic trade war. If Trump were deliberately trying to ruin America for Putin on all fronts, he couldn't be doing a better job. Why don't we take it for granted he IS?
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Manchurian president. He doesn't need to kill anyone, just assassinate the country to please his puppeteer. What is his ultimate goal???
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