“Rather than using this period of stability and prosperity to pay down debts, some major economies are moving in the other direction…”
The U.S pay down its debts? Surely, you’re joking! Too many companies and wealthy people make a lot of money on the increase in U.S. deficits and debt. And, they donate big sums of money to politicians.
Governed by self-interested, self-enriching politicians the U.S. can’t even reduce its annual deficits. Annual deficits were being reduced a few years ago to approx. $400 billion and are now skyrocketing towards $1 Trillion and then on the path to $2 Trillion.
Trump promised to pay down the entire U.S. debt in eight years. Then he flip-flopped and our annual deficits and debt continue their unstainable trajectories – while the rich get richer and the poor get pooper!
We must find a way to hold self-interested and self-enriching Politicians and their staffers, from both parties, personally liable, responsible and accountable for the lies they have told US, their gross mismanagement of our county, our $21T and growing national debt (108% of GDP), and approximately 80T in future, unfunded liabilities jeopardizing our economic and national security, while benefiting themselves, their party, and special interest donors.
http://www.usdebtforum.com
13
International organizations like IMF and World Bank look at economies on a macro level. Perhaps due to their inability to sound the alarm bells prior to 2008, this time they want to cover their arse to throw everything out there, JUST SO they can tell anyone who care to listen that "don't say we didn't warn you."
Yes, I see warnings, but not so much of the reasons that IMF or World Bank has listed.
Trade wars? Blah. For all the rah-rah from Trump, this guy can't stomach any voters revolt (more specifically, the voters who voted for him), those like farmers and workers. Mark my words, he's going to backpedal, big time, just like he did with the tariffs on steel, with so many exemptions to the big exporters to US that it really doesn't matter. (China is really become a minority player in our steel imports in recent years that tariffs would barely a scratch.)
China will feel the hurt, but its market has become so big now that it will survive. Beijing will also throw in all its weight to support normalcy, given its large reserve and certain insularity from external shock with limited trading of RMB.
What is really worrisome, is the fission on a micro-level in so many countries. The top 10-20% globally are all doing very well, but that leaves large majority of world population struggling to survive and remain unproductive. Remember how Hitler got his rise and started WWII? Bad economy and struggling citizenry.
Live, and let live. We are all better served to remember that.
10
I want to add to my post that I just made, printed below: Example: I received a job promotion that was supposed to definitely take effect in January 2017. That is over a year ago. Believe me, I know it is past due, because every day I recognize that I am: "not in position", like I am supposed to be. This is a problem, because this position is very "high-up". In fact it is referred to as: #1. I think the last #1, has already left the building, and has started his Baby Boomer vacation bucket list to do items.... that are long overdue. I am Generation X. I know that things are not "in order" because, still today, I am "out of place". I am not formally in position. It isn't that I lose the #1 position because I am not there, it is more like, things get worse for others, until I am formally in position as the new #1.
1
Because they are mostly left wing types who are never optimistic.
1
Because fearmongering is how they get people to vote for them.
2
Trump won by promising to do the financially impossible. And anyone with sense knew it. Unfortunately, those without sense voted in higher numbers and America has been suffering for it ever since. How many of you think America is "Greater" now than it was a year ago? And let's see some facts to back it back up, not just Far Right claims.
6
Some people are only happy when they're unhappy. I just ignore them.
2
No mention of the environment or finite natural resources. I'd have to conclude that economists aren't particularly farsighted either.
10
Gloomy means that "we" have some more negativity to go before there is a reasonable reaction. Perhaps frightened is the word that starts change in the intelligent direction. Too much dumb is being funded, perhaps even applauded. When things are rewarded that should not be rewarded are allowed to continue, and surprisingly, even begin: then of course The Future looks problematic. Around the new year of 2000, things should have definitely started changing, but they didn't. Still today change has been postponed. I know this, because of what has happened to me, and is still happening to me in the year: 2018. Perhaps tomorrow, there will be change.... or hopefully later today. ----- In terms of getting a sense of where I am coming from: My Resume puts me at the Top Levels of Higher Education and the BusinessWorld.
Anyone who thinks the economy is doing well is either (a) an oligarch, or (b) a reporter who works for an oligarch, told to write a story about how well the economy is doing.
16
“The present good times will not last for long...”
Perhaps. What is absolutely certain is that there's never been a year in recorded history when that statement hasn't been made.
3
Why do you think anyone would be gloomy about the worlds economy? I'll give you 2 guesses and one isn't Cohen.
2
Economists living up to their field’s reputation as the dismal science? Get real. First of all, economics is not a science and is highly subjective. Secondly, if it were science, it would take into account sociopolitical and environmental factors, such as declining natural resources, climate change, and overpoplulation, none of which are even considered or mentioned in this article. Most economists are amazingly ignorant about the connection between the economy and the environment and are just too arrogant and narrow minded to worry about it. It's high time that the study of economics be redefined and expanded to look more realistically at the relationships between society and the environment, and to address how economic growth and the conventional modern definition of a thriving economy is often at odds with a healthy planet and the well being of its human and nonhuman inhabitants.
12
Persistent trade imbalances and the profligate public debt of the United States are the kind of deadly serious problems that set the stage for a retreat from rationally informed actions and reactions toward an almost inevitable viscerally guided confrontation.
Germany wrapped itself in the Euro, protecting themselves from currency exchange rate adjustments.
China is acting so badly on so many vectors that it's mind-numbing to list them, but epic currency manipulation is right at the tops of that list.
Japan has the huge problem of a shrinking and population whose cost of care the rest of the world is simply going to have to get used to paying.
The US is being driven into the ditch by an unholy alliance of pandering politicians and feckless citizens who conspire to keep in office only those who will vote endless entitlements while passing the cost to future generations.
Free and fair trade would solve a lot of this, but nobody is willing to actually go there.
What a great world we live in!
5
Cheer up. Earth survived the 1920s, '30s, and 40s. We'll get through both the present and the coming circumstances. Most of us, anyway.
1
Irwin writes"
"some countries — Germany ... — have persistently run current account surpluses, meaning they export more than they import and essentially export capital to the rest of the world."
Now what does he mean by "capital"? If you look it up, you will find a myriad of definitions. It seems to me that if it is to be a useful concept it must mean something different from "money." Some authors distinguish money which is legal tender used to buy anything, from capital which is specific stuff that has value. So a dollar is money, but a truck or a patent is capital.
If we use this definition, then Irwin is pointing out that Germany has more money flowing into their economies than out while the opposite is true for the US because the capital the Germany exports out must be paid for by money.
Then he writes, "Germany could spend more on domestic investment, and the United States could reduce its budget deficit, which might start to reduce those imbalances." He gives no reasons to believe these are true. If the gov of Germany puts more money into the pockets of its citizens, it seems to me they may well spend it on imports and vice versa for the US.
Then he fails to distinguish between high private debt and high public debt. Public debt sends money TO the private sector and reduces private debt. Too much private debt wrecks the banking system (cf 2008) because there are limits on the money created by banks, but the gov can create as much money as it needs.
11
The US also could mandate balanced trade. Exporters could be granted $ credits that importers must buy on a regulated exchange before releasing equivalent $ to pay for imports. This once was proposed by Warren Buffett and almost made it through Congress until killed by special interest lobbyists. Fact!
5
There is no such thing as "the economy." It's long been described as though it is a common good, but that assumption is being shattered with transparency. Whose economy, which economy, who benefits, who does not? Those issues can't be glossed over as easily by describing something that is so fundamentally political as though it is not. We make a serious intellectual mistake when the discipline of political economy was bifurcated into two disciplines that are largely ignorant about each other. As one Texas legislator once proudly announced, "In this game there are winners and losers, and we get to decide who they are."
3
Globalists are gloomy so people will listen to them and to attempt to undermine Trump. They can't have the message be that the world is growing despite their protestations. Not much more than backslapping when Obama ran up a
$10 trillion deficit on the back of QE1, 2 and 3. The World Bank and IMF are concepts of the elites that are largely there to keep them employed and maintain the supra-national dream of the globalist agenda.
3
In the US, our oligarchs and their corporationsi have already decided on a solution to the unfolding disaster of too little resources and too many "profit-less" human units:
They will pay half of us to arrest and jail the other half.
If you want to invest for the long term , now is the time to invest in private prison corporations and mercenary corporations like CoreCivic and Blackwater ( Academic).
I will not be joining you as it is the 21st century equivalent of investing in the Jim Crow prison farms and Chain-gang prisoner plantations of the 1930s. That is blood money, and it is always financially profitable.
6
Why are world leaders so gloomy? Many of them are intelligent and realize that the majority is often wrong, dooming the future of democracy. The key example is population growth. A book, Limits to Growth, was published in 1972, which gave several possible scenarios for the future of life on planet earth if population continued to grow. China took the book seriously. In 1979, China introduced a one-child program to limit population growth. Americans for the most part held the book up for ridicule. Those who warned that population growth couldn't continue forever were ridiculed as crackpots. So nothing was done. World population has doubled since 1972. One of the consequences is global warming, and that has the attention of scientists. But amazingly nobody seems to notice the impact that population growth has on global warming. So now we are beginning to see other consequences. The UN estimates that 800 million people worldwide suffer from chronic malnutrition. Shortages are causing tremendous suffering in third world countries. And in the US living standards for the poor are falling and the gap between rich and poor is increasing. The US cannot afford universal health care, yet sanctuary cities attract unending streams of illegal immigrants. Nobody can talk about the consequences without being called a racist. So politicians tell little white lies, and democracy all form and no substance.
We need an end to illegal immigration and smaller family sizes.
7
Ouch! The last para really hurts.
Neil, what you have (very cogently and correctly) said before it is that the US in particular has burned its raincoat, thrown away its umbrella, and with the recent tax cut is in the process of removing the roof so that all the sunshine can come pouring in.
Maybe one of the things that worries those dismal-science practitioners is the complete irresponsibility of both the Executive and the Legislative branch of the government of the largest economy, and guardian (sic) of the reserve currency, of the world?
10
The ancient Hebrews had Jubilees in order to avoid the creation of latifundias and thus inequality and growing dissent. They were right. We must level the field of opportunities, be fair and just; introduce a modern form of Jubilee!
3
Oil, natural gas, basic minerals, clean water are all becoming harder to get and more expensive. Overpopulation, greater wealth in fewer hands, corrupt governments, fascism rising, air pollution, global warming........it doesn't take a PhD to figure out this can't continue for much longer without dire consequences.
24
They're gloomy because they don't have every last crumb of the pie yet.
7
Its important to remember that a sovereign (central bank and Treasury) can never run out of money. So any economic shock can be immediately counteracted by an increase in fiscal spending to make it a 4 day news cycle. The solution is a Job Gty as part of a Full Employment Fiscal Policy. See the blurb: http://mmt-inbulletpoints.blogspot.com/2018/04/the-kids-are-not-alright-...
3
Economics is no science. There are too many unknowns and variables to fashion the double-blind controls that provide the repeatable predictable results that are the essence of science.
There is no science in politics nor sociology or any other social 'science'. Accounting, banking and finance are arithmetic instead of science. There is no science in history or law.
The hubris and nationalism that feeds and fuels so many human endeavors is best understood as the biology of 300,000 years of primate ape African fit evolution. We are DNA genetically programmed to crave fat, salt, sugar, water, habitat, kin and sex by any means necessary including conflict and cooperation. And we can give that quest any fancy names that we want.
1
Economists thrive on pure doom.
Disaster to them is perfume.
They love to predict
Financial conflict,
And pull up their stats from the tomb.
2
Oh, let's see, President stupid opens his mouth and starts trade wars with everyone, or opens his mouth again and starts real wars with everyone.
This is a time when the global economy should be doing good but when you have people in charge that only care about themselves and lining their pockets then you have a chance for a melt down.
3
I read the Global Financial Stability Report for the articles.
I'm 90% cash. A big break is coming. Wall Street sociopaths are playing chicken to get the last dollar of returns, and as the robber barons of the past always said - only a fool stays in for the last dollar.
4
In all, the Trumpite/GOP has pushed the coming year's borrowing requirement toward $1.2 trillion.This means, in turn, that the bond pits will be flooded with $1.8 trillion of "homeless" treasury paper after accounting for $600 billion of the Fed's QT bond-dumping program.
Here's the thing. No one has ever tried---or even contemplated---financing $1.8 trillion or 8.8% of GDP at the tippy-top of a business cycle that will enter record territory (124 months) before FY 2019 is over.
Indeed, the very idea of it is pure madness and it will shatter the entire Bubble Finance order before it is done.
So what looms just ahead is a flood of government paper into the bond pits which will be 9X bigger(relative to GDP) than was the case at the last cycle peak on the eve of the financial crisis.
Besides, the Chinese were still buying Treasury paper hand-over-fist back then. By contrast, among the many wars the Donald has on his mind is the trade war with the Red Ponzi that has now gone into full tit-for-tat. This week has already generated a 179% Chinese levy on US sorghum and a pending US levy on steel automotive wheels, and apparently they are just getting warmed up.
The same is true of the eurozone.
The $1.8 trillion of homeless US treasury paper in the bond pits is not an aberration and it's not isolated. After the worldwide central bank money printing binge of the last decade, which t0ok combined balance sheets from $5 trillion to $22 trillion, it's a universal condition.
8
And with Nationalism and Fascism growing worldwide all it's going to take to tip the scales away from Democracy is an economic downturn and then it's here we go again.
3
two words, lol.... income inequality.
4
We should all be gloomy. Climate change. Mass extinction.
10,000,000,000 people by 2050.
We waste resources like we have a spare Earth in our back pocket.
We are all running, blind folded and humming a stupid song, towards a cliff.
20
A senior economics correspondent should know that economics is not called "the dismal science" because its practitioners make pessimistic predictions. Nor is it so called owing to the dismal accuracy of economic prognositcations.
Instead, the phrase originated with 19th century Scottish essayist Thomas Carlyle is his "Occasional Discourse on the Negro Question," where he argued in support of the forced labor of slavery over the free market for labor governed by the law of supply and demand advocated by the political economists of his time.
To answer your headline in one word..... income inequality.
4
It's the economy stupid as the old adage goes re who will win an election.
Here it is the debt stupid re reality.
There is no such thing as a free lunch. With the republican rifling the treasure of trillions of dollars with no budget cuts the disaster will come.
The only question is when and how bad.
8
More and more wealth is in fewer and fewer hands as the world wide population grows exponentially.
Our leadership doesn’t care about the future, they only care for how much they can smash and grab for themselves right now. They think they will be able to insulate their families but they are wrong
We will all be Puerto Rico in a few years.
6
What a wonderful economy! In the U.S. 40 million people live in poverty. How much better than that can it get?
It seems like the author, the World Bank and the IMF use economic metrics that measure everything but what happens in non-rich people's lives.
6
You don't have to be a high powered economist or policymakers to be gloomy about the future.
You just have to understand human nature and fear Donald Trump's haphazard decisions which he pulls out of thin air and then abandons equally recklessly leaving our nation and the world on thin ice.
This is the cloud hanging over the world.
6
I"m pretty sure the NYTimes had a small piece maybe 6 or 12 months ago, stating that U.S. household debt had reached an alltime high. And it seems China's company debt issues have not been resolved. Then the U.S. congress has passed a tax law that increases U.S. govt. debt an awful lot. So, yeah, it seems a lot of the world is overextended (Brazil, even?), so all it takes is a big enough jolt (trade war, maybe) to bring the situation to serious corrections in the markets and economies.
5
Corkey, M., and Cowley, S. Household debt makes a comeback in the US. New York Times, 17 May 2017.
1
Debt is obviously the elephant in the room, and nobody wants to talk to loudly about that elephant lest it start stampeding upon hearing its name. It's not just national debt, it's person debt. Maxed out credit cards, student loans, people underwater on their mortgages, as well as States trying to figure out how to pay unfunded pensions, the federal government seeing a looming crises in social security and medicare, we are very much like the grasshopper that had a merry time in summer and laughed at the prudent Ant, then starved when winter came. Winter is coming, but like the grasshopper we refuse to even think about it.
3
Thanks then to the Republicans for busting the deficit with tax cuts that will enrich the wealthy and have little impact on our economy. Well done at least they are consistent in their short-sightedness
7
I think it would be reasonable to expect the U.S. economy to follow the same pattern as the Trump Taj Mahal.
16
The wealth of the world is an illusion, it is all debt. How much corporate debt is there, more than 2007. How much government debt is there, a lot more than 2007. How much private debt is there, very much more than 2007. How much job security is there, a lot less than 2007. The central banks have created a bubble, a much bigger bubble than 2007. Hoping I survive when, not if, it pops.
5
Folks need to understand that every year of economic growth brings less forests, less fish in the ocean, poorer quality oil to extract, depleted soil, more mouths to feed. Not to mention more crowded and paved over cities that magnify the effect of natural disasters. This all has a way of constraining growth.
7
The wonderful Republican tax cut that gave 80% of the reduced revenue to corporations will result in budget deficits exceeding $1000 billion dollars by 2020. This will require deep cuts in domestic spending on such luxury items as Social Security, Medicare, and Medicaid; along with significant increases in personal income tax. But what the heck, that is still 2 or 3 years away.
4
You nailed it.
3
Even if I understood all the economic complexities, what could I do about it? Does this current information tell me whether I should make a big purchase or start a new small business concern or wait? I might as well study the Book of Revelation or again seek out the esoteric counsels of my corner fortune-teller, who sees dark clouds in my future btw.
5
Current levels of demand cannot sustain growth. Demand won't increase without workers/labor having greater discretionary income. Increased income doesn't provide increased demand when food and fuel prices eat it up. Financial imbalance is about more than countries. It's about the current imbalance of the top 1% owning more than the bottom 90%.
32
Yeah, I am in favor of getting more money into the private sector. Tax cuts do that, but in a very inefficient manner.
First of all, they have to be for those who need money and will spend it, and not to for those who do not need the money and will use most
of it for financial speculation. Trump's plan does just the opposite.
Then think about this. Suppose we cut poor Joe's taxes $1,000. That gets $1,000 into the private sector because Joe will spend it, and it
will go to help producing jobs for others. But suppose we pay Joe, $1,000 to cut the White House lawn. We still get the $1,000 into the
economy, but we ALSO get the lawn cut.
That is why federal spending is always a better way to get money into the private sector than tax cuts.
16
"If the World Economy Is Looking So Great, Why Are Global Policymakers So Gloomy?"
Because it's 2007 again.
Times ten.
And they know it. Unfortunately for humanity, it's too late to fix things.
After 2008 economists created the biggest bubble in history, and when it bursts it will make 2008 look like a picnic, because their policies have been pouring gasoline on the already raging wildfire of inequality for ten years now.
And they're looking around at the seething anger among the middle classes of the West and thinking to themselves, "We have a rather large problem here. If they're angry now, after the almost decade-long "recovery" that they weren't a part of, wait until they realize the pain for them is only beginning. When the next economic downturn hits, if it's as bad as it's starting to look, we're looking at massive social unrest across the developed world, which will quickly spread to the developing world. It's that global middle class revolution that Bannon has been talking about. And it's going to happen."
So they're speed-dialing the Silicon Valley billionaire "preppers" who have luxuriously renovated the old nuclear bunkers to ride out the coming violent revolution to see if there are any underground condos left. Because it can't wait until next January when they all get together in Davos to count their money.
Maybe that's why they're so gloomy.
Just sayin'.
Also, democracy and capitalism are failing across the developed world.
So there's that, too.
23
I basically agree you. Sometimes I do wonder about this idea of the new bubble, or what some people call "the asset bubble of every asset." Consider this: I'm in a very high priced area of the SF Bay Area. And yet my allegedly over-inflated home has only gone up about 3% per year over the last 20 years. Granted, that's largely because of the 2007/08 real estate melt down. But a bunch of my stocks are similar. But even if you are wrong about the "biggest bubble in history" there is no doubt you are correct about fanning the flames of already ridiculously extreme and harmful income and asset inequality.
8
Sheesh! Talk about "gloomy" - Fisrst we must rescue our democracy from Trump and the Republican majority.
2
Maybe you bought your home at a market high.....?
The concentration of wealth seems to blind the corporate world with their self perceived wisdom and power. There are many troubling trends in the world. Trump is lionized on CNBC for being the godfather of the global corporate atmosphere. The problem is for the billions around the world who are not benefitting. But suffer the consequences of global warming and the break down of civil order. One could look at the fragility of economic booms in history that look great but they end in recessions that do tremendous damage to societies.
6
This article was about the global economy, but many comments here seem to describe phenomena such as stagnant wages for poor and middle class people, and tax cuts for the wealthy, which are certainly problems within the US, but not representative of global trends.
I think low interest rates, reduction in free trade, and misaligned deficit spending trends (ie not taking advantage of the current strong economy to pay down some debt) are problems which, unlike our very low tax rates, affect many countries. These problems will leave central banks and fiscal policy makers with a much less effective set of tools with which to respond to the next recession.
18
Globally, wages are stagnant and there is great pressure on governments to drop tax rates in order to compete with American rates. In recent years,all of the major economies have dropped corporate taxes, which largely benefits the wealthy.
15
Luke let's see what has happened in the US when we took "advantage of the current strong economy to pay down some debt."
The federal government has balanced the budget, eliminated deficits for more than three years, and paid down the debt more than 10% in just six periods since 1776, bringing in enough revenue to cover all of its spending during 1817-21, 1823-36, 1852-57, 1867-73, 1880-93, and 1920-30. The debt was paid down 29%. 100%, 59%, 27%, 57%, and 38% respectively. A depression began in 1819, 1837, 1857, 1873, 1893 and 1929.
3
The global economy may seem strong but it is profitable for the rich 1 percent. World wide we had marches a few years ago where 99 percent of people in every country are seriously struggling. We need a new economic system to benefit everyone as this capitalism does not work.
18
Expanding on Kyle Taylor's comment: The common worldwide theme here seems to be too much cheap money chasing too few quality business opportunities, because too few are rich enough to buy all of what's being made -- the old Marx overproduction problem, now exacerbated by automation eliminating the need for human labor (eliminating that lever for change). But you still need humans to buy the stuff. Absent a long term way to deal with the problem, you'll just keep getting bubble after bubble, causing financial crisis after financial crisis.
60
Maybe true in the very long term, but in the past 20 years an enormous segment of the global population has risen out of poverty (giving them increasing ability to buy stuff), and that trend is ongoing led by countries in Asia and, more recently, Africa.
I think trends such as stagnant wages for middle class and poor people that are present in the US are absent on average when you consider the global population.
2
Good points Mr. Baumann. If Africa follows the same path as Asia, then the solutions could be both moving Asia to increase consumption (something China is fitfully working on) and political stability in Africa to allow export manufacturing led economic development. I fear, however, that the rapid automation of manufacturing (and many other areas) may soon eliminate this road. If robots in developed countries can make cheap stuff more cheaply than even the cheapest human labor, then how can Africa travel the same road as Asia? The very long term may arrive sooner than we expect. One way to find out may be to look at levels of Foreign Direct Investment devoted to export manufacturing (not infrastructure) in stable African countries. Has it ticked up recently? Any ideas Upshot?
Statistically speaking, regardless of perceived economic growth, around the world, wealth is still being concentrated in fewer and fewer hands, hence, growing inequality. Trump would have never been elected if many whom supported him thought otherwise. Also, I am sure many economists are looking with extreme unease at America as this government systematically is removing all regulation in the banking/financial industry which is "setting the table" for the repeat of the 2008 financial meltdown.
Policimakers have to look ALWAYS gloomy in order to have people’s attention. The same with media.
3
the so called "middle class" is all but extinct as the rich get richer and the poor are fed a false hope
39
That's definitely true in the US, but globally an enormous segment of the population has risen out of poverty, and this trend is ongoing fueled by growth in Asia, and, more recently, Africa.
I think it's true that globally the extremely rich are getting richer. But the US is kind of an anomaly in that poor people and middle class incomes have stagnated. And even here, in the past year it seems like wages are finally rising.
4
I can tell you why I would be gloomy: It is because the leader of the world's largest economy is a loose cannon. He zigs, then he zags, then he lies and then lies about his lies. How are the world economies supposed to plan when there is chaos at the top of our political and economic structure?
I would be asking: America what have you done? When is it going to stop? You are not only damaging yourself, you are hurting the rest of us as well.
60
They are nervous because they realize wealth of the world in a few hands is disastrous long term for the world economy. Especially, when it is being driven by corrupt leaders who are trying to shift towards dictatorships. We already know where this is going when it is revealed it is another ponzi scheme. The only hope is that this time the people will not fall for it and bail out the wealthy again.
61
"Even when enjoying sunny weather, it never hurts to know what you’ll do if it starts to rain."
It started to rain for me in early November, 2017. And it hasn't stopped. Maybe those economist's are also being rained on, by you know who!
7
I'd add aging demographics in the developed countries as a major biggie.
25
Yes there is room for concern but mainly here in the USA and the UK ( Brexit plus debt)
The reality is we are losing ground in the compeititive landscape as our infrastructure crumbles , our education is heavily underfunded, Health care costs escalate impacting the cost structure of our industry . Our ability to deal with these issues is limited by our massive debt which will be exacerbated by higher interest rates.
Trade wars do not help what will help is an efficient , capable work force supported by a modern infrastructure and a health care system and social security system which secures our people in their old age.
35
The federal gov can create as much money as it needs. It will run out of money the day after the NFL runs out of points. So why should it debt limit dealing with the issues you raise? The 50% larger debt ratio after WWII dd not prevent the interstate highways, startup costs for Medicare, the Great Society, etc. and from 1946 to 1973 real median household income surged 74%.
3
Policymakers are gloomy because there is creeping realization that the great economy is a bubble created by central banks keeping short term and long term interest rates artificially low for an extended period. The world is drowning in debt and awash with profitless unicorns, blocks of empty condo skyscrapers bought by anonymous oligarchs in every major city around the world, countries like Argentina, Egypt, Pakistan which have a long deadbeat record borrowing record amounts at low interest and generous terms and 1st world countries with runaway entitlement spending not supported by taxes or savings. 2018 is a repeat of every bubble that burst in the past 30 years, Tech, Commodities, Housing, Auto loans, Commercial real estate and emerging markets and some new ones like Student Loans, Munis & Pensions. Policymakers are gloomy because they have boxed themselves into a corner and have no good options left.
78
Two things to remember when considering the so-called "gloomy" outlook:
1. Paul Samuelson's observation that "Economists have correctly forecast nine of the last five recessions".
2. Lagarde and Obstfeld have long been negative about the world's economic outlook. Why should they change now?
6
But forecasting 9 of 5 recessions might be better than forecasting none of the last 5 recessions.
3
40 years of tax cuts for the already rich have destroyed not only the middle class but all optimism and hope for the future.
121
Absolutely.
Ronald Reagan discovered that just because people trust you to do the right thing for the country, it doesn’t mean that you have to.
He saw it as a business opportunity.
And now the Robber Barons run all three branches.
47
I'm not exactly an expert, but isn't $21.7 trillion dollars in debt with projected increases bad for the future of the US and other countries? Since the only thing keeping the dollar afloat in its current form is bonds and oil, basically forcing the world to use the dollar because it's the standard of the oil trade. Hence keeping it afloat and not drowning under its own weight.
8
Levi do you know that over $3 TRILLION of that $21.7 TRILLION debt is owed to the FED which returns the interest on it to the Treasury?
Do you realize that about 5 TRILLION of it is owed to other branches of the federal gov, so that that debt is merely an accounting fiction. (Actually the whole debt is merely an accounting fiction since we can create as much money as we want, but I won't live long enough to explain that to you.)
Levi, do you realize that a million dollars in today's economy means a lot less than a million in 1946 or 1835? If you want to impress us with how big the debt is, you have to look at the debt ratio, debt/GDP. The debt ratio outside the federal gov is about 74%.
It was 109% in 1946. 47% higher than today's.
Did that rob the next generation of their future? No, in the next 27 years have GDP growth averaged 3.8% and real median household income surged 74%. (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 output of Europe was about the same as the US in the Great Prosperity 1946 - 1973).
Did we pay down that enormous debt? No, we had deficits for 21 years out of the 27 and INCREASED the debt in dollars 75%.
Well, what happened to that huge debt? Since we invested in America, the economy grew so much, the debt became insignificant.
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