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Archive for August 21st, 2019
Not MAGA: The Donald’s Visible Economy Scam– David Stockman
You would never know that the GOP won the last presidential election based on what emanates from the vocal chords of the Trumpian inner circle and the keyboard of its top banana. This stuff is just plain politicized economics, statist pretense and Keynesian hogwash. The Donald’s keyboard is bad enough. Still, after a lifetime as a leveraged real estate speculator who apparently skipped Econ 101, why would he know any better? But chief trade advisor, Peter Navarro, who supposedly has credentials, showed this weekend exactly what flavor of statist economics now reigns in the White House: “I can tell you … Continue reading →
Source: Not MAGA: The Donald’s Visible Economy Scam – LewRockwell
My letter in The Record today…easy money and the coming recession
YOUR VIEWS
‘Easy money’ and a looming recession
Regarding “74% of economists see recession near” (Page 8A, Aug. 20): The piece is generally right on the money.
However, President Donald Trump’s counterproductive trade policies and unconscionable budget deficits during a boom — so much for Republican presidents being fiscal conservatives — would not be the reasons behind an economic downturn.
Recessions occur after the Federal Reserve creates an unsustainable boom with its easy-money policies.
The Fed engaged in the most massive creation of “new money” in American history to counter the Great Recession of 2007-09.
The inevitable consequences of easy money are bubbles everywhere: the stock market, the bond market and real estate.
In addition, individuals pour into sectors of the economy where the bubbles are creating the greatest demand for workers.
So when the inevitable recession hits, unemployment rises in those sectors.
The recession will commence when the Fed “tightens” the supply of money in reaction to accelerating price inflation.
This would be evidentwhen short-term interest rates rise, specifically the Fed Funds rate, which the Fed targets to “manage” the economy to damper price increases.
The recent inversion of the yield curve, when short-term rates are higher than long-term rates, has been an excellent predictor of past recessions.
However, as financial analyst Robert Wenzel pointed out, the current inversion is an anomaly, because long-term rates have declined faster than short-term rates have increased.
In short, a recession is coming, and Trump is correct to blame the Fed.
But his call for more easy money will only delay the day of reckoning.
Murray Sabrin, Ph.D.
Fort Lee The writer is a professor of finance and founder of the Sabrin Center for Free Enterprise at Ramapo College of New Jersey.