Ken Barrows
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Why do we need more trade? If 65% (pick a number) of the increased income goes to 1% and the world requires almost 100 million barrels of oil per day to move it around, we should argue for less trade.
I agree food independence is important. But why the ever increasing number of cars? You’d think the proponents of free trade believe in infinite growth on a finite planet.
Free trade provides benefit, though, for those at the top. The rest want to be there. No fun if you get there and cannot outsource all the unpleasant stuff for low wages.
If corporate globalization is leading the world to ruin but too many people are attached to it, a trade war seems the only way to shake things up.
And the 10 year UST remains below 3%. Here’s a speculation: it never goes over 3% for more than six months. It can’t if we want to maintain glorious growth.
In our modern world, austerity is for neither good times nor bad times. Once collapse occurs, austerity is forever.
For any country to be on top, it will still have to increase debt faster than income. I don’t know how long that will last–perhaps decades–but in the end the industrial way of live will go. The “United States” and “China” won’t matter to anyone.
Well written piece. But everybody, and I do mean everybody, Democrat or Republican, believes in infinite growth on a finite planet. If you don’t believe in that nonsense, politics is probably not for you.
News flash: the 10 year US Treasury isn’t going above 3% for more than six months. The American economy cannot handle it. Similar for the G-20, if not lower. Let us call it semi-collapse.
That might work, except the biggest beneficiaries of said tax cut just want to buy back stock. We will know soon enough.
So why have taxes at all? All borrowing, all of the time. A lot is written about MMT but little about its assumptions. Its proponents advocate for the average Joe/Jane but take us to the same resource deprived world.
DS,
I get what the article is saying, but I don’t think CHS focuses on the right metrics. Rather, it should be what the Bitcoin use now and what will it use in the future under certain assumptions. 325 million Americans with devices that drain electricity is certainly true, but what if Bitcoin spread to the whole population, more or less? Is its electricity consumption a limiting factor down the line or not?Capitalism has worked in converting natural resources to waste as quickly as possible. It raised material living standards for most at one time but now it does not. Without perpetual stimulus, we all face austerity.
A land tax seems anti-conservation to me. Just encourages skyscrapers powered by fossil fuels. Let’s just tax energy use instead.
I am being too harsh. I look forward to the data for the other 98% of the planet’s land surface that refutes data that shows 15 of the 17 hottest years globally since 1880 have been in the 21st century.
And I thought the biggest bubble in history was cryptocurrencies. Or Tesla. Or Amazon. As a commenter on another blog said (paraphrase), if the system cannot create more stuff, then creating more money/debt is a dandy substitute for some people.
Why would the 2018 US midterm elections change anything? The USA is going to elect a bunch of radicals? No way, it’s Goldman or…Goldman. The reason for the downfall will be something central banks cannot fix.
I think you are right, but traders still think it, rightly or wrongly. How long is their time horizon anyway? Years? No. Months? Doubt it. And maybe the Fed cannot do that forever but a mighty long time. Maybe thermodynamics is the force that will ultimately stop the Fed. Creating credit with keystrokes is an awesome power to have.
Stock market makes sense because traders believe the Federal Reserve is the guarantor of the stock market. A guarantee can go a long way.
As long as money making money takes precedence over creating wealth, it’s an inevitable process of humans wanting something for nothing (h/t Kunstler).
So if federal tax revenues do not fund federal expenditures, I am thinking that Treasuries do. Am I missing some other form of magic money? I am also thinking that paying a little bit of interest is better than paying no interest whatsoever.
The long term issue, which Professor Black doesn’t address, is whether debt can increase faster than income in perpetuity. I don’t think so, but I am just a schlub. The USA has an official deficit for FY 2017 of about 3.5% GDP. Nominal GDP barely grows that fast.
As the reserve currency, we can exchange debt for goods and services. Amazing deal. I am sympathetic to debt to provide health care and prevent homelessness, but why is MMT such a great idea for the long run again?
One view (wrong) is that General Honore did a good job after the initial screwup:
https://en.wikipedia.org/wiki/Russel_L._Honor%C3%A9General Honore disagrees with you regarding Puerto Rico and President Trump. Can we all agree that Teump is gratuitous and a bit of an a**hole?
Trump didn’t really circumvent anything. He knew what to say to get barely enough flyover people to vote for him. Then went on to appoint Sessions, Mnuchin, Gary Cohn, and Rex Tillerson. Maybe keeping the swamp in place is a good environmental move.
Re: corporate taxes.
The share of US government revenue from corporate taxes fifty years ago or so was much higher than today. Lowering them now might be good for the S & P 500, not much else.If federal debt weren’t anywhere near Mach 30, a lot of people would be disappointed in their current living standards. So it remains that all of the smartest people think debt (include corporate and household, too) can rise faster than income in perpetuity.
Seems so, but the USA is the reserve currency; money is infinite 😉 FYI, it’s four Texas representatives,not senators. Can debt grow faster than income in perpetuity?
Please tell me why proponents of UBI don’t believe that debt can increase faster than income in perpetuity. It seems left as well as right think money is infinite so resources are, too.
Keep the people from homelessness and starvation, but don’t pretend it’s a wealth creating measure.Au contraire, the Fed is still very much in control. Why are stocks continuing to be bid up against the expectations of many here? It’s because the Fed is a guarantor, implementing policies that seek to avoid too much stock market disruption. If you had no Fed to back up the money creation of central banks, “investors” would be a lot more cautious.
Trump said the Dow was in a bubble at 18,000 but properly at 22,000 because of his magnificence. If the Dow drops 50%, he ought to own it, but of course won’t.
Rich (the top 0.01%?) people cannot fathom that they aren’t wealth creators. So, they look at a rising stock market as a measure of wealth instead. Ultimately, a wealth creator has to provide the energy of a barrel of oil or million BTU of natural gas for less energy input than at present. Under that standard, almost no one is a wealth creator; we’re all takers.
Well, Martin Armstrong is the guy to go to on the issue. What’s he say about ocean acidification? Cold world and low PH?
The USA cannot adopt a single payer health care system. Why? Because it won’t work? I don’t know, but with us Americans it’s a cultural thing. I know, VA, Medicare, Medicaid, but gosh darn it, we cannot imagine healthy, working age citizens getting good health care from the state. We just don’t believe it. And there the discussion ends. This cultural reluctance extends to a good portion of Democrats, so it’s not just a party issue.
In the end, if the trend means it takes more joules to extract the next barrel of oil or next million BTU of NG, your consumer society is f***ed.
Champuga,
You’re out of line. Nassim scours the globe looking for facts. When the former facts are no good, get new ones.Listening to yesterday’s Modern Money Basics, I think a viewer could come to two conclusions. Deficits can be infinite as long as there are needs to be met and government’s role as a currency issuer can never decrease purchasing power. Both, I think, are silly conclusions.
I, too, see no need for mandated debt ceilings and balanced budgets. But the video (of course) didn’t wonder if a federal deficit greater than the growth in the GDP (USA FY 2016) was somehow excessive. Maybe it’s not, but that’s a long way from saying no deficit is excessive. Issuing currency shifts purchasing power. Whether up or down depends on who gets the largesse.
The video, like most political discussion, seems to live in a world of infinite growth on a finite planet. But that’s capitalism isn’t it?
