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Tag Archives: Budget Deficits
The Lesson of Rome: Fiddling Leads to Disaster
In our special November Bulletin last year, we were skeptical to the extreme that President Obama, or either of the Congressional political parties, would give more than a casual look at the [then pending] December 1st recommendations of the National Commission on Fiscal Responsibility and Reform (commonly called the Commission on Debt and Deficits). Created by Mr. Obama in early 2010, the commission was composed of 18 current and former members of Congress and it was given a narrow mandate: Develop a plan for the US to balance its annual budgets (before interest payments) by 2015. The commission accomplished its … Continue reading
Deficits Create BIG Implications for US Dollar
“If we didn’t have the US dollar as the de facto reserve currency of the world, we’d be Greece. We are broke, bankrupt. REALLY bankrupt.” James Baker III, former US Treasury Secretary and Secretary of State, 4/10/11 The foregoing comment made to Fareed Zakaria on CNN and, hence, heard literally round the world, speaks for itself. As brash as this statement is, Jim Baker was a soft-spoken superstar in both the Reagan and elder-Bush administrations. His appraisal of the current situation reflects his powerful knack for sizing up, clarifying and condensing the complexities of government, while avoiding partisan filters, a … Continue reading
Posted in White Papers
Tagged Budget Deficits, GDP, Reserve Currency, US Dollar, US Treasury
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Getting Down to Business of Federal Debt and Deficits
Consensus: present course is unsustainable Does debt matter? There is no shortage of business press and TV coverage about US government and the individuals who hold “power” in it. But, what power is that? Elected politicians do, and always did understand that they simply have no power, means, or tools to create productive jobs. But political speech making, egged on by a cable TV world that needs ongoing themes to feed its 24/7 yack-format had framed the 2010 general election to be all about jobs, jobs, jobs. Voters went to the polls in unusually large numbers and collectively, more or … Continue reading
Posted in White Papers
Tagged Budget Deficits, Federal Debt, Jobs, Money Printing, US Treasury
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US FED’S Battle Intensifies
This piece is intended as a follow-on to our recently published (October 2010) commentary about: (1) the US bond market’s current position, within the context of the last 50 years of its history, and (2) the zero interest rate floor it faces in carrying out massive Federal Reserve money printing activities to monetize the current fiscal year’s (third straight) trillion-dollar deficit. We speculated that Fed Chairman Bernanke’s“unsustainable” characterization of US budgets, on a number of occasions over the past two years was not just so much tut-tutting; that word was and is highly descriptive of the situation. Few Democrats and … Continue reading
Posted in White Papers
Tagged Alan Greenspan, Budget Deficits, Money Printing, Quantitative Easing, The FED
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Financing the Past with Future Dollars
Strong Dollar Policy One hallmark of all US Treasury Secretaries in the 21st Century has been their public claims to unflagging support for “a strong dollar policy”; this, in contrast to the fact that each of their tenures oversaw, and is overseeing new record levels of deficits, relative to overall US economic activity. The process has resembled images of the Global Warming Movement’s “poster-glacier”, shearing off massive chunks of ice into the ocean. In brief, what has long been the world’s greatest economy has recently been steaming ahead with an open vein…. Its currency has long been the only world-class … Continue reading
The Fed’s Massive Money-Printing Enterprise
So, where’s the sleight of hand? The Fed’s massive money-printing enterprise, of course means that there are significantly more US dollars in existence today than a year ago. We and others conclude that the Fed’s money-pump is laying a warm, fuzzy bed for future price-inflation, through de-valuation of the dollar, versus currencies of countries, mostly Asian, whose central banks are not manufacturing money. [Money is a commodity; its value is established by forces of supply and demand; an over-supply of dollars will naturally push up the price of things valued in dollars.] ‘Not so fast’, says the Fed The simple … Continue reading
Posted in White Papers
Tagged Ben Bernanke, Budget Deficits, Money Printing, The FED, US Treasury
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US FED: The Ultimate Cleanup Sponge
Green Shoots This piece would no doubt disappoint readers, if we failed to comment on the “green-shoots” that have been observed among the ashes of economic collapse. Conversely, we would be presumptive to attempt a fresh point of view on the subject. Instead, here are a couple of apparently unanswered questions and related observations: Are the green shoots we see actually growing, or have the surrounding ashes merely been compacted? Massive government spending is clearly providing needed soil, but not fertilizer. Recently positive quarter-on-quarter corporate and bank bottom lines are heavily influenced by one-time belt-tightening; sales have shrunk dramatically (and, … Continue reading
Posted in White Papers
Tagged Budget Deficits, Economic Growth, Government Spending, Green Shoots, The FED
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