Tax Reform and Trump’s Chinese Trade Deficit Conundrum

Most things come easier said than done.  Take President Trump’s posture on trade with China…

Trump doesn’t want a bigger trade deficit with China.  He wants a smaller trade deficit with China.  In fact, reducing the trade deficit with China is one of Trump’s promises to Make America Great Again.  In May 2016, he even told a campaign crowd:

“We can’t continue to allow China to rape our country and that’s what they’re doing.  It’s the greatest theft in the history of the world.”

Yet as Trump approaches the conclusion of his first year in office, he’s achieved the exact opposite of what he said.  The trade deficit with China hasn’t gotten smaller.  It has gotten bigger.  Actually, it has gotten a lot bigger.

For example, the U.S. trade deficit with China from January through November 2017 was approximately $342 billion.  Over this same period in 2016, the trade deficit with China was $317.4 billion.  This amounts to a 7.7 percent widening of the U.S. trade deficit with China that has occurred on Trump’s watch. Continue reading

Posted in Government Debt, MN Gordon | Tagged , , , , | 10 Comments

As the Controlled Inflation Scheme Rolls On

American consumers are not only feeling good.  They’re feeling great.  They’re borrowing money – and spending it – like tomorrow will never come.

On Monday the Federal Reserve released its latest report of consumer credit outstanding.  According to the Fed’s bean counters, U.S. consumers racked up $28 billion in November in new credit card debt and in new student, auto, and other non-mortgage loans.  This amounted to an 8.8 percent increase in consumer borrowing.  It also ran total outstanding consumer debt up to $3.83 trillion.

Perhaps this consumer spending binge will finally propel price inflation, as measured by the personal consumption expenditure (PCE) deflator, up to the Fed’s illusive 2 percent target.  Academic economists and central planners consider 2 percent price inflation to be the sweet spot for attaining economic heaven on earth.  We have some reservations.

Controlled inflation, or what’s sometimes called financial repression, is what the Fed is after.  Because controlled inflation is the grease that keeps the gears of the debt based monetary system turning. Continue reading

Posted in Inflation, MN Gordon | Tagged , , , , | 8 Comments

Why You Should Embrace the Twilight of the Debt Bubble Age

People are hard to please these days.  Clients, customers, and cohorts – the whole lot.  They’re quick to point out your faults and flaws, even if they’re guilty of the same derelictions.

The recently retired always seem to have the biggest axe to grind.  Take Jack Lew, for instance.  He started off the New Year by sharpening his axe on the grinding wheel of the GOP tax bill.  On Tuesday, he told Bloomberg Radio that the new tax bill will explode the debt and leave people sick and starving.

“It’s a ticking time bomb in terms of the debt.

“The next shoe to drop is going to be an attack on the most vulnerable in our society.  How are we going to pay for the deficit caused by the tax cut?  We are going to see proposals to cut health insurance for poor people, to take basic food support away from poor people, to attack Medicare and Social Security.  One could not have made up a more cynical strategy.”

The tax bill, without question, is an impractical disaster.  However, that doesn’t mean it’s abnormal. Continue reading

Posted in Government Debt, MN Gordon | Tagged , , , , | 8 Comments

Several Simple Suppositions and Suspicions for 2018

The New Year’s nearly here.  The slate’s been wiped clean.  New hopes, new dreams, and new fantasies, are all within reach.  Today’s the day to make a double fisted grab for them.

Without question, 2018 will be the year that everything happens exactly as it should.  Some things you’ll be able to control.  Other things will be well beyond your control.

Certainly, your ability to stop your neighbor’s cat from relieving itself in your side yard is limited, barring extreme measures.  What we mean is each day shall unfold before you – both good and bad – in symbiotic disharmony.  You can count on it.

But what are the specifics and particulars for the year ahead?  What about stocks, the 10-Year Treasury note, gold, bitcoin, and everything else?  Are we fated for World War III?  Will this be the year Hillary Clinton finally croaks?

Today we endeavor to answer these questions – and more – with hesitation and humility.  Obviously, predicting the future is more art than science.  But so is Fed monetary policy, or a charted wave pattern that extends resistance and support lines out into the future. Continue reading

Posted in MN Gordon, Stock Market | Tagged , , , , | 9 Comments