Our system was never intended to be like this. Our founders hated taxes, and they fought a very bitter war to escape the yoke of oppressive taxation. During his very first inaugural address, Thomas Jefferson clearly expressed what he thought about taxes... “A wise and frugal government... shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.” Why couldn’t we have listened to him?
“The typical investor has usually gathered a good deal of half-truths, misconceptions, and just plain bunk about successful investing.” With the month of April winding up the seasonally strong time of the year, earnings season just ahead and economic growth weak, the risks to the downside far outweigh “hope” of higher prices. Or, is “bad news” still the bear market deterrent?
The unintended consequences of a minimum wage hike in a weak economic environment are not inconsequential. Furthermore, given that businesses are already fighting for profitability, hiking the minimum wage, given the subsequent “trickle up” effect, will lead to further increases in productivity and “off shoring” of jobs to reduce rising employment costs. So much for bringing back those manufacturing jobs.
"when I look at the current picture of expected tax revenues combined with benefits promised to future generations, this is the most unsustainable situation I have seen ever in my career." The disaster that Druckenmiller sees coming for the United States is all about changing demographics and entitlement spending. They don’t add up to a sustainable situation. Fixing this is going to require some real sacrifice by the American people and that doesn’t sound like a very appealing platform upon which to get re-elected.
Wage inequality is really a sign of a deeper problem; basically it reflects an economic system that is not growing rapidly enough to satisfy everyone. Our basic problem is that the world economy is growing so slowly that the ordinary workers at the bottom find themselves with less than an adequate quantity of goods and services. This problem seems to be getting worse rather than better, over time, making the problem a political issue.
Europe is the birthplace of Western civilization and the source of most of the trends and bodies of knowledge that define modernity. The average European speaks several languages versus sometimes less than one for Americans. They are, in short, a well-schooled people with vast accumulated wisdom. So how do we explain this...
Some reversals of financial trends prove so momentous they define the generation in which they occur. The stock market crash in 1929 kicked off the Great Depression, which ushered in the welfare and then the warfare state and redefined the relationship between government and citizens. Bonds and stocks began their bull market runs in the early 1980s. Now, those markets are fonts of optimism increasingly unhinged from reality. The US has come full circle. The New Deal and World War II marked a massive shift of resources and power to the federal government. Conversely, financial reversal will fuel a virulent backlash against the government and its central bank.
Sadly, nations get the leadership they deserve. Turning a blind eye to reality is not a sustainable "solution." Leaders faced with unrest, rising demands and dwindling coffers always debauch their currency as the politically expedient "solution."
The state most reliant on federal spending is Mississippi where federal spending is equal to 32% of the state's GDP, and the current central banking regime perpetuates the current imbalance between net tax payer states and net tax receiver states by making it more difficult for poorer parts of the country to accumulate wealth and increase productivity.
Attempts to control economic growth through government spending and/or manipulating interest rates (e.g., stimulate growth with low rates) generally leads to more severe crises. None of these things are recent phenomena, but can be found again and again throughout American history. Today, there is no party that favors true privatization or free markets. The solution, however, is simply to take as much power as possible out of the control of corruptible politicians and their special interest supporters.