Trump, the first Keynesian GOP president in many, many years. Bigly.
US gov’t spending now up $125 bln over last year. Growth rate 3.54% y-o-y. Spending really accelerating. It’s expected to reach $5 trillion a US record.
Huge tax cuts which could have been targetted better.
The complete opposite to austerity.
Protection of domestic industries and stimulating/incentivising domestic production.
Everything Keynes advocated after the war.
The slow growth of the past 30 years has been exactly due to neoliberal policies, i.e. trade agreements, outsourcing, financialisation, etc.
He’s doing what most of you have been screaming for, for nearly 4 decades now.
Infact the only thing missing is a new deal aka a job guarentee and that would have been so much better to create jobs in the US. Rather than impose tariffs to bring jobs back to the US.
I would call it military Keynesian.
It’s not far off a left wing dream what he is doing with fiscal policy and monetary policy. He is
definately Protecting domestic industries and stimulating/incentivising domestic production via import substitution.
Supply side Jesus has gone missing in action. I’ll keep saying it, the right acting like the left in many ways and the left acting like liberals in many ways.
What the Trump administration has also been doing is balance sheet reduction.
Other countries haven’t even thought about all the QE they did and what they are going to do about it.
The Fed’s balance sheet resumed its decline last week. Down $12.6 bln to $4.347T. That is the lowest level since May 2014 and down $166 bln y-o-y.
Fed Treasury holdings down $7.6 bln to $2.37T. Down $94.5 bln y-o-y. They are now at the lowest level since May 2014.
MBS down $5.9 bln to $1.72T. This is the lowest level since Nov 2014. MBS holdings are down $49 bln y-o-y.
This is yet another huge Keynesian fiscal stimulas into the economy.
QE sucked billions worth of interest income out of the US economy as it swapped interest bearing treasury securities for reserves.
Balance sheet reduction is the opposite it swaps reserves for interest bearing treasury securites or lets the treasury securities mature putting interest income into the economy instead of stripping it out.
They plan another $400 billion reduction next year and the year after that.
Also, because their monetary policy is to hike interest rates that aslo increases the interest income flowing into the economy another Keynesian fiscal stimulas.
As of the 5th July Interest on Treasury Securities, $197 bln, up $15.9 bln and growing at 8.8% y-o-y. This is the fastest growing major line item in the US at the moment. Going into the economy.
Compare that with Medicaid, $289.4 bln, up $6.4 bln and growing at 2.3% y-o-y.
The Federal deficit thru July 5, 2018 is $555 bln or 2.8% of GDP. It is $83.2 bln more than same time last year.
= The household, business and foreign owners of $’s sector surplus is $555 bln and is $83.2 bln more than same time last year.
The private sector has $83.2 bln more than same time last year. As the government budget deficit = private sector surplus.
Total net spending for the fiscal year thus far, $3.68 Trillion.
I love it that the dollar is rallying despite the fact that Trump’s policies including tariffs are, in essence, a general price hike on the entire population.
I’ve been short the $ since the FED started hiking interest rates because they do the exact opposite of what they say they do.
They cause inflation they don’t fight it
Because when they raise interest rates the cost of borrowing increases but that cost gets passed onto the consumer as higher prices.
So interest rate hikes are price hikes and then you have the interest income channels with 20 trillion worth of debt paying interest no wonder Interest on Treasury Securities, $197 bln, up $15.9 bln and growing at 8.8% y-o-y.
Record government spending
Record tax cuts
Balance sheet reduction
Tariffs
All inflationary which causes inflation pressures EVERYWHERE.
Inflation Reducing purchasing power (which is what Trump’s policies are doing) DOES NOT RESULT IN A HIGHER EXCHANGE RATE.
Commodity markets and gold continue to trade like a recession is coming.
Only one problem…
A RECESSION IS NOT COMING.
This is fear trade. We’ve seen it expressed in sentiment readings.
That’s all this is.
But, but, but, but I thought raising interest rates fights inflation and makes the currency stronger ?
7 US rate hikes and inflation is at 6 year high
It’s hialrious !
You should be buying gold and selling the $ any chance you can get.
