Deficit Spending

G-20 Meeting Ends With Rising Discord Between China And US

While the G-20 group traditionally tries to put on a united front, a curious divergence emerged following the latest meeting in China, where as Bloomberg notes Chinese and U.S. officials "showed signs of being at odds on how synchronized efforts to boost global growth need to be, with China stressing the need for improved coordination more than the U.S."U.S. Treasury Secretary Jacob J. Lew on Thursday talked down the need for crisis-level coordination as he headed to Chengdu, China, for the meeting.

7 Things Trump Must Do

"We the undersigned urge you, the presumptive Republican nominee for President, to support a rebirth of free-market capitalism in the U.S. You have said repeatedly that you want to make American great again. We agree with you. And we assert that the most effective way to start that process would be to affirm your principled support for economic liberty, for open and competitive markets, and for a foreign policy that rejects both protectionism at home and interventionism abroad."

Why Helicopter Money Won't Push Stocks Higher

In effect, helicopter money turns the entire economy into a Ghost City. Things look busy and productive until the day the helicopter money runs out. From that day on, everything crashes back to reality and tumbleweeds are soon blowing down empty streets.

Larry Summers Wants To Give You A Free Lunch

According to Summers, with this low growth and low interest context, government debt levels no longer matter. In other words, federal governments have free reign to massively increase deficit spending and run-up federal debts, because, on balance, the fiscal stimulus will pay for itself. But who are we to question Summers’ unique qualifications - for example, unlike Summers, we’ve never lost $1.8 billion of other people’s money.

Krushing Krugman? Lacy Hunt On The Negative Multiplier Of Government Debt

The trap is listening to Keynesian economists like Krugman because doing so only digs deeper and deeper debt holes. The real solution is a writedown of unproductive debt, not increased fiscal stimulus. Instead central banks attempt to cram more and more debt into a system clearly overloaded with debt.

Bill Gross Says Yellen "Worships False Idols" So "Worry About The Return Of Your Money, Not On It"

"Investors should not hope unrealistically for deficit spending any time soon. To me, that means at best, a ceiling on risk asset prices (stocks, high yield bonds, private equity, real estate) and at worst, minus signs at year's end that force investors to abandon hope for future returns compared to historic examples. Worry for now about the return "of" your money, not the return "on" it."

August 15th - The Date Which Will Live In Monetary Infamy

August 15, 2016 will mark the 45th anniversary of President Nixon’s decision to close the gold window. U.S. citizens and the government are now beholden to the consequences of years of accumulated debt and weak productivity growth that have occurred since that day. Now, seven years after the end of the financial crisis and recession, these consequences are in plain sight. The Fed finds themselves crippled under an imprudent zero interest rate policy and unable to raise interest rates due to fear of stoking another crisis.

Peter Schiff: "Brexit Is Just What The Doctor Ordered"

British voters may not know what they will get with an independent Britain, but they knew that something was rotten, not just in Denmark, but all over the European Union. The same holds true in the United States. Until our leaders can paint more realistic pictures of where we are and where we are going, we should expect more “surprises” like the one we got yesterday.

The New "Hope"

What you think about the market doesn’t matter. What everyone thinks about the market (the consensus) doesn’t matter. What matters is what everyone thinks that everyone thinks about the market, and the way you get ahead of this game is to track the “Missionary statements” of politicians, pundits, and bankers made through the four media microphones where the Common Knowledge of markets is created: The Wall Street Journal, The Financial Times, Bloomberg, and CNBC. Today the investment hope that has crystalized into an investment theme is the notion that soon, just around the corner now, perhaps as a result of the next mystery-shrouded meeting of the world’s central bankers, perhaps as a result of the U.S. election this November, we will enjoy a coordinated global infrastructure spending boom.

Japan Is First To Panic; Won’t Be The Last

The most widely-reported result of the recent G-7 meeting was Japan’s attempt to convince the other major economies to admit that a crisis is imminent and take appropriately radical steps. The response seems to have been a bunch of blank stares. What does this mean? In a nutshell, the next phase of the global economic crisis has begun.

Peak Petro-State - The Oil World In Chaos

Pity the poor petro-states. Once so wealthy from oil sales that they could finance wars, mega-projects, and domestic social peace simultaneously, some of them are now beset by internal strife or are on the brink of collapse as oil prices remain at ruinously low levels. At the peak of their glory, the petro-states played an outsized role in world affairs.  That, of course, was then, and this is now. While these countries still matter, what worries these presidents and prime ministers now is the growing likelihood of civil violence or even state collapse.