Goldman Sachs: The Financial Outlook For The USA Is ‘Not Good’

CNBC – May 21, 2018: The article highlights that Jan Hatzius, chief economist at Goldman Sachs, sees the deficit ballooning to $2.05 trillion (7 percent of GDP) by 2028. And that “Lawmakers might hesitate to approve fiscal stimulus in the next downturn in light of the already substantial budget deficit,” the economist said. The Congressional Budget Office projects that debt could equal GDP within a decade, a level not seen since World War II.

The fiscal outlook for the United States “is not good,” according to Goldman Sachs, and could pose a threat to the country’s economic security during the next recession.

(BattleForWorld: This assessment is realistic, but as always, such analysis often gets neutralized later with cooked up figures expressing growth and other wonderful things recovering the economy back into normalcy. Nothing will be admitted with credibility because they do not want fear and panic from the people and an end to their military adventures, and so the economy is just going to run into the ground with the ones at the helm acting with puzzling surprise when it happens.)

According to forecasts from the bank’s chief economist, the federal deficit will increase from $825 billion (or 4.1 percent of gross domestic product) to $1.25 trillion (5.5 percent of GDP) by 2021. And by 2028, the bank expects the number to balloon to $2.05 trillion (7 percent of GDP).

An expanding deficit and debt level is likely to put upward pressure on interest rates, expanding the deficit further,” Jan Hatzius — Goldman’s chief economist — wrote Sunday. “While we do not believe that the U.S. faces a risk to its ability to borrow or repay, the rising debt level could nevertheless have three consequences long before debt sustainability becomes a major obstacle.”

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When The U.S. Government Defaulted

ZERO HEDGE – May 27, 2018: The highlight of the article from the Global Macro Monitor, notes that:

One of the most pervasive myths about the United States is that the federal government has never defaulted on its debts.

There’s just one problem: it’s not true, and while few people remember the “gold clause cases” of the 1930s, that episode holds valuable lessons for leaders today. – Sebastian Edwards, Project Syndicate,  May 21, 2018

UCLA professor,  Sebastian Edwards, author of the book, American Default: The Untold Story of FDR, the Supreme Court, and the Battle over Gold, has become one of the must read books.

The author has also published an excellent synopsis of the the book, Learning from America’s Forgotten Default, on the Project Syndicate (PS) website.  And it is an excellent introduction to the subject material, but only scratches the surface. Snippets from Project Syndicate:

  • There was a time, decades ago, when the US behaved more like a “banana republic than an advanced economy, restructuring debts unilaterally and retroactively
  • In April 1933, in an effort to help the US escape the Great Depression, President Franklin Roosevelt announced plans to take the US off the gold standard and devalue the dollar.
  • …this would not be as easy as FDR calculated. Most debt contracts at the time included a “gold clause,” which stated that the debtor must pay in “gold coin” or “gold equivalent.”
  • These clauses were introduced during the Civil War as a way to protect investors against a possible inflationary surge.
  • …the gold clause was an obstacle to devaluation. If the currency were devalued without addressing the contractual issue, the dollar value of debts would automatically increase to offset the weaker exchange rate, resulting in massive bankruptcies and huge increases in public debt.
  • Congress passed a joint resolution on June 5, 1933, annulling all gold clauses in past and future contracts. …


Modern Monetary Theory (MMT)

Sebastian’s material gives us much ammunition in arguing with the Modern Monetary Theory crowd, who believe a sovereign government cannot and will never default on its local currency obligations if it has an independent central bank.    Of course, they will argue that FDR and the U.S. didn’t have an independent monetary policy because of its link to the gold standard.

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The Huge Fraud Behind Our Stock Market

REDACTED TONIGHT – May 19, 2018: Redacted Tonight is a comedy show written and performed by Americans, in America covering American news. (BattleForWorld: The stock market alters the entire engine of our economy creating an unlivable planet. It is the ultimate Ponzi scheme.)

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Part Of The Stock Market Will Go Private In Two Years

RT KEISER REPORT  – May 22, 2018: Max: Well, we have discussed this many times and I am glad to see that it is finally getting some recognition out there in the financial press. This phenomenon of neo-feudalism coming back into the economy due to rampant “mergers and acquisitions” fueled by free money. So what this all means is the number of stocks traded on the New York Stock Exchange and other exchanges is shrinking, because these companies are being bought out – they are being taken private using leverage buyout.

Just to refresh people’s memory: A leverage buyout is that you are using collateral of a company you are set to acquire as the collateral for the money you need to borrow to buy that company. And then after you buy the company you return money borrowed to the bank that was borrowed too you based on the fact that you had put up the collateral of the company you are acquiring. Just think about that for a second: In other words, during the Mike Milken days, corporate raiders like Carl Icahn or Ron Perlman, they would go Mike Milken and say here’s a company, they’ve got billions of dollars worth of assets on the books. I want to put their assets up as collateral to borrow the 10 billion dollars I need to buy them . And they would buy them. And then they would split the company up into many pieces and fire lots of people, and raid the pension accounts and destroy capitalism as we know it and make off with billions of dollars and we ended with with America’s oligarchy, a billion-year corporate raiders, which we now call “activist investors”. The trend has resulted in terminal capitalism, where the rats have been given unlimited credit and no regulations and they are killing the golden goose.

Soon, there will be no stocks to buy at all. No opportunity to excel at all. And we are back to serfdom, it’s the road to serfdom for real. Not that fake version that reference fake communism, but the real road to serfdom brought on by unfettered capitalism. …

Max: …We are entering a period of rising interest rates… I predict in 24 months (into 2020) you will begin to see the biggest wave of “mergers and acquisitions” ever in history by a factor of 10.  As just 30% or 40% of everything that gets traded out there gets gobbled up and taken private.

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Russia Should Prepare to Pull Assets From US Reserves

SPUTNIK NEWS – May 25, 2018: At the SPIEF economic forum in St. Petersburg, Russian Business Ombudsman Boris Titov told Sputnik on Thursday (May 24) that he believed that the Russian government should prepare a road map outlining steps for the withdrawal of reserves from US securities.

(BattleForWorld: This type of talk often makes others nervous, because it hints at some kind of unforeseen economic problem ahead and in order not to create panic contingency plans are being prepared to address the situation. Some type of economic chaos is ahead and often the public will know about it only when the problem can no longer be kept hidden away.)

“Although such spontaneous actions to transfer them from US securities to some other assets may be not quite right in a political perspective, there must be some road map on this issue,” Titov said on the sidelines at SPIEF.

And according to Titov, placement of reserves in US securities carries great risks for the country under current conditions.

“We see that the United States has already frozen Iranian assets, and this is a serious threat, we must make a decision that, of course, this money cannot be placed in the United States,” said Titov.

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Half of Americans can’t afford vacation this summer

CNBC – May 26, 2018: The article highlights that half of Americans won’t be able to take a vacation this summer – and it’s not just because they can’t afford it. As 49 percent of Americans won’t be taking one this summer, and while lack of money certainly plays a role, it’s not the only reason so many people are deciding to stay home. … “A vacation doesn’t have to be something where you fly somewhere,” Melanie Ross, a senior financial adviser for NCA Financial Planners,” tells Bankrate.

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