So the US economy is nearing its inflation target of 2% and the latest payroll data suggests that employment is also better than anticipated with 235K jobs created in February versus 175K jobs expected. Perhaps the stage is being set for a Fed rate hike normalisation quicker than that what the market anticipates.
But it is the record US public deficit which has now surpassed 20 trillion dollars that could come into focus going forward.
Will Congress raise the debt ceiling (the upper limit of money that the US government can borrow to meet its debt obligations) on March 15? The economy is experiencing modest growth expanding by 1.9% in the final quarter of 2016. Moreover, that reconciles with an increase in total tax receipts of 0.5% over the first four months of the year.
The January US Federal Budget recorded a surplus of $51.3bn compared with a surplus of $55.2bn the previous year and compared with consensus forecasts of a surplus near $40.0bn. The US usually posts a budget surplus for January with strong tax receipts on seasonal grounds and before tax refundskick-in. For the first four months ...
Public debt is less burdensome when the economy is expanding but it would need more than lacklustre economic growth. Furthermore, when the Fed's fund interest rates are low the cost of servicing the debt is also low. But that is likely to change when the Fed starts moving towards its goal of interest rate normalisation. That also means highly leveraged governments and corporates could be burdened with higher debt costs going forward.
So the US economy is shouldering a cumbersome public deficit at a time when the Fed is keen on raising rates. Put another way, the US economy might need to grow more than just 2% or 3% to sustain debt payments. An economy boom would be ideal.
How then would an economic boom (GDP greater than 5%) be achieved when the population is ageing and the pool of young fit working-age group is diminishing.
Natural population growth is in decline as generation X struggles to pay off student debts and achieve financial independence in the gig economy. Without a stable income the next generation is less credit worthy, if they can't secure a mortgage, they don't buy houses, cars, and start a family. So the indigenous population declines and the working population ages and then retires.
Meanwhile, resources are diverted to the ageing population needs (but this is a sunset economy) which will transition from dusk to night, it has no long-term future in a failing economic model that leads to population decline with fewer younger people.
Short term fix, an injection of young blood (sustainable immigration) into the economy could reduce the negative impact of an ageing workforce, lower worker productivity and population stagnation or decline.
There is a correlation between an ageing, declining population and lower economic growth, Japan is s good case study. The human farmers (or chosen few who print the money) don't create the wealth or economic prosperity, instead, it is the sweat, toil, innovation and enterprise of their human livestock which creates real wealth and prosperity. In a few words, increasing the money supply doesn't create economic prosperity it just makes fiat currency (which has no intrinsic value) less valuable. So when the central bank (human farmers) issue more fiat currency that means, even more, currency is circulating in the economy and chasing the same or fewer goods and services (provided by their human livestock), which then leads to higher prices. Put another way more currency is needed to buy the same good or service which is the definition of inflation.
It would be inaccurate to say that the greatest monetary easing experiment in the history of finance (implemented by the central banks following the financial crisis of 2008) did not create inflation.
This unprecedented amount of monetary easing implemented by the central bank's quantitative easing program did indeed create hyperinflation or (asset bubbles) in government bonds, stocks, prime real estate and many other trophy assets owned by the super rich (super luxury yachts, paintings, classic vintage cars, precious stones..)
Monetary policy is being implemented by those at peak of the food chain for their own economic gain. The easy money circulated amongst the top hierarchy of the food chain has enabled this group to speculate and accumulate wealth beyond their wildest dreams. So the trickle up wealth effect of abusive monetary policy has facilitated an opaque transfer of wealth from the middle class to the chosen few. Perhaps it has even added to this demographic time bomb.
The trillions of dollars of newly created currency were not channelled into productive investments or public works. Today the infrastructure (roads, bridges, drains and sewerage systems, transport infrastructure, ports) of many G7 economies is in need of investments.
But when easy money can be made on the speculative casino inflating asset bubbles, buy today sell tomorrow and make a killing. So why bother doing anything tangible with capital when fortunes can be made on the financial casino, creating nothing making nothing. What's more, boosting shareholder value becomes not much more than corporate stock buybacks with the cheap money.
So the CEOs reduce CAPEX spending, thereby employing fewer people and employing capital in stock buybacks.
In short, a few people got very rich at the expense of everyone else. It is how just 62 of the richest people have as much as half of the world's wealth.
Growing inequality has added to the net worth of the world's richest billionaires, according to a new Oxfam report.
This type of wealth inequality could only have been financial engineered.
Trump has come to power riding the populous revolt anti-establishment wave.
There is an image of President Trump in the oval office speaking on the phone with a portrait of former President Andrew Jackson hanging on the wall behind him.
Andrew Jackson was a rich populist who bragged and invited scorn. Trump draws new interest in the 7th president.
What does the 45th president see in the 7th president?
The two presidents do have a few similarities, both wealthy populists battling against the establishment of the day.
Moreover, it was only recently that Andrew Jackson was removed from the $20 USD note.
Treasury Secretary Jack Lew announced Wednesday that Harriet Tubman will replace former President Andrew Jackson on the $20 bill. In a call with reporters
It just wasn't considered politically correct to have a former slave owner (which is like employing the service of domestic cleaner on the minimum wage today) on the note.
Was Jackson taken off the note due to his anti-central bank speech?
"Controlling our currency, receiving our public money, and holding thousands of our citizens independence, it would be more formidable and dangerous than the naval and military power of the enemy…."
But what do Trump and all his billionaire bankers have in common?
The gold curtains, Jacksons portrait hanging above him- is Trump communicating to us through symbols his intentions? Will the 45 president attempt to smash the central bank, introduce a gold back dollar, or is Trump just part of an elaborate psychological operation to lull the population back to sleep?
Time will tell.