If there is a recession within the next 2 years, something that is almost guaranteed to happen, the deficit will skyrocket even more.
If one assumes that a recession is likely to arrive within the next two years, and that such a recession will reduce government revenues and increase spending by at least 20%, the federal deficit would easily exceed $2.5 trillion in fiscal year 2019 or 2020, not the $1 trillion currently being forecast.
Congress and the Whitehouse have chosen to greatly increase the federal deficit. As a result, if a recession arrives in the next couple of years, the government will be in a weak fiscal position to respond with stimulus. Even if a recession doesn’t arrive, the government is ensuring that an ever increasing percentage of tax revenues will go towards debt interest expenses and not actual government services and programs.
http://thesoundingline.com/taps-coogan/
Thursday, March 29, 2018
Wednesday, March 28, 2018
Dystopia in Songdo
http://www.dailymail.co.uk/sciencetech/article-5553001/28-billion-project-dubbed-worlds-Smart-City-turned-Chernobyl-like-ghost-town.html
'Songdo is a new kind of city: Completely artificial, painstakingly designed, without a hint of decay or poverty, and nearly empty. It's a human desert'. 'There is an oppressive, Chernobyl-like emptiness here. The shallowness is awesome, in both the modern and traditional sense of the word; you can almost feel that these huge buildings are only years away from being completely abandoned.'
But it appears that like the UAE’s Masdar City, another perpetually unfinished ‘international’ ‘green’ ‘futuristic’ gated community, Songdo may be just one more city on its ways to becoming one more exhibit in the Museum of Futures That Never Were.
This also reminds me of other dytopian cities: Brasilia, Yujiapu, and Ordos, Mongolia.
'Songdo is a new kind of city: Completely artificial, painstakingly designed, without a hint of decay or poverty, and nearly empty. It's a human desert'. 'There is an oppressive, Chernobyl-like emptiness here. The shallowness is awesome, in both the modern and traditional sense of the word; you can almost feel that these huge buildings are only years away from being completely abandoned.'
But it appears that like the UAE’s Masdar City, another perpetually unfinished ‘international’ ‘green’ ‘futuristic’ gated community, Songdo may be just one more city on its ways to becoming one more exhibit in the Museum of Futures That Never Were.
This also reminds me of other dytopian cities: Brasilia, Yujiapu, and Ordos, Mongolia.
Thursday, March 22, 2018
New Interstates
I don't have time to write a complete article so this will be short.
The Interstate Highway System was mostly completed by 1980. The original act proposed 41,000 miles of highway, and 40,000 were built by 1980. And the system was deemed complete in 1992 with the completion of I-70 through Glenwood Canyon in Colorado. But there are 3 new major interstate highway being built now.
Interstate 11 is being built between Phoenix and Las Vegas, and it may eventually reach Reno in the north and Nogales, AZ in the south. It is hard to believe it was left out of the original system.
Interstate 69 is partially built and will connect Mexico with Canada. I think the most useful part of it will connect Houston with Shreveport.
Interstate 14 is mostly across the middle part of Texas, starting in El Paso following I-10, then branch off. It will eventually go all the way to Augusta, Georgia.
Since we have unlimited money to spend, why not fully fund these?
The Interstate Highway System was mostly completed by 1980. The original act proposed 41,000 miles of highway, and 40,000 were built by 1980. And the system was deemed complete in 1992 with the completion of I-70 through Glenwood Canyon in Colorado. But there are 3 new major interstate highway being built now.
Interstate 11 is being built between Phoenix and Las Vegas, and it may eventually reach Reno in the north and Nogales, AZ in the south. It is hard to believe it was left out of the original system.
Interstate 69 is partially built and will connect Mexico with Canada. I think the most useful part of it will connect Houston with Shreveport.
Interstate 14 is mostly across the middle part of Texas, starting in El Paso following I-10, then branch off. It will eventually go all the way to Augusta, Georgia.
Since we have unlimited money to spend, why not fully fund these?
Friday, March 16, 2018
Global 12 Stocks
There are 12 stocks which seem to rise head-and-shoulders above the rest. These are listed here:
The market cap of these companies is about $6.7 trillion.
Honorable mention:
Samsung (SSNLF)
Wells Fargo (WFC)
Walmart (WMT)
Royal Dutch Shell (RDS-A & RDS-B)
These companies are just dominating their fields to such an extent that they are clearly in a different league then the rest. Note: I may have made some mistakes in calculation.
| G12 as of 3/16/2018 | |||||||
| In | Shares (M) | Price | Total (M) | ||||
| Rank | Symbol | Company | DJIA | 03/16/18 | 03/16/18 | Subtotal | 03/16/18 |
| 1 | AAPL | Apple Inc | X | 5070 | 178.02 | 902,561 | |
| GOOGL-A | Alphabet | 298.49 | 1134.42 | 338,613 | |||
| GOOG-B | Alphabet | 47 | 1134.42 | 53,318 | |||
| 2 | GOOG-C | Alphabet | 349.84 | 1135.73 | 397,324 | 789,255 | |
| 3 | AMZN | Amazon | 484.11 | 1571.68 | 760,866 | ||
| 4 | MSFT | Microsoft | 7700 | 94.60 | 728,420 | ||
| 5 | TCEHY | Tencent | 9500 | 59.27 | 563,065 | ||
| 6 | FB-A | 2400 | 185.09 | 444,216 | |||
| FB-B | 505 | 185.09 | 93,470 | 537,686 | |||
| 7 | BABA | Alibaba | 2560 | 200.28 | 512,717 | ||
| BRK-A | Berkshire Hathaway | 0.74875 | 310630 | 232,584 | |||
| 8 | BRK-B | Berkshire Hathaway | 1340 | 206.96 | 277,326 | 509,911 | |
| 9 | JPM | JP Morgan Chase | X | 3430 | 115.44 | 395,959 | |
| 10 | JNJ | Johnson Johnson | X | 2680 | 133.68 | 358,262 | |
| 11 | BAC | Bank of America | 10240 | 32.17 | 329,421 | ||
| 12 | XOM | Exxon Mobil | X | 4240 | 75.12 | 318,509 |
The market cap of these companies is about $6.7 trillion.
Honorable mention:
Samsung (SSNLF)
Wells Fargo (WFC)
Walmart (WMT)
Royal Dutch Shell (RDS-A & RDS-B)
These companies are just dominating their fields to such an extent that they are clearly in a different league then the rest. Note: I may have made some mistakes in calculation.
$21 Trillion
...as of close of Friday, the US Treasury reported that total US debt has risen above $21 trillion for the first time; or $21,031,067,004,766.25 to be precise.
https://www.zerohedge.com/news/2018-03-16/us-national-debt-hits-21-trillion
It hit $20 trillion on 9/8/2017, so this is only a little over 6 months later. I had earlier seen 9/30/2018 as the date when the $20 trillion line would be breached, so this is 5.5 months early.
If we are spending $100 billion per month, we should get to $22 trillion on about 1/20.2019, by the 2nd anniversary of Trump taking office.
When did we first cross the $10.5 trillion mark? On 10/30/2008. So this took about 9.5 years. So if past trends continue, we should get to $42 trillion on about 10/30/2027.
https://www.zerohedge.com/news/2018-03-16/us-national-debt-hits-21-trillion
It hit $20 trillion on 9/8/2017, so this is only a little over 6 months later. I had earlier seen 9/30/2018 as the date when the $20 trillion line would be breached, so this is 5.5 months early.
If we are spending $100 billion per month, we should get to $22 trillion on about 1/20.2019, by the 2nd anniversary of Trump taking office.
When did we first cross the $10.5 trillion mark? On 10/30/2008. So this took about 9.5 years. So if past trends continue, we should get to $42 trillion on about 10/30/2027.
Monday, March 5, 2018
$1 trillion in interest per year by 2021
Here is a thought: If the national debt rises to $25 trillion, and interest rates on that jump to 4%, then the annual bill for interest will be $1 trillion. And this could occur as soon as 2021.
Read this:
We are now ramping up government debt by orders of magnitude at the same time when interest on our mountains of debt will easily rise to 4% in about two years. I come by that number partly from the present rate of interest rise but mostly from the fact that the Fed is moving out of controlling the cost of debt, and will be doing so at a faster rate in the months ahead. (That is, if it stays with the program it has promised; and if it doesn’t, we simply have QE forever.) Mostly I come to it because 4% is the low side of what interest on the debt has historically been when the Fed wasn’t sopping up all government bonds, bills, and notes.
My comment: When this happens we will just up the deficit to $2 trillion per year. Why not? We just established that the government is the source of all wealth and its ability to create wealth is unlimited, so everybody will get richer. And why stop at $2 trillion, why not $3 trillion. That would be enough to give everyone a Universal Basic Income. And then there would have to be cost-of-living-adjustments on the monthly non-welfare checks everyone would receive.
Read this:
We are now ramping up government debt by orders of magnitude at the same time when interest on our mountains of debt will easily rise to 4% in about two years. I come by that number partly from the present rate of interest rise but mostly from the fact that the Fed is moving out of controlling the cost of debt, and will be doing so at a faster rate in the months ahead. (That is, if it stays with the program it has promised; and if it doesn’t, we simply have QE forever.) Mostly I come to it because 4% is the low side of what interest on the debt has historically been when the Fed wasn’t sopping up all government bonds, bills, and notes.
A rise to the low side of normal for government bond interest will likely put interest payments alone on the national debt at a $1 trillion a year by the end of this decade (because the debt will also rise by another $3-4 trillion by then with all new debt being financed at the higher rates and all rolled-over debt being financed at those rates, and most of the US debt is short term, so will roll over soon).
The time (end of 2020), then, is not far off when the entire newly normal trillion-dollar deficit will be consumed just to pay interest on the debt. Whether inflation drives interest up or the Federal Reserve’s unwind or the Republican’s new normal of trillion-dollar annual deficits or the president’s proposed fiscal stimulus plan, the concern that is shaking markets is ALL about lethal levels of interest coming to our already monumental mountains of debt.
From http://thegreatrecession.info/blog/fed-up-on-peak-debt/My comment: When this happens we will just up the deficit to $2 trillion per year. Why not? We just established that the government is the source of all wealth and its ability to create wealth is unlimited, so everybody will get richer. And why stop at $2 trillion, why not $3 trillion. That would be enough to give everyone a Universal Basic Income. And then there would have to be cost-of-living-adjustments on the monthly non-welfare checks everyone would receive.
New crytocurrencies from Marshall Islands and Cambodia
The Venezuelan Petro appears to be a total fraud even if it isn't banned by the US Treasury. But two new challengers appear for the title of the first successful official national cryptocurrency.
The Republic of the Marshall Islands is preparing to issue the Sovereign (SOV). It is unknown what technology this will be based on, whether on Ethereum or something else. This will be legal tender. The Marshall Islands currently uses the US dollar as its official currency and this would circulate alongside it.
Cambodia will soon release its new digital currency, to be called the Entapay. It is aiming at replacing Visa as a payment mechanism.
I don't intend to comment on every single one of these, since there are dozens every day, but I may comment on some of these going forward. I don't expect these two to be wildly successful, but I think that some country like India or Singapore will have successful cryptocurrencies, which other countries will then copy.
The Republic of the Marshall Islands is preparing to issue the Sovereign (SOV). It is unknown what technology this will be based on, whether on Ethereum or something else. This will be legal tender. The Marshall Islands currently uses the US dollar as its official currency and this would circulate alongside it.
Cambodia will soon release its new digital currency, to be called the Entapay. It is aiming at replacing Visa as a payment mechanism.
I don't intend to comment on every single one of these, since there are dozens every day, but I may comment on some of these going forward. I don't expect these two to be wildly successful, but I think that some country like India or Singapore will have successful cryptocurrencies, which other countries will then copy.
Saturday, March 3, 2018
The government is the source of unlimited wealth
Read: The Radical Left-Wing Theory That the Government Has Unlimited Money
Now read: Martin Armstrong - Hyperinflation Unfolds Only When Public Confidence Collapses
Now, while we at it, read: Monetarily Sovereign
What is MMT? MMT (modern monetary theory), or Monetary Sovereignty (from Rodger Mitchell) is the idea that the government can create wealth by spending money, specifically by deficit spending.
What about inflation? Inflation can be reigned in if it gets out of control through increasing interest rates. The Fed wants inflation to be about 2%, and it hasn't been 3% or higher since 2007.
How long can this state of affairs last? Forever, apparently, unless public confidence in the system breaks down.
But what about interest on the debt? It gets paid to rich people, and we can just jack up taxes on rich people to pay for the interest.
But what about rich foreigners who buy the debt, collect interest, and don't pay taxes? Well, they are stupid because they will never get paid back in the same dollars, instead they will get paid back in depreciated dollars. The interest is just to compensate for the loss of purchasing power, and it may not even do that.
What is the purpose of taxes? The purpose of taxes in this system is not to raise revenue, because the government doesn't not need any revenue at all, it can just digitally create money at the push of a button. The purpose of taxes is: A) to keep inflation under control, and B) wealth redistribution.
Isn't this madness? Absolutely. But we have already past the point of no return, which was Rand Paul attempting to filibuster the spending bill on Feb. 8.
We are on a roller coaster ride and there is no way off. You might as well enjoy the ride. Unlike Martin Armstrong, I don't believe this will work in the long run. It certainly will work in the short run (the next 10-15 years).
So let's try it. But at some point, which I think will be in the mid-2030's, the whole inflation thing will turn into hyperinflation and the whole system will break down, like what is happening in Venezuela right now, but probably not as extreme.
Now read: Martin Armstrong - Hyperinflation Unfolds Only When Public Confidence Collapses
Now, while we at it, read: Monetarily Sovereign
What is MMT? MMT (modern monetary theory), or Monetary Sovereignty (from Rodger Mitchell) is the idea that the government can create wealth by spending money, specifically by deficit spending.
What about inflation? Inflation can be reigned in if it gets out of control through increasing interest rates. The Fed wants inflation to be about 2%, and it hasn't been 3% or higher since 2007.
How long can this state of affairs last? Forever, apparently, unless public confidence in the system breaks down.
But what about interest on the debt? It gets paid to rich people, and we can just jack up taxes on rich people to pay for the interest.
But what about rich foreigners who buy the debt, collect interest, and don't pay taxes? Well, they are stupid because they will never get paid back in the same dollars, instead they will get paid back in depreciated dollars. The interest is just to compensate for the loss of purchasing power, and it may not even do that.
What is the purpose of taxes? The purpose of taxes in this system is not to raise revenue, because the government doesn't not need any revenue at all, it can just digitally create money at the push of a button. The purpose of taxes is: A) to keep inflation under control, and B) wealth redistribution.
Isn't this madness? Absolutely. But we have already past the point of no return, which was Rand Paul attempting to filibuster the spending bill on Feb. 8.
We are on a roller coaster ride and there is no way off. You might as well enjoy the ride. Unlike Martin Armstrong, I don't believe this will work in the long run. It certainly will work in the short run (the next 10-15 years).
So let's try it. But at some point, which I think will be in the mid-2030's, the whole inflation thing will turn into hyperinflation and the whole system will break down, like what is happening in Venezuela right now, but probably not as extreme.
Friday, March 2, 2018
Debtwatch February 2018
On Jan. 31, 2018, the debt held by the public was $14.80 x 10^12. Interest paid on the national debt for January was $27.8 billion per the monthly treasury statement.
On Feb. 28, 2018, the debt held by the public was $15.15 x 10^12, an increase of $350 billion during the month and an increase of 2.4%.
Update: For interest, I will use the number on the 1st page of the monthly treasury statement. So for January 2018, it was $25 billion. For February 2018, it was $23 billion. This is actually probably the most important number to watch. I expect this number to skyrocket to as much as $100 billion per month within the next 3 years.
On Feb. 28, 2018, the debt held by the public was $15.15 x 10^12, an increase of $350 billion during the month and an increase of 2.4%.
Update: For interest, I will use the number on the 1st page of the monthly treasury statement. So for January 2018, it was $25 billion. For February 2018, it was $23 billion. This is actually probably the most important number to watch. I expect this number to skyrocket to as much as $100 billion per month within the next 3 years.
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