‘Twas the Week Before Christmas..

Precious metals expert Michael Ballanger compares the current state of the precious metals market to it one year ago.
“‘Tis one week ’til Christmas and all through the Street
Brokers are begging for the Donald’s next tweet.
With benchmarks all causing the advisors such fear
They all need a jumpstart to rescue the year.”
I was sitting in my rustic abode on the shores of lovely Lake Scugog last evening, a houseful of family all revelling beautifully as outside the wind howled and the snow whirled while neither man nor beast dared venture into the frigid abyss of a vintage Canadian pre-winter, jet-stream-delivered, pre-Christmas storm. You see, I live in a small rural town located northeast of the City of Toronto at latitude 446′, which is approximately the same as Minneapolis, Minnesota, but nowhere as isolated (nor as wintery) as Edmonton, or Minsk, or Moscow, all of which reside at around latitude 553′. In the vernacular of brass monkeys, the weather outside here in Port Perry is emasculating at -16 C (3F) but the weather in Moosonee, Ontario, which lies over 1,000 kilometres north of me in the SAME province, was clocked at -27 Celsius, which comes in at -16.6 F. That, my friends, is COLD weather.
Now, add the wind chill factor, which tonight here in the “Port” is severe as not only is it cold, we sit on the windward side of the lake, which means that the big northwest wind comes over the tree and roof tops across the lake and then barrels down in us with a vengeance. Fido can’t even get through the snow drifts caused by the wind to do his “business,” so he just walks back and forth until he can function and then, when finished, BOLTS back up the back stairs of the deck and howls at the patio door until let in. So WTF is the point of all of this drivel? Ladies and gentlemen, it is three days unto the first day of winter and I continue to read about carbon credits and global warming and how we should ALL drive electric cars. Three days until winter. . .
As Donald Trump continues to “drain the swamp” by adding more and more members of the Black Lagoon alumni (for all of you millennials or echo-boomers or carbon credit counters, Web search “The Creature from the Black Lagoon”), the last vestige of the Obama “Faith and Hope” movement are now observing Mother Nature at her omnipotent best; she is showing these kids (who vote with their “trust fund” brains) that no matter how many “Congressional Studies” are completed and read in session, Mother Earth determines when and IF GLOBAL WARMING is an “issue” with her. She sits up there in the clouds quietly watching the creatures – ALL creatures – that have an impact on HER planet and decides when and if a species should survive. The last time that Mother decided to change the status quo was when a bunch of the “Protestacockalus Flatulus” decided to tell “Tyrannosaurus Rex” that he was emitting too much methane after meals. She hurled an asteroid the size of the moon into what is now Sudbury, Ontario, in order to curb the methane by creating an Ice Age that exterminated the dinosaurs. I guess you really don’t want to piss off Mother Nature, now, do you?

This post was published at GoldSeek on 20 December 2016.

Meet MethBot: Russian Hackers Exposed For “Biggest Ad Fraud Ever”

With Facebook admitting to numerous errors in its advertising metrics, news that a group of Russian criminals are making between $3 million and $5 million every day in a brazen attack on the advertising market appears prescient. Amid headlines of “fake news” and censorship, Forbes exposes Methbot – the biggest digital ad fraud ever uncovered and perpetrated by faking clicks on video ads.
As security firm WhiteOps – who discovered the fraud – explains…
Controlled by a single group based in Russia and operating out of data centers in the US and Netherlands, this ‘bot farm’ generates $3 to $5 million in fraudulent revenue per day by targeting the premium video advertising ecosystem.
read more here…
As Forbes’ Thomas Fox-Brewster explains, the crew, which White Ops dubbed Ad Fraud Komanda or “AFK13”, planned their machinations in meticulous detail.

This post was published at Zero Hedge on Dec 20, 2016.

How We Become Slaves Of ‘The System’

This article was written by Bob Livingston and originally published at Personal Liberty Digest
Almost everything you think and do is against your best interest and you don’t even realize it. It’s planned that way.
The state seeks absolute control of your mind, body and spirit. Can the state succeed? It has, but only a precious few ever know.
Your mind and your thoughts are not your own. Almost every thought you have channels you toward the state.
By the time a child grows up and goes through the public (non)education system, he or she has no thoughts of his or her own. By the time that person is finished with college, the system has sealed his or her thought processes so that nothing is questioned. The imperative to inquire beyond what comes from the propaganda media and our leaders is gone.
Our minds are so smug in darkness and organized confusion that we are complete automatons. Our ego, our individuality, is completely excised and we are completely transferred into the state organism and group thought. Any deviation from the system by anyone is met with hostility by friends and neighbors.
By this we become locked into a system based only on conventional wisdom. Conventional wisdom is what everybody knows. It is the court history (faux history) we receive in school and through the controlled media, repeated ad nauseum.
Conventional wisdom is based on confusion and disinformation. It has a crowding-out effect in our thought processes that stifles inquiry. In other words, conventional wisdom programs us to reject any information or thought not in harmony with our preconditioning and experience. It is called cognitive dissonance.
The more one is formally educated, the more he/she is locked into the system mindset. (Why do you think there is such a push for everyone to receive a college education whether a person is so inclined or not?)

This post was published at Alt-Market on 20 December 2016.

Gold: The Wait For Inauguration Day

At this time last year, most gold investors and analysts were predicting lower prices for gold. Many of them were shorting it. The shorts were obliterated, because gold bottomed the day after the December 2105 FOMC meeting. It soared about $330 an ounce, from about $1045 to above $1375. It’s been said that history doesn’t exactly repeat, but it does rhyme. On that note, please click here now. Double-click to enlarge this daily bars gold chart. Gold has a cyclical tendency to decline ahead of a rate hike, and rally after it is announced. This time, the US election may delay the rally, but create one that is bigger and more sustained than the rally of 2016. Here’s why: Republican parties have cyclically been associated with significant US dollar downtrends. The next presidential inauguration occurs on January 20, 2017. Donald Trump has repeatedly stated that he wants a lower dollar. He’ll have control of both the senate and the congress, putting him in a position of tremendous power to impose his will on US markets. Please click here now. Double-click to enlarge. Most technicians are now wildly bullish on the US dollar index. They are excited about what appears to be an ‘upside breakout’, and there’s no question that the US dollar index could move higher until inauguration day. Note the RSI non-confirmation with the price on that daily bars US dollar index chart. The dollar’s technical strength is weakening quite dramatically. For a big picture view of the dollar’s price action during the past few presidencies, please click here now. Double-click to enlarge.

This post was published at GoldSeek on 20 December 2016.

Jim Rickards in Debate of Gold, SDRs, or More of the Same?

This is a syndicated repost courtesy of The Daily Reckoning. To view original, click here. Reposted with permission.
While meeting up last month in London, Jim Rickards in debate joined forces with Ann Pettifor for a discussion for the ages. The center of the debate was on the ‘Future of the International Monetary System – Gold, SDRs, or More of the Same.’ The two economic heavyweights come from highly respected backgrounds and offer a unique perspective in their own right together with our Daily Reckoning UK colleagues.
Ann Pettifor is a UK analyst focused on the global financial system and works as a director at UK based organization, Policy Research in Macroeconomics (PRIME). Her latest book, Just Money: How Society Can Break the Despotic Power of Finance covered the social impact of the global monetary system. She was one of the few economist who predicted the financial crisis years prior to the aftermath of 2008 and is widely celebrated as a leading voice for UK analysis.

This post was published at Wall Street Examiner on December 19, 2016.

Wisconsin Woman Snaps After Electors Certify Votes For Trump – “You Sold Out Our Country”

After the Wisconsin electors read out what most of us saw as a fairly predictable vote tally, 10 electoral votes for Donald Trump, one Wisconsin citizen completely lost her mind. Apparently the finality of actually hearing the votes certified was just too much for this snowflake to handle as she launched into a tirade accusing the electors of selling out their country. You know, because ignoring the will of the majority of the voters in your state would not be considered selling out.
‘You sold out our country. Everyone of you, you’re pathetic. You don’t deserve to be in America.’
“This is my America.”
Of course, the majority of the people in the room sat while calmly chanting: “Shame, shame, shame.”

This post was published at Zero Hedge on Dec 20, 2016.

‘Trickle-Down Poverty’: The Coming Cashless Society Is Making People Desperate

Forget about tax policies and left-right politics with the coming era of Trump.
The real trend for the direction of the economy is in the rapidly-accelerating transition to a cashless society.
This vicious move by the top of the pyramid to eliminate physical currency is a drastic step towards the near-total control of society.
Already, plastic cards and electronic payments have taken over the trend of many point-of-sale purchases, not to mention the majority of online sales, which are now very significant.
However, cash remains a major part of spending, and an important part of the individual’s daily economic life.
Nonetheless, the cashless grid is setting in, and its consequences are coming down on society.

This post was published at shtfplan on December 19th, 2016.

The Implosion Of The Global Markets Has Started & Can’t Be Stopped

The world doesn’t realize it yet, but the implosion of the global markets has started and can’t be stopped. While the financial networks continue to focus on the rising U. S. stock market and Dollar, this represents a mindset that has totally gone insane.
Why? Because the rapidly increasing Dollar and broader U. S. stock market do not represent a healthy economy, rather it reveals the swelling of the cancerous U. S. financial tumor. The faster and larger it grows, the more it will endanger the U. S. economy.
I am completely surprised by the lack of wisdom in the Mainstream and Alternative media analyst community. While many Mainstream analysts are probably paid to put out positive financial or economic propaganda, a good portion of the alternative media has no clue about the key factor that is driving the world straight over the cliff.
Furthermore, many precious metals investors are throwing in the towel and getting into the greatest overvalued stock market frenzy in history. Fortunately, those who read the SRSrocco Report articles, especially on energy, understand there are only a few ideal future investments worth owning… so they BUY & HOLD their physical gold and silver.
Investors who continue to trade paper or sell physical precious metals to play RUSSIAN ROULETTE in the markets, do so because they believe business as usual will continue indefinably, or at least for many years. Thus, 99% of global investors park their funds into assets that are propped up by the Fed and Central Banks:
Unfortunately, President Elect Donald Trump will not be able to turn the mighty U. S. A. Titanic away from hitting the massive DEBT ICEBERG below. It’s just a matter of time.
As I stated in my article, The Peak & Decline Of International Reserves Warns Of Massive Asset Deflation Ahead, the global economy has already hit the wall and is now imploding. While this may be slow at first, it will pick up speed over the next several years.

This post was published at SRSrocco Report on December 19, 2016.

Tis The Season For Credit Card Debt: This Christmas Americans Will Spend An Average Of 422 Dollars Per Child

For many Americans, the quality of Christmas is determined by the quality of the presents. This is especially true for our children, and some of them literally spend months anticipating their haul on Christmas morning. I know that when I was growing up Christmas was all about the presents. Yes, adults would give lip service to the other elements of Christmas, but all of the other holiday activities could have faded away and it still would have been Christmas as long as presents were under that tree on the morning of December 25th. Perhaps things are different in your family, but it is undeniable that for our society as a whole gifts are the central feature of the holiday season.
And that is why so many parents feel such immense pressure to spend a tremendous amount of money on gifts for their children each year. Of course this pressure that they feel is constantly being reinforced by television ads and big Hollywood movies that continuously hammer home what a ‘good Christmas’ should look like.
Once again in 2016, parents will spend far more money than they should because they want to make their children happy. According to a brand new survey from T. Rowe Price, parents in the United States will spend an average of 422 dollars per child this holiday season…
More than half of parents report they aim to get everything on their kids’ wish lists this year, spending an average of $422 per child, according to a new survey from T. Rowe Price.

This post was published at The Economic Collapse Blog on December 19th, 2016.

Buying Panic Resumes As Dollar Surges To Fresh 14 Year Highs, Gold Dumped

After a brief respite yesterday amid global terror attacks and weak data, The BoJ’s lack of action overnight appears to have spurred more panic-buying in stock futures (near record highs, Dow testing towards 20k), VIX-slamming, and a surge back into the dollar (back at Dec 2002 highs). Gold (and silver) and getting monkeyhammered once again and bonds are being sold.
The Dollar Index broke its post-Fed highs to 14 year highs…
As EURUSD hits fresh 13 year lows (amid chatter of European stabiity after Merkel’s political prospects look troubling following yesterday’s terror attacks)

This post was published at Zero Hedge on Dec 20, 2016.

SWOT Analysis: Why Bullion Looks Cheap Compared to U.S. Equities

Strengths
The best-performing precious metal this week was platinum, up 1.20 percent for the week after surging 3.48 percent on Friday when the December 16 issue of Science published research on a new fuel cell design using an atomically ordered platinum and lead core surrounded by a thick uniform shell of four platinum layers. The new design can undergo 50,000 voltage cycles with a negligible decay in performance and no apparent changes in their structure or elemental composition which has been a weakness in previous fuel cell designs. China’s gold withdrawals surged in November, according to the monthly report from the Shanghai Gold Exchange. The increase of 214.72 tonnes was a 40 percent rise over the October figure. This level of demand puts China on track to potentially maintain its position as the world’s largest gold consumer. Kitco also reports that China may be unofficially restricting gold imports. Rumors and reports indicate that international banks are having difficulties with their imports, as the People’s Bank of China is taking longer to approve each importing transactions. The central bank may be trying to unofficially restrict gold imports to curb high capital outflows from China’s investors. Bloomberg reports that gold imports by India climbed 10 percent in November, to the highest this year. After pressure on gold demand due to higher prices, an excise tax and anti-corruption measures, overseas purchases rose to 111 metric tons , compared to 101 tons a year earlier. Zerohedge also reports the rush to buy gold in the midst of the disruption has consumers paying as much as a 50 percent premium above official India prices. India’s top gold importer, Axis Bank, has reportedly suspended the bank accounts of some bullion dealers and jewelers after some executives were arrested over money laundering. Weaknesses
The worst performing precious metal this week was palladium, down 4.73 percent. Palladium, which is up 23.75 percent this year, seemed to trade more in line with the sentiment towards gold and silver but did not see the Friday bounce the other metals experienced. Gold mining company Gold Reserve, Inc. is still owed $300 million for its first installment from Venezuela for the seizure of a mining project. The payment was due on November 30, pushed back from the original date of October 31, but the country requested an extension to December 15. Now that deadline has passed also.

This post was published at GoldSeek on 20 December 2016.

Caterpillar Posts Record 48 Consecutive Months Of Declining Retail Sales

While Caterpillar’s CEO may have resigned recently, admitting that he misjudged the business strategy, and even the company issued a press release cautioning the market may have gotten ahead of itself, CAT stock does not appear to be bothered, soaring by 12% since the Trump presidential victory, and continues to trade near 2016 highs on hopes an infrastructure push would make excavators great again. For now, however, the woes at the heavy industrial manufacturer continue, with yet another month of declining global sales, the company’s 48th in a row.
To be sure, there was a glimmer of hope for CAT coming out of Asia, where retail sales continued the rebound after posting positive gains in the August, September, and October, rising 12% last month, the biggest annual gain since September 2012, however the November gains moderated fractionally to 11%. This however was offset by continuing – and sharper – declines in North America, the EAME and Latin Ameica regions, which declined by 19%, 25%, and 32%, worse than last month’s declines of 16%, 14% and 24%, respectively.

This post was published at Zero Hedge on Dec 20, 2016.

The Bears Are Dying: Even Bob Janjuah Turns (Somewhat) Bullish

For evidence that the market bears are all but extinct look no further than the latest letter from ertwhile bear Bob Janjuah, in which the Nomura strategist throws in the towel in a near-term correction and predicts that “the trends over H1 2017 should be higher (especially US) equities and yields, steeper curves, a stronger USD, and mixed performance in credit (especially in the IG sphere) and EM. Equity markets in particular are initially likely to ignore the inflation issue and focus on the idea that Donald Trump can overnight rebuild the US economy into a ‘4-5% nominal GDP’ limo, vs the underlying current sense of a ‘3% and falling fast’ jalopy. So for me, most likely over the middle two quarters of 2017, I can see the S&P 500 cash index up at 2450 /- 50 points, with the Nasdaq weakest and the Dow strongest of the big three US indices.”
He also forecasts that the Fed will be prompted to hike four times, raising rates by 100 bps in 2017, driven by ‘an overwhelming flow of inflationary and credit growth data’ if Trump successfully implements his agenda early on as president, leading Fed to ‘see itself as way behind the curve.” He expects that hikes to be back loaded into 2H17. As a result he believes the 10Y yield could go up to 4% as soon as 2H17 as ‘Trumponomics’ may deliver greater-than-expected inflation.
However the bear is not entirealy dead: in addition to a powerful equity ramp in 2017, rising above the average Barron’s roundtable forecast, Janjuah expects limited sustained GDP growth, more aggressive Fed and general tightening of financial conditions, which will lead to next recession, with signals becoming clearer between mid-2017 and mid-2018.
He also warns that Trump will likely fail in his attempt to reflate the US economy, which will be unable to sustain an increase in GDP growth above the cost of capital.
In essence it comes down to the ability primarily of the US (other parts of the world still follow) to generate a sustainable increase in trend real GDP growth that outstrips the sustained increase in the cost of capital which we are seeing already most notably in USDs (through the rising USD, higher yields and now a hawkish Fed). If President Trump and the US can pull this off then it should generally benefit much of society. Unfortunately, I think Donald Trump is probably the wrong man at the wrong time. The world needed Trump reflation and Trumpian deregulation back in 2008-09 when unemployment, slack and output gaps were high. In 2017 I think Trumponomics is most likely to lead to a short-term boost to nominal GDP (which will be very tradable) giving way to serious inflationary concerns, which in turn will mean that the sustained increase in the cost of capital in USDs will ultimately trigger the next recession.

This post was published at Zero Hedge on Dec 20, 2016.

S&P Futures Rise Propelled By Stronger Dollar; Europe At 1 Year High As Yen, Bonds Drop

It appears nothing can stop the upward moment of equities heading into the year end, and as has been the case for the past few weeks, US traders walk in with futures higher, propelled by European stocks which climbed to their highest in almost a year, while the dollar rose and bonds and gold fell, failing again to respond to a series of geopolitical shocks following terrorist attacks in Ankara, Berlin and Zurich. The yen tumbled after the Bank of Japan maintained its stimulus plan even as the central bank touted improving economic prospects for the Japanese economy.
“There was no particular surprise from the policy meeting, but investors are happy that the economy’s fundamentals are finally rising after the BOJ expressed an upbeat view,” said Takuya Takahashi, a strategist at Daiwa Securities.
In an amusing interlude during today’s Kuroda press conference, in which the BOJ head said the BOJ is far from its target, Kuroda said that the BOJ continues to target 10 Year yield at “about 0%” and then added that it is meaningless to try to discuss “what about 0%” is, hinting to markets that as long as US yields keep rising, the Yen will keep falling.

This post was published at Zero Hedge on Dec 20, 2016.

What Have the “Experts” Gotten Right? In the Real Economy, They’re 0 for 5

If the “experts” were assessed on results, they’d all be fired. The mainstream media continually hypes the authority of “experts,” i.e. people with a stack of credentials from top institutions. But does the mainstream media ever check on whether the “experts” got anything right? Let’s compare the “experts” (conventional PhD economists) diagnoses and fixes with the results of their policies. Let’s stick to the big issues: inflation, productivity, near-zero interest rate policy (ZIRP), employment and “growth”. If you get these wrong, you get the entire economy wrong. If you can’t get the big issues right, your “expertise” has failed: your “expertise” is not just worthless, it’s counter-productive, because if common-sense policies had been put in place instead of the “experts’” fixes, we’d have made progress rather than digging a deeper hole. 1. Inflation. Conventional “experts” believe inflation has been near-zero for the past decade and will continue to be near-zero as far as the eye can see. Did they get this right? No. Households exposed to healthcare, higher education and rental expenses have seen staggering increases in costs for the same (or diminished) services. In other words, the purchasing power

This post was published at Charles Hugh Smith on MONDAY, DECEMBER 19, 2016.

Monte Paschi Private Bailout On Edge Of Collapse As “Potential Anchor Investors Balk”

On Sunday, when we previewed the latest last-ditch effort to rescue Italy’s third largest bank when Monte Paschi launched a 4-day attempt to sell 5 billion in equity to anchor and retail investors, we said that “in the otherwise quiet pre-Christmas week, all eyes will be on Monte Paschi, and specifically the intentions of the alleged anchor investor, Qatar (and perhaps a handful of Chinese banks), to determine if Italy’s banking crisis is “fixed” if only for the near future, or if the new year is set to begin with another “risk flaring” episode out of the Italian banking sector as Monte Paschi’s bailout once again morphs into a political scandal and the biggest headache for Italy’s brand new government.”
This was followed on Monday by a surprising report out of Reuters that the Italian cabinet was seeking parliamentary approval to raise public debt by 20 billion, in a “precautionary” move, which however set off alarms that the Monte Paschi private sector bailout was not going as expected, and the government would have to step in, in the process triggering Germany’s ire.
That was confirmed this morning when Bloomberg reported that Monte Paschi will “probably fail in its effort to raise 5b of funds from money managers and individuals as potential anchor investors balk and few bondholders agree to swap their notes into stock, said people with knowledge of the matter.”
The much discussed Qatar sovereign-wealth fund, which had considered an investment, hasn’t yet committed to buying Paschi shares Bloomberg notes, and no major investors have stepped in in its place.
Just as bad, a concurrent second debt-for-equity swap has raised less than 200m through Monday, far less than the expected target in the billions, and confirming that the state’s bailout contribution could be substantial.

This post was published at Zero Hedge on Dec 20, 2016.

19/12/16: Why Investment-less Growth: Explaining Secular Stagnation in Investment

One key component of the supply side secular stagnation is the notion that in recent years, corporate investment in the U. S. and other advanced economies have declined on a secular trend (or structurally). With low investment, there is low productivity growth and weak wages growth. The end result is not only lower economic growth, but also declining long term potential growth.
Since the thesis of supply side secular stagnation started making rounds in the economic policy literature, quite a few economists jumped into the debate proposing various explanations to the phenomena. To-date, however, there have not been an empirical study that looked at all reasonably plausible explanations on offer to assess which can account for the decline in capital investment.
German Gutierrez Gallardo and Thomas Philippon, in there paper ‘Investment-Less Growth: An Empirical Investigation’ published this month by NBER do exactly that. The authors ‘analyze private fixed investment in the U. S. over the past 30 years.’
First, the authors establish that indeed, ‘investment is weak relative to measures of [firm] profitability and valuation – particularly Tobin’s Q, and that this weakness starts in the early 2000’s.’ In other words, whilst firms remain profitable, they simply do not reinvest their profits at the same rate today as in the 1990s.

This post was published at True Economics on Tuesday, December 20, 2016.

‘Car Recession’ Bites GM: Inventory Glut, Layoffs, Plant Shutdowns

But GM already booked those vehicles on dealer lots as revenues.
GM has been reacting to its fabulously ballooning inventory glut by piling incentives on its vehicles. But that hasn’t worked all that well though it cost a lot of money. Now it’s time to get serious.
It will temporarily close five assembly plants in January and lay off over 10,000 employees, spokeswoman Dayna Hart said today. Plants that assemble cars will be hit, according to the AP:
The company’s Detroit-Hamtramck factory and Fairfax Assembly plant in Kansas City, Kansas, each will be shut down for three weeks, while a plant in Lansing, Michigan, will be down for two weeks. Factories in Lordstown, Ohio, and Bowling Green, Kentucky, each will be idled for one week.
The factories make most cars in the General Motors lineup including the Chevrolet Cruze, Camaro, Corvette, Malibu, Volt, and Impala; the Cadillac CT6, CTS and ATS; and the Buick LaCrosse.
While retail sales for the 11 months of the year edged up less than 2%, GM expects sales to rental companies to drop by about 75,000 vehicles this year. And rental companies buy mostly cars.
Sales of trucks and SUVs accounted for nearly 62% of all GM vehicles sold in November in the US, a record percentage. But car sales stank.
With car sales slowing for months, GM has kept production up, trying to move the iron with incentives, but that hasn’t worked. And overall inventory on dealer lots has soared to 874,162 vehicles at the end of November, up 26.5% from a year ago, up 28% from last July, and the highest level in eight years when GM was skidding into bankruptcy during the Great Recession. This pile of vehicles translates into 87 days’ supply.

This post was published at Wolf Street on Dec 19, 2016.

Ray Dalio Praises Trump: Predicts “Huge” Changes; It Will Be “Glorious To Be Rich”

In one of the most euphoric praises for Donald Trump and the president-elect’s fledgling administration to date, overnight Bridgewater founder Ray Dalio said economic changes under the Trump administration may be more dramatic than shifts from ‘the socialists to the capitalists’ in the U. K., U. S. and Germany from 1979 to 1982, and predicted that “we are about to experience a profound, president-led ideological shift that will have a big impact on both the US and the world.”
Comparing Trump to Margaret Thatcher, Ronald Reagan and Helmut Kohl, Dalio said the incoming administration may have a much bigger impact on the U. S. economy than can be measured by tax changes and fiscal spending. The Trump era could ‘ignite animal spirits’ and attract productive capital.
In his summary of Trump’s economic policies, Dalio urges readers to read Ayn Rand “as her books pretty well capture the mindset. This new administration hates weak, unproductive, socialist people and policies, and it admires strong, can-do, profit makers. It wants to, and probably will, shift the environment from one that makes profit makers villains with limited power to one that makes them heroes with significant power.”
The shift from the past administration to this administration will probably be even more significant than the 1979-82 shift from the socialists to the capitalists in the UK, US, and Germany when Margaret Thatcher, Ronald Reagan, and Helmut Kohl came to power. To understand that ideological shift you also might read Thatcher’s ‘The Downing Street Years.’ Or, you might reflect on China’s political/economic shift as marked by moving from ‘protecting the iron rice bowl’ to believing that ‘it’s glorious to be rich.’ He adds that the “shift by the Trump administration could have a much bigger impact on the US economy than one would calculate on the basis of changes in tax and spending policies alone because it could ignite animal spirits and attract productive capital. Regarding igniting animal spirits, if this administration can spark a virtuous cycle in which people can make money, the move out of cash (that pays them virtually nothing) to risk-on investments could be huge.”
Regarding attracting capital, Trump’s policies can also have a big impact because businessmen and investors move very quickly away from inhospitable environments to hospitable environments. Remember how quickly money left and came back to places like Spain and Argentina? A pro-business US with its rule of law, political stability, property rights protections, and (soon to be) favorable corporate taxes offers a uniquely attractive environment for those who make money and/or have money. Looking at foreign policy under Trump, Dalio predicts that “we should expect the Trump administration to be comparably aggressive. Notably, even before assuming the presidency, Trump is questioning the one-China policy which is a shocking move. Policies pertaining to Iran, Mexico, and most other countries will probably also be aggressive.“

This post was published at Zero Hedge on Dec 20, 2016.