Tag Archives: Hunt for Taxes

Jun 15 2018

Do We Really Borrow From Only Ourselves? Does the Debt/GDP Ratio Means Anything?


Armstrong Economics Blog/Economics

Re-Posted Jun 15, 2018 by Martin Armstrong

QUESTION: Mr. Armstrong, the famous economist Paul Krugman says that debt is ok when we owe it to ourselves. He calls it “deficit scolding” as he wrote in the New York Times. Would you like to comment on this statement?

GH

ANSWER: Paul Krugman seems to lack any historical understanding of how nations rise and fall. Anyone who claims debt is OK and can be infinite because “we” owe it to ourselves is clueless. He wrote in the article you referred to that “we have a more or less stable ratio of debt to GDP, and no hint of a financing problem.” The debt to GDP ratio is interesting but totally irrelevant. China’s debt to GDP stands at 250%, the USA at 103%, and Greece buckled at 186%. Obviously, this ratio is rather meaningless as a forecasting tool. I have published this chart on call money rates previously. In my studies, I quickly discovered that you cannot reduce the cause of any effect to a single issue. We can see that the peak in call money rates took place during 1899 and it was the lowest in 1929 when the Great Depression hit. You can’t even claim that if interest rates hit some magical level the stock market would crash. The world is far more complicated than just this one-dimensional approach to everything.

Capital flows were fleeing the USA in 1899 so interest rates went higher with a shortage of money. In 1929, the capital was in the USA for it rushed here because of World War I. The inflow of capital created an excess so the peak in call money rates was lower than 1899 when capital was fleeing. We even have the world of President Grover Cleveland from the Panic of 1893 commenting on the net capital outflow because of the “unsound” financial policy of the Silver Democrats.

The greatest mistake in the analysis is always trying to reduce any effect to a single cause. The world is a complex mechanism. It is indeed like a rainforest. There are countless species and each is interconnected. Exterminate one and you will find that it was the food source for another which dies. That species, in turn, was the food source for yet another and so on. The world economy is equally complex. This is why I say we are ALL CONNECTED. Create a war in one region, we may not be involved with troops, but the capital flows shift.

Everything is interconnected. There is no single cause and effect. Looking at GDP debt ratios is pointless. This is also why fundamental analysis is notoriously wrong. The majority tries to reason the future based upon this one-dimensional analysis and they NEVER got it right. I have posted this video clip of Larry Summers before. He is asked why can’t you guys ever get it right just once. His excuse is blunt. The economy is extraordinarily complex like the weather. He argues nobody can forecast the direction.

For anyone to say that debt can be infinite when we owe it just to ourselves is a fool. At times, 70% of the national debt has been accumulating interest payments. A national debt is the single greatest way we transfer wealth among citizens as well as nations. I kept yelling on Capitol Hill that Quantitative Easing would fail, it would not “stimulate” the economy for a very simple reason. The assumption that the Fed would buy 30-year bonds and then the banks would lend into real estate with lower interest rates was crazy. The debt is NOT owned by exclusively Americans. China was smart and it sold the 30-year bonds and swapped to 5-year or less paper. The money was transferred out of the country. To pretend this is a debt we “owe” ourselves is just fantasy.

Even domestically, if I am the lender and you are the borrower, then you are paying me because you borrowed the money. Your wealth is transferred to me because you could not wait to buy something for cash. Sorry, I believe Adam Smith was someone who tried to observe HOW things actually work instead of trying to support a predetermined conclusion.

Jun 15 2018

Economic Migration v Welfare Migration


Armstrong Economics Blog/Economics

Re-Posted Jun 15, 2018 by Martin Armstrong

COMMENT:

Sir,

After reading your blog post about the 300% increase in the cost of healthcare for refugees, I wondered the cost in this country for illegal aliens. Healthcare. Education. Food stamps. Etc. I googled anywhere from 3.4 to 11 billion dollars from health care alone.

I laughed out loud after reading the above. You wrote about the turn on the last group of people off the boat.

Keep up the good work and see you in Nov

DK

ANSWER: The cost of socialism is not merely over the top, it has altered the migration patterns within human society tremendously. The waves of migration from Europe to America were each inspired by the economic conditions at home. Therefore, we find the Irish, Germans, Italians, and English all coming during varied waves or periods overall when looking at the majority (naturally there were people from each group who moved for personal reasons). Nonetheless, the one thing that they all had in common was that they paid for their passage and they did not expect social benefits for free.

Today, the migration patterns are purely economic, but they are inspired by socialism whereby they need only show up and receive automatic income and benefits. When the European migration took place, predominantly during the 19th century and then waves after World War I and World War II, the people received no handouts from the taxpayer. There were no social programs to receive free living expenses. Churches provided food when people gave to charity BEFORE there were taxes. Europeans migrated to the United States to start new lives and to earn a living — not because they would be subsidized.

There are waves of migration that are caused by political unrest and no doubt some of that was at the reason for people fleeing Syria. Less know is the wave of refugees fleeing to Colombia and Venezuela who are also seeking security and economic stability since the army continues to support the Venezuelan socialist government that is collapsing. There were Americans in the south who fled to Brazil during the Civil War. They were called Confederados (Portuguese pronunciation: [kõfedeˈɾadus]) and were some 10,000 to 20,000 Confederate American refugees. They settled primarily in the state of São Paulo.

Providing welfare checks to show up on your soil alters the reasons for migration that have existed for thousands of years.

Jun 14 2018

Joseph T. Salerno: This is Why Socialism is a Negative Sum Game


Published on Nov 7, 2017

Joseph T. Salerno (born 1950) is an American Austrian School economist who is Professor of Economics, Chair of the economics graduate program in the Lubin School of Business at Pace University, and Academic Vice President of the Ludwig von Mises Institute. In this talk with Jeff Deist he talks about why socialism is a negative sum game. Full clip, creative common licenced: https://www.youtube.com/watch?v=HBIkj… — This channel aims at extracting central points of presentations into short clips. The topics cover the problems of leftist ideology and the consequences for society. If you like the content, subscribe to the channe
Jun 14 2018

Jordan Peterson – Poverty causes crime? Wrong! – The Gini coefficient


Published on Mar 6, 2017

original source: https://www.youtube.com/watch?v=mJI0h… Psychology Professor Jordan Peterson explains the clear documented science why it’s relative poverty and not poverty itself that causes crime. He goes on further explaining the role of the male dominance hierarchy in context of relative poverty and crime. Dr. Peterson’s new book is available for pre-order: 12 Rules for Life: An Antidote to Chaos: http://amzn.to/2yvJf9L If you want to support Dr. Peterson, here is his Patreon: https://www.patreon.com/jordanbpeterson Check out Jordan Peterson’s Self Authoring Program, a powerful tool to sort yourself out: http://bit.ly/selfAuth (Official affiliate link for Bite-sized Philosophy
Jun 14 2018

Make Black America Great Again


Published on Jun 13, 2018

Donald Trump is unexpectedly popular with black Americans. Are they ready to Make America Great Again? Want even more Right Angle each week? Become a member at BillWhittle.com! https://www.billwhittle.com/subscribe Right Angle is brought to you by the paying members of BillWhittle.com and by donations from viewers like you! Show your support by making a donation at: https://www.billwhittle.com/donate
Jun 14 2018

Katie Arrington Discusses MAGA Agenda and Her Defeat of Mark Sanford…


Re-Posted from The Conservative Tree House on June 13, 2018 by

Until last night South Carolina politician Mark Sanford had never lost an election. However, a strong MAGA candidate confronted his opposition to the Trump agenda and challenged him in a primary race.  Sanford was defeated by Katie Arrington.

Mrs. Arrington appeared on Fox News with Lou Dobbs to discuss her campaign and her support for President Trump and the MAGA agenda.  One of the interesting points made by Arrington is the #1 question from her district voters: ‘do you support our president’?

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Simultaneous to Katie Arrington appearing with Lou Dobbs, a defeated Mark Sanford was appearing with Marth MacCallum [insert your favorite metaphor here]

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Jun 14 2018

President Trump Interview With Bret Baier…


Re-Posted from The Conservative Tree House on June 13, 2018 by

President Trump gave an interview to Fox News Bret Baier aboard Air Force-1 just prior to departing Singapore.  The interview aired on Fox earlier tonight:

Jun 14 2018

Canadian Economy Drops 31,000 Full-Time Jobs In May – Chrystia Freeland Lobbies Washington DC Ally Bob Corker…


Re-Posted from The Conservative Tree House on June 13, 2018 by

Canada’s Foreign Affairs Minister Chrystia Freeland, the primary NAFTA negotiator, went to Washington DC today for a highly political ‘in-camera’ session with the U.S. Senate Committee on Foreign Relations. [Press briefing video at bottom]

The Chairman of the Foreign Relations Committee is Bob Corker, one of the largest recipients of corporate Wall Street lobbyist money in the senate.  Corker is the most staunch voice in opposition to President Trump’s trade reset policy.  The ranking democrat is Bob Menendez.  Together Corker and Menendez represent two of the most corrupt representatives in congress.  These are the allies Chrystia Freeland is counting on.

Freeland’s strategy, on behalf of Prime Minister Justin from Canada, is to leverage internal U.S. political opposition against President Trump’s NAFTA trade reset.  However, while Canada and Mexico fight against any new trade agreement that eliminates their economic exploitation model, the Canadian economy is already beginning to contract; and this is happening even before any substantive U.S. trade policies are in place:

(Via CBC) The economy lost 7,500 jobs in May as a drop in full-time employment was only partially offset by an increase in part-time jobs, Statistics Canada said Friday.

The overall drop in the number of jobs came as full-time jobs fell by 31,000, offset in part by a gain of 23,600 part-time positions.

[…] the only reason why the jobless number held steady was a dip in the labour force participation rate, which declined one tick to declined one tick to 65.3 per cent. Only Canadians who are actively looking for a employment are formally counted as unemployed.  (more)

In comparison the U.S. job market added over 223,000 jobs in the same month and the unemployment rate dropped to 3.8%.   Companies and private industry will not invest in either Canada or Mexico while the looming probability of a U.S. withdrawal from NAFTA remains.

Canada and Mexico are doubling down on their position that current NAFTA loopholes must remain in place allowing them to operate as pass-throughs to the U.S. market for foreign, mostly Asian, goods.

After the fiasco of the G7 summit, the likelihood of any agreement in terms between the U.S., Canada and Mexico is essentially nil. There are increasingly visible U.S. economic indicators that positive U.S. MAGAnomic results are overwhelming the voices of purchased political leaders trying to sell a narrative of doom around President Trump’s tariff proposals and reciprocal trade reset.

One key index is the U.S. stock market growth amid tariff, trade and NAFTA withdrawal discussion. As CTH has discussed the eventual trade outcome now appears baked into the latest market analysis.  This is the worst possible timing for Justin and Chrystia to be playing politics with the Canadian economy; but that’s exactly what their strategy appears to be committed to.  Amid this U.S. MAGAnomic environment, threats of counter-tariffs by Mexico, Canada and the EU are as useless as feathers in a hurricane.

The only thing missing is the official U.S. announcement withdrawing from NAFTA… But don’t worry, that announcement is coming.  Unfortunately for the politically-minded Justin Trudeau and Foreign Minister Chrystia Freeland what they don’t understand is that President Trump doesn’t care about their delicate sensibilities and blame-casting maneuvers. POTUS Trump was elected specifically because he doesn’t apply a political prism in front of economic or national security decisions.

Without radical transformation to remove the loopholes, NAFTA is dead, all three countries know it.  The aspect that both Canada and Mexico continue to ignore is that President Trump is in no rush to announce it.

President Trump is in no rush to announce withdrawal because the effects of withdrawal are already well underway. Investors are not going to invest in Canada and Mexico while the uncertainty of a U.S. NAFTA exit looms in the air.  The political positioning of the Canadian team is entirely framed around blame casting:

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Chrystia from Canada continues pushing the ridiculously obtuse narrative that tariffs to protect the U.S. steel and aluminum industry represent President Trump saying Canadians are a national security threat to the U.S.

Canada doesn’t make much steel and aluminum for two reasons:

#1 because the environmentalists in Canada have killed off their heavy manufacturing industrial base. Which is exactly what President Trump is attempting to ensure doesn’t happen in the United States.

#2 because it’s just easier, and more lucrative, to structure the Canadian economy as a brokerage for the assembly of pre-manufactured Asian products prior to entering the U.S. market via the NAFTA loophole.  This economic model was designed by former Canadian and Mexican officials, who were well paid puppets to the plans of multinational corporations and financial interests.

It was a nice gig while it lasted; and both Canada and Mexico have had over 25 years to enjoy the construct.  However, President Trump is now resetting the entire agreement to benefit the interests of U.S. workers and Main Street USA.

RAW DATA:

https://www.scribd.com/embeds/380893748/content?start_page=1&view_mode=&access_key=key-qpmsWOMnmq4gee6FZvrY

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Worlds Top Ten Steel Producers HERE

CNN analysis on Global Steel Production and Use HERE

World Steel Industry Statistics and Resources HERE

2018 pdf link on World Steel Production HERE

Do you remember the list of items the dynamic duo Justin Trudeau and Chrystia Freeland selected as targets for their counter-tariff position? Check it out here. What do: “felt pens”, “rubber boats”, “orange juice” and “tomato ketchup” have to do with the U.S. steel and aluminum tariffs?  See The Answer HERE.  It’s all politics.  Pure, politics.

Jun 14 2018

Mandatory Sick Leave for Temps, Part-Time & Just Commission Employees


Armstrong Economics Blog/Regulation

Re-Posted Jun 14, 2018 by Martin Armstrong

The State of New Jersey just keeps making it more expensive to operate a business in the state. New Jersey has now become the 10th state to adopt mandatory paid sick leave. It goes into effect on October 29, 2018. Giving sick leave to employees has been generally a standard in America. What these new regulations do is go much further. All employees, whether temporary, part-time, full-time, salaried, hourly or paid on commission, must now accrue one hour of sick leave for every 30 hours worked. Employers may cap an employee’s sick leave accrual and use at 40 hours per benefit year.

The crazy thing is hiring a temp worker because someone else is out sick or on maternity leave now involves given such a person also gets sick leave benefits. Then the employer and employee may mutually agree to a payout in the final month of the benefit year of 50% or 100% of the employee’s unused sick time. If unused time is paid out in full, carryover is not required. If 50% is paid out, the remaining 50% will carry over. If the employee does not want to be paid out, or the employer chooses not to offer this option, all unused time will carry over up to 40 hours.
Employers may grant sick leave up front in a lump sum. When using the lump sum method, employers may either pay employees for unused sick leave at the end of the calendar year or allow carryover. With lump sum plans, whether to pay out or allow carryover is the employer’s choice – the agreement of the employee is not required. In no case will time be forfeit, unless it is in excess of the carryover limit of 40 hours.

This is now extending benefits to people who are not regular employees. Retail stores hire workers just for the Christmas season. That means they will need to account for sick leave and carry this over if the person returns for a temporary job in the future year? The accounting this imposes on small business is just insane. Of course, politicians want to pretend to be caring for the people when in fact they may be reducing job opportunities for them in the end. Automated registers are showing up everywhere. A grocery store to Home Depot have registers you scan in your own purchases, pay, and leave. The more regulations, the more we will see auto-registers expand into many retail operations to solve the rising regulation and costs.

And they wonder Why New Jersey is #2 State behind NYC with net-migration leaving and business as well?