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Crafty_Dog
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« Reply #1200 on: December 07, 2016, 03:39:36 PM »

Nonfarm Productivity Increased at a 3.1% Annual Rate in the Third Quarter To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 12/6/2016

Nonfarm productivity (output per hour) increased at a 3.1% annual rate in the third quarter, unchanged from last month's preliminary report. Nonfarm productivity is unchanged versus last year.

Real (inflation-adjusted) compensation per hour in the nonfarm sector increased at a 2.2% annual rate in Q3 and is up 1.8% versus last year. Unit labor costs rose at a 0.7% annual rate in Q3 and are up 3.0% versus a year ago.

In the manufacturing sector, productivity rose at a 0.4% annual rate in Q3, slower than among nonfarm businesses as a whole. The smaller gain in manufacturing productivity was due to slower growth in output. Real compensation per hour increased at a 2.0% annual rate in the manufacturing sector, while unit labor costs rose at a 3.3% annual rate.

Implications: Nonfarm productivity growth was unrevised at a 3.1% annual rate in the third quarter. That may seem odd given the upward revisions to real GDP growth for Q3, but the number of hours worked were revised up as well, leaving output growth per hour unchanged. Still, that 3.1% annualized gain in productivity for the third quarter represents the fastest gain in two years, a break from the trend in declining productivity readings over the prior three quarters, and a clear improvement from the 2% annualized pace of productivity growth seen over the past twenty years. But despite the healthy rise in Q3, productivity remains unchanged from a year ago. We believe government statistics underestimate actual productivity growth. Have you ever had to call a cab or a limo to come pick you up on short notice? Now, with the press of a button, UBER sends a car directly to your door. And it's faster, easier, and often cheaper than ever before. Meanwhile Yelp gives you instant restaurant reviews and Facetime lets you talk face-to-face with people thousands of miles away. The benefits from these technologies have been immense. But because many of these incredible new technologies are free, they aren't directly included in output measures, making their impact on productivity difficult to measure. So while our quality of life continues to rise, it's not completely showing up in the government statistics. As the tax and regulatory environment improves, expect productivity growth to pick up in the next couple of years. In particular, a lower tax rate on corporate America will encourage greater efficiency. In addition, continued employment gains are pushing down the unemployment rate and putting rising pressure on wages, which give companies a greater incentive to take advantage of the efficiency-enhancing technology that entrepreneurs have been inventing in troves.
 
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Crafty_Dog
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« Reply #1201 on: December 22, 2016, 12:30:40 PM »

Real GDP Growth in Q3 was Revised to a 3.5% Annual Rate To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 12/22/2016

Real GDP growth in Q3 was revised to a 3.5% annual rate from a prior estimate of 3.2%, beating the consensus expected 3.3%.

The upward revision was due to stronger business investment and personal consumption. Other categories were either unchanged or changed only slightly.

The largest positive contribution to the real GDP growth rate in Q3 came from consumer spending. The weakest component of real GDP was residential investment.

The GDP price index was unrevised at a 1.4% annualized rate of change. Nominal GDP growth – real GDP plus inflation – was revised up to a 5.0% annual rate versus a prior estimate of 4.6%. Nominal GDP is up 2.9% versus a year ago and up at a 3.1% annual rate in the past two years.

Implications: Today's final GDP report for the third quarter showed real economic growth at a 3.5% annual rate, slightly better than consensus expectations, and the fastest growth in two years. The upward revisions were due to business investment and personal consumption, which means the "mix" of growth was favorable for the year ahead. Although corporate profits were revised down slightly, they were still up 5.8% in Q3 and up 2.1% from a year ago. The lull in profits over the past year and a half has been an energy story. But as energy prices are well off their lows from earlier this year, we expect higher profits in the quarters to come. Meanwhile, plugging the new profits data into our capitalized profits model suggests US equities remain cheap, not only at today's interest rates but even using a 10-year Treasury yield in the 3.5% - 4% range. In terms of monetary policy, the Fed should see today's report as a confirmation that they made the right decision to raise short-term rates last week. Nominal GDP growth (real growth plus inflation) was revised to 5% annual rate in Q3 from a prior estimate of 4.6%. Nominal GDP is up 2.9% in the past year and up at a 3.1% annual rate in the past two years, leaving the Fed plenty of room for rate hikes in 2017. Monetary policy will not be restrictive until the federal funds rate is moved close to nominal GDP growth. That's still a long way off. In other news today, the FHFA index, which measures prices for homes financed with conforming mortgages, increased 0.4% in October. In the past year, these home prices are up 6.2% versus a 6.0% increase in the year ending in October 2015. Look for continued gains in home prices in the year ahead, as jobs keep expanding, wage growth accelerates, and any headwind created by an increase in mortgage rates is offset by expectations of faster future economic growth.

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DougMacG
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« Reply #1202 on: December 22, 2016, 04:41:30 PM »

"Real GDP growth in Q3 was revised to a 3.5% annual rate from a prior estimate of 3.2%, beating the consensus expected 3.3%."

I must admit I was wrong when I predicted the growth estimate would be revised downward after the election.  Still, this and the current quarter will conclude 8 years of lethargic, pathetic and ARTIFICIAL growth.

Nominal growth is 3% and our inflation target is 2%.  The difference is a rounding error; we aren't better off.

What would the real growth rate be without 10 trillion in new fiscal deficit stimulative spending?  What would it be without quantitative easing, asset re-purchases and 8 years of near zero interest rate policy?  Zero growth or worse, I suspect.

Easy money when it shouldn't be was a major cause of the last financial meltdown:  https://economicsone.com/2016/12/09/unconventional-monetary-policy-normalization-and-reform/
Have we learned anything?

What would the growth rate be if we didn't tax corporations at the highest rate in the world?  If we didn't pour two dozen new tax increases on the economy with Obamacare, or if we didn't add tens of thousands of new pages of regulations onto what used to be a relatively free economy?  If we hadn't dropped out of the top ten freest countries in the world in the Heritage Freedom Index?

Stay tuned.  Maybe we will find out.
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G M
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« Reply #1203 on: December 22, 2016, 08:04:10 PM »

We are hardly out of the woods yet. I am hoping the boom will be soon enough and big enough to start to mitigate the looming collapse.

http://chicagoboyz.net/archives/54412.html

Can Donald Trump Prevent the Economy from Falling Into a Black Hole?

Posted by Kevin Villani on December 13th, 2016 (All posts by Kevin Villani)

Interest rates will eventually rise without an even more devastating policy of financial repression. When they do, rising interest costs will produce a vicious cycle of ever more borrowing. We are already approaching the “event horizon” of spinning into this black hole of an inflationary spiral and economic collapse from which few countries historically have escaped. A substantially higher rate of growth is the only way to break free.

National economic growth is typically measured by the growth of GDP, and citizen well being by the growth of per-capita GDP. The long run trend of GDP growth reflects labor force participation, hours worked and productivity as well as the rate of national saving and the productivity of investments, all of which have been trending down.

The population grows at about 1% annually and actual GDP growth averaged 2% overall for 2010-2016 (using the new World Bank and IMF forecast of US GDP at 1.6% for 2016), hence per capita GDP grew at only 1%. Moreover the income from that 1% growth went primarily to the top one percent while 99% stagnated and minorities fell backwards.

Why we are approaching the Event Horizon
The Obama Administration annually predicted a more historically typical 2.6% per capita growth rate, consistent with the historical growth in non-farm labor productivity. How could their forecasts be so far off?

The Obama Administration pursued the most massive Keynesian fiscal and monetary stimulus ever undertaken. Such a policy generally at least gives the appearance of a rise in well being in the near term, as the government GDP statistic (repetitive, as the word “statistic derives from the Greek word for “state” ) reflects final expenditures, thereby imputing equal value to what governments “spend” as to the discretionary spending of private households and businesses in competitive markets. But labor productivity gains stagnated at only about 1%, most likely reflecting the cost and uncertainty of anti-business regulatory and legislative policies that dampened investment, something the Administration denied, trumping even a short term boost to GDP.

As a result the national debt approximately doubled from $10 trillion to $20 trillion, with contingent liabilities variously estimated from $100 to $200 trillion, putting the economy ever closer to the event horizon. Breaking free will require reversing the highly negative trends by reversing the policies that caused them.

Technology alone isn’t sufficient
Obama Administration apologists argued that stagnation is “the new normal” citing leading productivity experts such as Robert Gordon who dismissed the potential of new technologies. Many disagree, but Gordon’s findings imply even greater reliance on conventional reform.

Fiscal policy won’t be sufficient
Raising taxes may reduce short term deficits but slows growth. Cutting wasteful spending works better but is more difficult.

The list of needed public infrastructure investments has grown since the last one trillion dollar “stimulus” of politically allocated and mostly wasteful pork that contributed to the stagnation of the last eight years. Debt financed public infrastructure investment contributes to growth only if highly productive investments are chosen over political white elephants like California’s bullet train, always problematic.

Major cuts in defense spending are wishful thinking as most geopolitical experts view the world today as a riskier place than at any prior time of the past century, with many parallels to the inter-war period 1919-1939.

The major entitlement programs Social Security and Medicare for the elderly need reform. But for those in or near retirement the potential for savings is slight. Is Medicare really going to be withheld by death squads? Are benefits for those dependent on social security going to be cut significantly, forcing the elderly back into the labor force? Cutting Medicare or SS benefits for those with significant wealth – the equivalent of a wealth tax – won’t affect their consumption, hence offsetting the fall in government deficits with an equal and offsetting liquidation of private wealth. Prospective changes for those 55 years of age or younger should stimulate savings and defer retirement, improving finances only in the long run.

The remaining bureaucracies are in need of major pruning and in numerous cases elimination but they evaded even budget scold David Stockman’s ax during the Reagan Administration.

Americans will have to work more and consume less
That is the typical progressive economic legacy of excessive borrowing from the future.

The first Clinton Administration created the crony capitalist coalition of the political elite and the politically favored, e.g., public sector employees and retirees, subsidy recipients and low income home loan borrowers. The recent Clinton campaign promised to broaden this coalition, which would have accelerated the trip over the event horizon.

Reform that taxes consumption in favor of savings and a return to historical real interest rates could reverse the dramatic decline of the savings rate. Regulations redirecting savings to politically popular housing or environmental causes need to be curtailed in favor of market allocation to productive business investment.

Repeal and replace of Obama Care could reverse the trend to part time employment. Unwinding the approximate doubling of SS Disability payments and temporary unemployment benefits could reverse the decline in labor force participation.

Service sector labor productivity has been falling since 1987, the more politically favored the faster the decline. Legal services are at the bottom, partly reflecting political power of rent-seeking trial lawyers, followed by unionized health and then educational services. Union favoritism through, e.g., Davis Bacon wage requirements and “card check” increases rent seeking, particularly rampant in the unionized public sector.

Competition, of which free but reciprocal trade has historically been a major component, has traditionally provided the largest boost to well being by realizing the benefits of foreign productivity in a lower cost of goods while channeling American labor into employment where their relative productivity is highest. The transition is often painful, but paying people not to work long term is counterproductive. Immigration of both highly skilled and low cost labor (but not dependent family) generally contributes to per capita labor productivity in the same way as free trade.

None of this will be easy. The alternative is Greece without the Mediterranean climate or a sufficiently rich benefactor.

—-

Kevin Villani, chief economist at Freddie Mac from 1982 to 1985, is a principal of University Financial Associates. He has held senior government positions, been affiliated with nine universities, and served as CFO and director of several companies. He recently published Occupy Pennsylvania Avenue on the political origins of the sub-prime lending bubble and aftermath.



"Real GDP growth in Q3 was revised to a 3.5% annual rate from a prior estimate of 3.2%, beating the consensus expected 3.3%."

I must admit I was wrong when I predicted the growth estimate would be revised downward after the election.  Still, this and the current quarter will conclude 8 years of lethargic, pathetic and ARTIFICIAL growth.

Nominal growth is 3% and our inflation target is 2%.  The difference is a rounding error; we aren't better off.

What would the real growth rate be without 10 trillion in new fiscal deficit stimulative spending?  What would it be without quantitative easing, asset re-purchases and 8 years of near zero interest rate policy?  Zero growth or worse, I suspect.

Easy money when it shouldn't be was a major cause of the last financial meltdown:  https://economicsone.com/2016/12/09/unconventional-monetary-policy-normalization-and-reform/
Have we learned anything?

What would the growth rate be if we didn't tax corporations at the highest rate in the world?  If we didn't pour two dozen new tax increases on the economy with Obamacare, or if we didn't add tens of thousands of new pages of regulations onto what used to be a relatively free economy?  If we hadn't dropped out of the top ten freest countries in the world in the Heritage Freedom Index?

Stay tuned.  Maybe we will find out.
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ccp
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« Reply #1204 on: January 01, 2017, 10:47:37 AM »

I remember when Peter Gold (?) told us he was buying gold after the tech crash in the early 2000s on a previous forum pre Dog Brothers:

http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart
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Crafty_Dog
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« Reply #1205 on: January 03, 2017, 03:53:48 PM »

The ISM Manufacturing Index Rose to 54.7 in December To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 1/3/2017

The ISM manufacturing index rose to 54.7 in December, beating the consensus expected level of 53.8. (Levels higher than 50 signal expansion; levels below 50 signal contraction.)

The major measures of activity were mostly higher in December, and all stand above 50, signaling growth. The new orders index surged to 60.2 from 53.0 in November, while the production index increased to 60.3 from 56.0. The employment index moved higher to 53.1 from 52.3, while the supplier deliveries index declined to 52.9 from 55.7 in November.

The prices paid index increased to 65.5 in December from 54.5 in November.

Implications: Manufacturing ended 2016 on a high note, with the ISM manufacturing survey hitting the highest reading in two years. And December's increase represents the fourth consecutive month that the index has moved higher, signaling faster growth. Both the new orders and production indices hit multi-year highs, suggesting that 2017 should hit the ground running as factories gear up to fill increased demand. Some of this may be in part due to President-Elect Trump's focus on the manufacturing sector, but we think the likelihood of tax and regulatory reform are boosting confidence across industries and will benefit both the manufacturing and service sectors. The employment index also hit a 2016 high in December after being the only major indicator to decline in November. That said, manufacturing remains a small portion of total employment. We tend to focus on other signals of labor force strength (initial claims, earnings growth, and consumer spending) which have shown constant strength even through some turbulent times for the manufacturing sector. On the inflation front, the prices paid index skyrocketed to 65.5 in December from 54.5 in November, with eighteen commodities rising in price while just three declined. So any claims that rising prices are just a reflection of the rebound in oil prices are missing the mark. Yes, energy prices have been on the rise since bottoming in mid-2014, but rising economic activity is starting to put pressure on a wide variety of inputs. This, paired with rising energy, is likely to push inflation above the Fed's 2% target in 2017. As a whole, today's report shows the Plow Horse manufacturing sector starting to hit its stride as the nation prepares to pass the reins to a new President. In other news this morning, construction spending increased 0.9% in November (+0.8% including revisions to October). New single-family home building led the way, while hotel construction and public schools also increased.
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Crafty_Dog
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« Reply #1206 on: January 04, 2017, 01:06:15 PM »

http://scottgrannis.blogspot.com/2017/01/off-to-good-start.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+blogspot%2FtMBeq+%28Calafia+Beach+Pundit%29
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Crafty_Dog
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« Reply #1207 on: January 25, 2017, 01:34:57 PM »

http://www.ftportfolios.com/Commentary/EconomicResearch/2017/1/25/the-plow-horse-is-dead
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Crafty_Dog
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« Reply #1208 on: January 30, 2017, 02:24:43 PM »

________________________________________
Personal Income Increased 0.3% in December To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 1/30/2017

Personal income increased 0.3% in December, coming in below the consensus expected 0.4%. Personal consumption rose 0.5% in December, matching consensus expectations. Personal income is up 3.5% in the past year, while spending is up 4.5%.

Disposable personal income (income after taxes) increased 0.3% in December and is up 3.7% from a year ago. The gain in December was led by private-sector wages & salaries.

The overall PCE deflator (consumer inflation) rose 0.2% in December and is up 1.6% versus a year ago. The "core" PCE deflator, which excludes food and energy, increased 0.1% in December and is up 1.7% in the past year.

After adjusting for inflation, "real" consumption increased 0.3% in December and is up 2.8% from a year ago.

Implications: Last year ended on a solid note, with healthy gains in Christmas-time consumer spending and respectable income gains as well. Income increased 0.3% in December with private-sector wages & salaries bouncing back 0.4% after declining in the previous month. Incomes are up 3.5% in the past year and we expect further gains in the year ahead as the labor market continues to tighten. In turn, consumer spending will continue to grow as well. Spending rose 0.5% in December and is now up 4.5% in the past year. Today's report also shows inflation continuing to trudge higher. The PCE deflator, the Fed's favorite measure of inflation, rose 0.2% in December and is up 1.6% from a year ago. It still has not crossed 2%, but this is a sharp jump from just 0.6% inflation in the year ending in December 2015. In the past three months PCE prices are up at a 1.9% annual rate, right around the Fed's long-term target of 2%. Meanwhile, the "core" PCE deflator, which excludes food and energy, is up 1.7% from a year ago. We expect continued acceleration in year-ago comparison measures of inflation over the next few months, with a lot of the gain coming from energy prices. Together with continued employment gains, these figures support the case for at least three rate hikes by the Fed in 2017. The one consistent dark cloud in the income reports has been government redistribution. Overall government transfers to persons are up 3.3% in the past year. Before the Panic of 2008, government transfers – Medicare, Medicaid, Social Security, disability, welfare, food stamps, and unemployment insurance – were roughly 14% of income. In early 2010, they peaked at 18.5%. Now they're around 17%, but not falling any further. Redistribution hurts growth because it shifts resources away from productive ventures and, among those getting the transfers, weakens work incentives. That's why, for the time being, we still have a Plow Horse economy, not a Race Horse economy.
 
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DougMacG
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« Reply #1209 on: January 30, 2017, 03:06:04 PM »

Also note that GDP went up 1.8% per year the last 8 years   - - -   as Wesbury predicted?     (

The good news is the predictability - that dismal policies bring dismal results.

The bad news is that we haven't really changed the policies yet.
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Crafty_Dog
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« Reply #1210 on: January 30, 2017, 04:10:32 PM »

http://scottgrannis.blogspot.com/2017/01/the-markets-not-very-optimistic.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+blogspot%2FtMBeq+%28Calafia+Beach+Pundit%29 
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Crafty_Dog
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« Reply #1211 on: February 01, 2017, 11:45:55 PM »

The ISM Manufacturing Index Rose to 56.0 in January To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 2/1/2017

The ISM manufacturing index rose to 56.0 in January, beating the consensus expected level of 55.0. (Levels higher than 50 signal expansion; levels below 50 signal contraction.)

The major measures of activity were all higher in January, and all stand above 50, signaling growth. The employment index jumped to 56.1 from 52.8 in December, while the production index increased to 61.4 from 59.4. The supplier deliveries index moved higher to 53.6 from 53.0, while the new orders index rose to 60.4 from 60.3 in December.

The prices paid index increased to 69.0 in January from 65.5 in December.

Implications: Manufacturing opened 2017 on a high note, with the ISM manufacturing survey hitting the highest reading in more than two years and the best reading to start a year going back to 2011. And every major category of activity showed a faster pace of expansion in January. Factories hit the ground running, with the production index rising to 61.4 in January, a multi-year high. Add in continued growth in the pace of new orders and production should continue to show healthy growth in the months ahead. Plus, President Trump has promised tax cuts and regulatory reforms, likely boosting confidence across industries. The employment index showed the largest increase in January, rising to 56.1 from 52.8 in December. That said, manufacturing remains a small portion of total employment. For a better picture of labor market health, we tend to focus on broader signals (initial claims, earnings growth, and consumer spending) which have shown constant strength even through some turbulent times for the manufacturing sector. On the inflation front, the prices paid index jumped to 69.0 in January from 65.5 in December, with more than twenty commodities rising in price while not a single commodity reported lower. So any suggestion that rising prices are just a reflection of the rebound in oil prices misses the mark. Rising economic activity, the lagged effect of loose monetary policy, is starting to put pressure on a wide variety of inputs, and it looks increasingly likely that inflation will rise above the Fed's 2% target in 2017. In other news earlier this morning, the ADP index says private payrolls increased 246,000 in January. Plugging this into our models suggests Friday's official Labor report will show a nonfarm increase of 197,000 (versus a consensus 175,000), although we may tweak this forecast slightly based on tomorrow's report on unemployment claims. On the housing front, pending home sales, which are contracts on existing homes, increased 1.6% in December, suggesting a small gain in closings on existing homes in January. The national Case-Shiller index, which measures home prices, increased 0.8% in November and is up 5.6% from a year ago, an acceleration from the 5.2% gain in the year ending in November 2015. Price gains in the past twelve months have been led by Seattle and Portland, with the slowest gains in New York City and Washington, DC. Construction spending declined 0.2% in December (unchanged including revisions to prior months), as a decline in manufacturing and educational facilities more than offset a pickup in home building.
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objectivist1
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« Reply #1212 on: February 03, 2017, 07:40:59 AM »

Irreversible Damage - The U.S. Economy Cannot Be Repaired

Brandon Smith - February 2, 2017


As I outlined in my article 'The False Economic Narrative Will Die In 2017', the mainstream media has been carefully crafting the propaganda meme that the Trump administration is inheriting a global economy in “ascension,” when in fact, the opposite is true. Trump enters office at a time of longstanding decline and will likely witness severe and accelerated decline over the course of the next year. The signs are already present, and this fits exactly with the basis for my prediction of the Trump election win — conservative movements are indeed being set up as scapegoats for a global economic crisis that international financiers actually created.

Plus, it doesn’t help that Trump keeps boasting about the farcical Dow hitting record highs after his entry into the White House. Talk about the perfect setup…

With the speed at which Trump is issuing executive orders, my concern is that people’s heads will be spinning so fast they will start to assume an appearance of economic progress. Here is the issue — some problems simply cannot be fixed, at least not in a top down fashion. Some disasters cannot be prevented. Sometimes, a crisis has to run its course before a nation or society or economy can return to stability. This is invariably true of the underlying crisis within the U.S. economy.

It is imperative that liberty activists and conservatives avoid false hope in fiscal recovery and remain vigilant and prepared for a breakdown within the system. Despite the sudden political sea change with Trump and the Republican party in majority control of the D.C. apparatus, there is nothing that can be done through government to ease fiscal tensions at this time. Here are some of the primary reasons why:

Government Does Not Create Wealth

Government is a wealth-devouring machine. The bigger the government, the more adept it is at snatching capital and misallocating it. Such a system is inherently unequipped to repair an economy in a stagflationary spiral.

I’m hearing a whole lot of talk lately on all the jobs that will be created through Trump’s infrastructure spending plans, which reminds me of the desperation at the onset of the Great Depression and the efforts by Herbert Hoover to reignite the U.S. economy through a series of public works programs. Reality does not support a successful outcome for this endeavor.

First off, Trump’s ideas for infrastructure spending to kick start a U.S. recovery are not new. The Obama administration and Congress passed the largest transportation spending bill in more than a decade in 2015 and pushed for a similar strategy to what is now being suggested by Trump. I should point out though that like Herbert Hoover, Obama’s efforts in this area were essentially fruitless. Obama was the first president since Hoover to see “official” annual U.S. GDP growth drop below 3 percent for the entirety of his presidency, with GDP in 2016 dropping to a dismal 1.6 percent.

Though projects like the Hoover Dam were epic in scope and electrifying to the public imagination during the Depression, they did little to fuel the overall long-term prospects of the American economy. This is because government is incapable of creating wealth; it can only steal wealth from the citizenry through taxation to pay debts conjured out of thin air, or, it can strike a devil’s bargain with central banks to print its way to fake prosperity.

Some might argue that Trump is more likely to redirect funds from poorly conceived Obama-era programs instead of increasing taxes or printing, but this does not change the bigger picture. Redirected funds are still taxpayer funds, and those funds would be far better spent if they were returned to taxpayers rather than wasted in a vain effort to increase GDP by a percentage point. Beyond this, the number of jobs generated through the process will be a drop in the bucket compared to the 100 million plus people no longer employed within the U.S. at this time.

Bottom line? Though new roads and a wall on the southern border are winners for many conservatives, infrastructure spending is a non-solution in preventing a long-term fiscal disaster.

Interdependency Is Hard To Break

Another prospect for raising funds to pay for job generating public works projects is the use of tariffs on foreign imports. Specifically, imports of goods from countries which have maintained unfair trade advantages through global agreements like NAFTA, CAFTA or the China Trade Bill. This is obviously a practical concept and it was always the intention of the founding father post-revolution for government to generate most of its funding through taxation of foreign imports and interstate commerce, rather than taxation of the hard earned incomes of the citizenry. However, the idea is not without consequences.

Unfortunately, globalists have spent the better part of a half-century ensuring that individual nations are completely financially dependent on one another. The U.S. is at the very CENTER of this interdependency with our currency as the world reserve standard. In order to change the nature of the inderdependent system, we have to change the nature of our participation within that system. This means, in order to assert large tariffs on countries like China (which Trump has suggested), America would have to be willing to sacrifice the main advantage it enjoys within the interdependent model — we would have to sacrifice the dollar’s world reserve status.

Keep in mind, this is likely to be done for us in an aggressive manner by nations like China. China’s considerable dollar and treasury bond holds can be liquidated, and despite claims by mainstream shills, this WILL in fact have destructive effects on the U.S. economy.

Also keep in mind that with higher tariffs come higher prices on the shelf. The majority of goods consumed by Americans come from outside the country. Higher tariffs only work to our advantage when we have a manufacturing base capable of producing the goods we need at prices we can afford. The American manufacturing base within our own nation is essentially nonexistent compared to the Great Depression. In order to levy tariffs we would need a level of production support we simply do not have.

The point is, an unprecedented change in America's production dynamic would have to happen so that we do not face heavy fiscal consequences for the use of tariffs as an economic weapon.

Manufacturing Takes Time To Rebuild

Much excitement has been garnered by reports that certain U.S. corporations will be bringing some manufacturing back within our borders over the course of Trump’s first term as president. And certainly this is something that needs to happen. We should have never outsourced our manufacturing capability in the first place. But, is this too little too late? I believe so.

I remember back in 2008/2009 mainstream economists were applauding the Federal Reserve’s bailout efforts and the call for quantitative easing, because, they argued, this would diminish the dollar’s value on the global market, which would make American goods less expensive, and by extension inspire a manufacturing renaissance. Of course, this never happened, which only adds to the mountain of evidence proving that most mainstream economists are intellectual idiots.

It is important that we do not fall into the same false-hope trap in 2017. While Trump may or may not handle matters more aggressively, there is only so much that can be accomplished through politics. Rebuilding a manufacturing base after decades of outsourcing takes time. Many years, in fact. Factories have to be commissioned, money has to change many hands, wages have to be scouted for the best possible labor per-dollar spent and people have to be trained from the very ground up in how to produce goods again. In many cases, the skill sets required to maintain functioning factories in the U.S. (from engineers to machinists to assembly line labor to the people who know how to manage it all) just don’t exist anymore.  All we have left are millions of retail and food service workers forming mobs to demand $15 an hour, which is simply not going to encourage a return to manufacturing.

Beyond this, at least in the short term, America will have a much stronger dollar on the global market, rather than a weaker dollar, due to the fact that the Federal Reserve has initiated a renewed series of interest rate increases just as Trump entered office.  While the mainstream theorizes that the Fed will turn "dovish" and back away from rate hikes, I think this is a rather naive notion.  It serves the elites far better to create a battle between Trump and the Fed - therefore, I see no reason for the Fed to back away from its rate hike process.  Trump will demand a weaker dollar, the Fed won't give it to him, and ultimately, the global economy will start to see the dollar as a risky venture and dump it as the world reserve; which is what the globalist have wanted all along so that they can introduce the SDR as a bridge to a new world currency.

With a "strong" dollar (relative to other indexes) there is even LESS incentive for foreign nations to buy our goods now than there was after the credit crisis in 2008. If the dollar loses world reserve status (as I believe it will during Trump’s first term), then at that point we will have a swiftly falling currency — but too swift to fuel a manufacturing reboot.

Is there even enough internal wealth to support the rise of manufacturing within the U.S. for a period of time necessary for our economy to rebalance?  If there is I’m not seeing it.  We are a nation mired in debt.  So much so that even selling off our natural resources would not erase the problem.

Ultimately, the shift away from being tied to a globalized system towards a self-contained producer nation with a citizenry wealthy enough to sustain that production in light of limited exports to foreign buyers is a shift that requires incredible foresight, precision and ample time. It is not something that can be ramrodded into existence through force or by government decree. In fact, the act of trying to force the change haphazardly will only agitate an economy already on the verge of calamity.

Solutions Start With The Citizenry, Not Washington

I understand that conservatives in particular want to “make America great again,” and I fully agree with that goal. But, someone has to point out the inconsistencies in the current strategy and recognize that the situation is beyond repair. To make America great again would require decentralized efforts to maximize production and self reliance at a local level, not centralized federal tinkering with the economy. The globalists have been far too thorough in their programs of interdependency. The only way out now is for the system to crash and for the right people to be in place to rebuild.

Sadly, not only will a crash result in great tragedy for many Americans, but it is also an outcome the globalists prefer. They believe that THEY will be the men in the right place at the right time to rebuild the system in an even more centralized fashion. They hope to sacrifice the old world order to inspire the social desperation needed to convince the masses of the need for a “new world order.” Again, this crash cannot be avoided, it can only be mitigated. We can prepare and become self sufficient. We can fight to ensure that the globalists are not in a position to rebuild the system in their image once the dust settles. But, we should not place too much expectation that the Trump administration will be able to solve any of our economic problems, if that is even their intent.  The solution remains in our hands, not in the hands of the White House.

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"You have enemies?  Good.  That means that you have stood up for something, sometime in your life." - Winston Churchill.
ccp
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« Reply #1213 on: February 06, 2017, 10:12:42 AM »

I remember in the 60s watching my $100 dollars "earn" or accrue 5% interest just for being deposited at a bank and thinking that ain't much.  Now to get anywhere near that is hawked as some kind of great deal:

https://www.nerdwallet.com/blog/banking/history-of-bank-accounts/
« Last Edit: February 07, 2017, 12:31:29 PM by Crafty_Dog » Logged
Crafty_Dog
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« Reply #1214 on: February 10, 2017, 01:42:49 PM »

http://scottgrannis.blogspot.com/2017/02/claims-in-uncharted-waters-is-labor.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+blogspot%2FtMBeq+%28Calafia+Beach+Pundit%29
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G M
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« Reply #1215 on: February 10, 2017, 03:15:24 PM »


Not reassuring.
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objectivist1
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« Reply #1216 on: February 13, 2017, 09:34:48 PM »

The author is correct here - this ought to be blindingly obvious at this point:

www.sovereignman.com/trends/worlds-largest-hedge-fund-manager-predicts-bleak-future-for-markets-20855/

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"You have enemies?  Good.  That means that you have stood up for something, sometime in your life." - Winston Churchill.
ccp
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« Reply #1217 on: February 14, 2017, 07:47:34 AM »

Plan B for billionaires is a opulent underground bunker fortress in New Zealand probably lined with terra cotta warriors.

For us - forget about it. 
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G M
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« Reply #1218 on: February 14, 2017, 01:21:57 PM »

Plan B for billionaires is a opulent underground bunker fortress in New Zealand probably lined with terra cotta warriors.

For us - forget about it. 

New Zealand will probably be a base for the PLA in the not too distant future.
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Crafty_Dog
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« Reply #1219 on: February 14, 2017, 05:50:28 PM »

PLA?
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G M
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« Reply #1220 on: February 14, 2017, 06:39:08 PM »

PLA?

PLA= People's Liberation Army-China
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Crafty_Dog
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« Reply #1221 on: February 15, 2017, 01:10:52 AM »

Monday Morning Outlook
________________________________________
Room to Grow To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 2/6/2017

The US economy has grown at an average annual rate of only 2.1% since the recovery started in mid-2009, far slower than during the economic expansions of the 1980s and 1990s.

Many analysts tie some of the slower growth to slower expansion in the labor force due to retiring Boomers and the end of the shift of women into the paid job market. But productivity (output per hour) has been slow as well. Since mid-2009, productivity is up at a 1.0% annual rate versus a pace of 2.1% at the same point in the recoveries after the 1981-82 recession and 1990-91 recession. The expansion in 2001-07 lasted six years during which productivity grew 2.5% per year.

In other words, if productivity growth had been just as fast in the current expansion as in the expansions of the 80s and 90s, real GDP growth would have been averaging around 3.2% per year, not 2.1%. In that case, much of the current angst about the US economy would be gone.

Two popular theories try to explain why productivity growth has been so slow.

One is the "Great Stagnation" theory made famous by economist Robert Gordon, among others. Gordon believes humanity – usually, but not always, led by the US – made massive leaps in technological progress and implementation between 1870 and 1970: incandescent light bulbs, automobiles, central heating, refrigerators, the germ theory of disease, window screens, radios, telephones, television, air conditioners, airplanes, sewer systems, and indoor plumbing.

Gordon says those kinds of achievements, directly addressing problems humans have wanted to address since the beginning of time, simply can't be duplicated again, and so we're simply going to have to learn to live with slower economic growth. In turn, he proposes government policies that focus on redistributing income to lower earners.

No one doubts the transformative nature of the inventions of the late 19th Century and early 20th Century. But pretending that we can know the future path of technological advances is the kind of hubris at the heart of centrally planned economies.

Moreover, we think any slowdown in progress is due to the larger size of government, which puts politicians in charge of shifting resources around according to political expediency rather than letting those resources find their most efficient use. It's no wonder that the biggest leaps in innovation started when the US government was tiny compared to today's size.

Think about the possibilities of driverless cars or doubling the length of healthy vigorous adult life (both mentally and physically). The economic value of these kinds of breakthroughs would be enormous.

Another theory of why we have to settle for slower growth is our economy has too much debt. But debt, by itself, is not a reason for slower growth. Just think about your own situation. If you woke up this morning and had $50,000 more debt than you previously realized, would you work more or less in the future? More, obviously, which makes output go up, not down.

Debt can be a problem if debtors suddenly decide they won't pay their obligations. In that case, lenders can become insolvent, causing financial strains until the economy adapts.

But we don't see a reason for a sudden spike in defaults by borrowers. Seven years ago, consumers were 90+ days delinquent on more than a $1 trillion in consumer loans. But that figure has declined every year since and is now at $400 billion.

Although the government's debt is at a record high, net interest on the debt is still low relative to both GDP and federal revenue. Even if interest rates on government debt went to 4% across the yield curve tomorrow, net interest relative to GDP and revenue would still be lower than the average during the 1980s and 1990s.

Meanwhile, capital standards are higher and leverage ratios lower at US financial institutions. In other words, debt is not holding the US economy back.

We believe the US is at a pivotal point right now, with a chance to curb spending, cuts tax rates, and rollback the regulatory state. If it does so, many of the same analysts now telling us we have to accept slower growth will be spinning their wheels inventing theories about why growth suddenly picked back up.
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