Financial markets seem convinced that the recent surge in business and consumer confidence in the US economy will soon be reflected in “hard” data, such as GDP growth, business investment, consumption, and wages. But economists and policymakers are not so sure. (To some outside the US, it is an assumption that sometimes looks a lot like blind faith.)
Attempting to spend a nation to prosperity using borrowed money is not without consequences. In the short run, an illusion of wealth can be erected. In the long run, that illusion slips into decay and disrepair.
"Gold can be stored for a long time and, despite the price fluctuations on international markets, it doesn’t lose its value for the population as a means of savings," Kyrgyzstan’s Central Bank Governor Tolkunbek Abdygulov said, "I’ll try to turn the dream into reality faster."
In a centrally planned economy decisions on what to produce, how to produce, and for whom are taken primarily by the government. But not even Stalin or Roosevelt could come up with a rather exotic tool that can take central planning to a whole new level: carbon taxes.
"I find myself in the strange situation of cheering Donald Trump’s nascent program of economic renewal for the US, while worrying deeply about the domino effect that may topple a dollar-based global financial system whose health has relied greatly on benign neglect by the United States."
"The point is a century of scientific mismanagement of the currency has pushed the economic, financial, and social order well past any rational limit. Total government debt and stock valuations are at all-time extremes. Something big is coming. You can guarantee it. But don’t blame Trump when the world ends. There ain’t a doggone thing he or anyone else can do to stop it."
"It’s not just volatility; it’s valuation. Instead of magical lottery tickets that automatically and necessarily reward those who wait, stocks are ownership units of businesses. That’s banal, I know, but everyone seems to forget it. And it means equity returns depend on how much you pay for their future profits, not on how much price volatility you can endure."
"[Rogoff] has the audacity to say that people should not look at their short-term personal losses, but rather look at the long-term vision of the central banks. He is such an elitist. I cannot find words appropriate to describe how this academic, who has zero experience in the real world, is incapable of comprehending that his Marxist style intervention is creating the next crisis."
The point in highlighting these examples is to remind you that people’s opinions, especially those with a vested interest in a certain outcome, may not always be trustworthy. We simply urge you to examine the facts and data before blindly relying on others.
Barack Obama is one of the biggest “Keynesians” of all time, but unfortunately most Americans don’t even understand what that means. By propping things up in the short-term, he has absolutely demolished our long-term economic future. But like most politicians, Obama has been willing to sacrifice the future for short-term political gain.
"...there is a long way to go between President-elect taking office, drafting bills and getting them passed. There is even a further period of time before any actions actually passed by the Trump administration actually create perceivable effects within the broader economy. In the meantime, there are many concerns, from a technical perspective, that must be recognized within the current market environment."