In stock futures only the 3rd wave of wave iii is completing now. Same story in the cash market.
Dollar and Euro are either in their 3rd waves or their C waves. Wave (ii) was very shallow and brief.
Have you studied MMT, or the works of Mosler and/or Wray?
Basically the premise is now that the entire world monetary system is a basket of fiat currencies that float against each other, we have a whole new ballgame. And in that new game you cannot use the old paradigm of looking at a government as if it were a household that needs to balance expenses with income. The reason is due to the fact that the government controls the currency and as result it can never "go broke".
The problem though is that no one, most economists included and absolutely no one in positions of power in the Federal government, understands this and is still thinking of the US like it's a household and needs to balance expenses and income.
If MMT is correct, right now because we have a lot of excess capacity, we should be lowering taxes and increasing spending. The Dems want to raise taxes and increase spending, and the Republicans want to lower taxes and reduce spending. Neither of these approaches will increase our capacity utilization.
So the Fed is doing its own "increase spending", but it's having all kinds of unintended consequences. If the increased spending that the Fed is doing had been instead mandated by Congress to spend that money on infrastructure, education, etc., we would be getting something beneficial from that money that is being pumped into the markets. Instead, what we're getting is yet another asset bubble that is sure to pop sooner or later.
The U.S. created the world fiat system. Not all countries are going to play the game. As long as you have hold-outs then capital will flow there and the "system" will be out of balance. Not all countries are going to want to run ever-expanding debt loads. The Kennedy school and Ivy-league curriculums promote Modern Management Theory as an adjunct to Socialism 101 but the birth and death of societies are tied to their debt. What have France, Spain, or Portugal done since they hit their debt walls in the 16th and 17th centuries? What has Britain done since it hit it's wall in early 20th? Nada. What has education spending by the Feds since the 60's accomplished? It transferred control of schools from local governments and took the quality down the toilet. Dollars spent by central governments become evermore ineffective the more they circumvent local control. Economists are taught the power of government spending and are the first to encourage politicians to go further into hock. Fed debt to GDP is now 100% 14.5T GDP to 14+T debt. This puts us between Iceland and Nicuragua (about the 11th worst in the world). Societies always believe that they can extend spending beyond their means.
Steve,
ReplyDeleteHave you studied MMT, or the works of Mosler and/or Wray?
Basically the premise is now that the entire world monetary system is a basket of fiat currencies that float against each other, we have a whole new ballgame. And in that new game you cannot use the old paradigm of looking at a government as if it were a household that needs to balance expenses with income. The reason is due to the fact that the government controls the currency and as result it can never "go broke".
The problem though is that no one, most economists included and absolutely no one in positions of power in the Federal government, understands this and is still thinking of the US like it's a household and needs to balance expenses and income.
If MMT is correct, right now because we have a lot of excess capacity, we should be lowering taxes and increasing spending. The Dems want to raise taxes and increase spending, and the Republicans want to lower taxes and reduce spending. Neither of these approaches will increase our capacity utilization.
So the Fed is doing its own "increase spending", but it's having all kinds of unintended consequences. If the increased spending that the Fed is doing had been instead mandated by Congress to spend that money on infrastructure, education, etc., we would be getting something beneficial from that money that is being pumped into the markets. Instead, what we're getting is yet another asset bubble that is sure to pop sooner or later.
The U.S. created the world fiat system. Not all countries are going to play the game. As long as you have hold-outs then capital will flow there and the "system" will be out of balance. Not all countries are going to want to run ever-expanding debt loads. The Kennedy school and Ivy-league curriculums promote Modern Management Theory as an adjunct to Socialism 101 but the birth and death of societies are tied to their debt. What have France, Spain, or Portugal done since they hit their debt walls in the 16th and 17th centuries? What has Britain done since it hit it's wall in early 20th? Nada.
ReplyDeleteWhat has education spending by the Feds since the 60's accomplished? It transferred control of schools from local governments and took the quality down the toilet. Dollars spent by central governments become evermore ineffective the more they circumvent local control. Economists are taught the power of government spending and are the first to encourage politicians to go further into hock. Fed debt to GDP is now 100% 14.5T GDP to 14+T debt. This puts us between Iceland and Nicuragua (about the 11th worst in the world). Societies always believe that they can extend spending beyond their means.