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Showing posts from June, 2017

Top Ten Reasons the Fed Raises Interest Rates When There Is No Inflation

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This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/us-markets/top-ten-reasons-the-fed-raises-interest-rates-when-there-is-no-inflation?post=117992&uid=4798

Why would the Fed raise interest rates where there is little inflation? This is an important question to ask, I think, because the Fed is tightening rates while tax revenue is down and while any tightening could throw the nation into recession.

I believe there are at least ten top probable reasons why the Fed is raising rates, starting with the December, 2016 increase:

1. The Fed is misreading the effective demand limit, as assessed by Edward Lambert. Christmas shopping was below par and should sound a warning. The chart by professor Lambert explains the effective demand limit and the closing of the business cycle. Inflation is simply not a concern to Dr. Lambert:



2. The Fed cannot raise rates significantly to stop rising inflation later on. That tool that Paul Volcker possessed, has been t…

Trump May Shrink Shipping and Air Shipping Capacity Utilization

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This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/global-markets/trump-may-shrink-shipping-and-air-shipping-capacity-utilization?post=117892&uid=4798

Donald Trump may destroy shipping and air capacity utilization if he decides to initiate a trade war. According to Trumponomics:

Targeted nations in this Trumpian effort to reduce the trade deficit include Canada, China, Germany, Japan, Mexico and South Korea, accounting for 1/2 the trade deficit. These nations export heavily and are prospering to varying degrees, and yet shipping capacity increases are a function of supply cutbacks, while air capacity utilization is in the depths of despair.

Shipping capacity utilization is high right now not because of more trade or prosperity, but because of massive cutbacks to the supply of shipping: 

High capacity utilization levels on the major east-west trades in the beginning of the third quarter are a result of supply-side adjustments rather than stron…

What a JFK Political Party Could Look Like

This is my opinion of what the JFK Party would look like based upon the views held by John Fitzgerald Kennedy at the time of his assassination and upon my views of what is to come:

1. Help the Poor

2. Help the Elderly

3. Force a generous Palestinian Two State Solution

4. Push for Tolerance of All Races and Religions, and that includes Jews and Muslims

5. Rein in the CIA

6. Permit Gun Rights (JFK supported gun rights as a defense against government abuse)

7. Stop all US wars except self defense. Carry a Big Stick

8. Promote the Idea of Helicopter Money

9. Make Israel Join the Non Proliferation Treaty

10. Support No Cold War Escalation with Russia

11.Support Unions

12. Support Heavy Penalties for Hiding Money Offshore or Onshore

13. Support Sovereignty in Deciding Green Issues and Sovereignty Over Dominance by Machines  (This includes being controlled by self driving electric cars.)

14. Root Out and Expose Those Place Allegiance to Israel Before the USA in Our Government

15. Rein in the Federal Reserv…

Larry Kudlow's Strange Views About Inflation

This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/bonds/larry-kudlows-strange-views-about-inflation?post=117384&uid=4798

Larry Kudlow, well known economic pundit, for years on CNBC, has unusual views regarding inflation. Through a Forbes article, we see that he spoke to the Heritage Foundation and said this:

Inflation is a devastating tax on savings. But low inflation is a tax cut. By enhancing the value of financial assets, price stability rewards patient savers and investors. It is a stimulant to capital formation, new business start-ups and growth. Growth does not cause inflation, low inflation causes growth. That does not seem quite right. After all, when there is growth, auto prices go up, and when growth is slow, there are discounts and rebates on houses. The same sort of thing works for homes. The builder throws in upgrades that normally cost extra, and if that doesn't work, the price of new homes trend lower.

Kudlow is …

Donald Trump Cannot Increase Aggregate Demand

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This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/bonds/donald-trump-cannot-increase-aggregate-demand?post=116910&uid=4798

The entire logic of Donald Trump's policy rests on the assumption by some economists that Trump can boost aggregate demand in the economy. However, it appears that the Fed and Trump want two different things.

Donald Trump wants to give a supply side boost to the economy. However, even Arthur Laffer said that giving a boost through supply side economics only increases economic activity if the original taxes on corporations and marginal taxes on individuals are very high. In Ronald Reagan's time they were very high. Now they are not so high. But, Laffer has recently said that Trump's plan will work. 



However, the Laffer Curve was born this way:

The idea that lower tax rates could translate into higher total tax revenue is described by the “Laffer curve.” Legend has it that supply-side economist Arthur Laffer sk…