Stockman: US Fiscal Path Will Rattle the Rafters of the Casino

As we’ve reported, the US government is spending money like a drunken sailor. But nobody really seems to care.
Since Nov. 8, the US national debt has risen $1 trillion. Meanwhile, the Russell 2000 (a small-cap stock market index) has risen by 30%. Former Reagan budget director David Stockman said this makes no sense in a rational world, and he thinks the FY 2019 is going to sink the casino.
In a rational world operating with honest financial markets those two results would not be found in even remotely the same zip code; and especially not in month #102 of a tired economic expansion and at the inception of an epochal pivot by the Fed to QT (quantitative tightening) on a scale never before imagined.’
Stockman is referring to economic tightening recently launched by the Federal Reserve. It’s not only the increasing interest rates. By next April the Fed will be shrinking its balance sheet at an annual rate of $360 billion and by $600 billion per year as of next October. By the end of 2020, the Fed will have dumped $2 trillion of bonds from its books. Stockman puts this into perspective.

This post was published at Schiffgold on DECEMBER 26, 2017.

How Do We Really Cut the Burden of Government? Cut Spending!

In all of the talk about tax reform, nobody is considering the more fundamental problem facing America – the size and scope of the federal government.
Peter Schiff has described the Republican tax plan as ‘tax cuts masquerading as reform.’ When it’s all said and done, Americans aren’t going to get tax relief. They are going to get big government on a credit card. The balance will come due down the road.
The real issue is the total cost of government. In an article originally published on the Mises Wire, Ryan McMaken argues that if Republicans really want to ease the burden of government, they need to cut spending.
Washington, DC is currently in the middle of the ‘tax reform’ process, which as Jeff Deist, points out, is ‘ a con, and a shell game.’ Tax reform proposals, Deist continues ‘always evade and obscure the real issue, which is the total cost – financial, compliance, and human – taxes impose on society.’
Tax reform is really about which interest groups can modify the current tax code to better suit their own parochial interests. The end result is not a lessened tax burden overall, and thus does nothing to boost real savings, real wealth creation, or real economic growth. It’s just yet another government method of rewarding powerful groups while punishing the less powerful ones.
Not surprisingly then, the news that’s coming out of Washington about tax reform demonstrates that the reforms we’re seeing are only shifting around the tax burden without actually lessening it. The central scam at the heart of the matter is that DC politicians are more or less devoted to ‘revenue neutral’ tax reforms. That means if one group sees a tax cut, then another group will lose a deduction, or even see an actual increase in tax rates.
This is why many middle-class families may be looking at a higher tax bill. David Stockman explains:

This post was published at Schiffgold on NOVEMBER 28, 2017.

Hey GOP, Want to Cut the Burden of Government? Cut Spending.

Washington, DC is currently in the middle of a the “tax reform” process, which as Jeff Deist, points out, is ” a con, and a shell game.” Tax reform proposals, Deist continues “always evade and obscure the real issue, which is the total cost – financial, compliance, and human – taxes impose on society.”
Tax reform is really about which interest groups can modify the current tax code to better suit their own parochial interests. The end result is not a lessened tax burden overall, and thus does nothing to boost real savings, real wealth creation, or real economic growth. It’s just yet another government method of rewarding powerful groups while punishing the less powerful ones.
Not surprisingly then, the news that’s coming out of Washington about tax reform demonstrates that the reforms we’re seeing are only shifting around the tax burden without actually lessening it. The central scam at the heart of the matter is that DC politicians are more or less devoted to “revenue neutral” tax reforms. That means if one group sees a tax cut, then another group will lose a deduction, or even see an actual increase in tax rates.
This is why many middle class families may be looking at a higher tax bill. David Stockman explains:
[O]n the eve of the House Ways and Means committee vote on the tax bill—-which will then be barricaded by a no amendments “closed rule” when it goes to the full house—–the smoking gun is already apparent. By 2027 (after the temporary $300 adult tax credit gimmick expires and all provisions of the Brady mark become fully effective), the middle quintile US family ( about 30 million filers between $55,000 and $93,000 of AGI) would find itself in a crap shoot.

This post was published at Ludwig von Mises Institute on November 13, 2017.

Yawning Debt Trap Proves the Great Recession is Still On

While David Stockman stated early this year with resolute certainty that the debt ceiling debate would blow congress up and send the nation reeling over the financial precipice, I avoided jumping on the debt-ceiling bandwagon. While I was convinced major rifts in the economy would start to show up in the summer, I was not convinced they would have anything to do with the debt ceiling debate. If there is anything you can be certain of this in endless recovery-mode economy, it is that the US will just keep pushing its bags of bonds up a hill until it can finally push no more. So, I figured another punt down the road was more likely.
The Debt Ceiling Debate that Didn’t Happen The reason I didn’t think that debate would blow apart is that Republicans have more than once experienced the political reality that comes from taking the nation to the brink of default or of shutting down government. Each time that kind of thing has happened, it has hurt Republicans far more than it has hurt Democrats. I doubted establishment Repubs (the majority) had the stomach to take us through another credit downgrade, though I’ve noted such an event was possible.
Unsurprisingly to me, then, Congress did the only thing it seems to be capable of any more and just kicked that can a little further down the road with hardly a kerfuffle about it. Hurricane Harvey made things a lot easier for congress to kick the can again by providing a good excuse to dodge that unwanted debate on the basis of massive human suffering that truly did need tending to. Much-talked-about government shutdown put off for a better time
The debate was entirely avoided even as the national debt broke over the $20 trillion mark this summer, keeping US debt at more than 100% of GDP, which is the stratosphere we’ve been in since 2011.
A group of progressive economists affiliated with the University of Massachusetts predicted in 2013 that a debt burden [that reaches 90% of GDP for five years] would result in an annual growth rate of just 2.2 percent, which means economic stagnation. (Reason.com)
We’re already well past that five-year marker. Not surprisiing, then, that the Congressional Budgeting Office expects economic growth to stay at 1.8% through 2027.

This post was published at GoldSeek on 24 October 2017.

What If the Tax Donkeys Rebel?

I would hazard a guess that an increasing number of tax donkeys are considering dropping out as a means of increasing their happiness and satisfaction with life.
Since federal income taxes are in the spotlight, let’s ask a question that rarely (if ever) makes it into the public discussion: what if the tax donkeys who pay most of the tax rebel? There are several likely reasons why this question rarely arises. 1. Most commentators may not realize that the vast majority of income taxes are paid by the top 10%–and that roughly 60% are paid by the top 4% of households. (A nice example of the Pareto Distribution, i.e. the 80/20 rule, which can be extended to the 64/4 rule.) As David Stockman noted in Trump’s 1,500-word Airball, “Among the 148 million income tax filers, the bottom 53 million owed zero taxes in the most recent year (2014), and the bottom half (74 million) paid an aggregate total of just $45 billion. So let me be very clear. There was still $4 trillion left in the collective pockets of these 122 million taxpayers – even after the IRS had its way with them! By contrast, the top 4% or 6.2 million filers paid $802 billion in Federal income taxes. That amounted to nearly 58% of total Federal income tax payments.”

This post was published at Charles Hugh Smith on MONDAY, OCTOBER 02, 2017.

“Tax Reform Is A Pipe-Dream” – Stockman Warns Market Is Heading For Massive Crash

Having raged against President Trump’s ‘1500-word-airball’ of a tax reform plan, the Reagan administration’s director of the Office of Management and Budget, David Stockman told CNBC this week that Wall Street is “delusional” for believing it will even be passed.
“This is a fiscal disaster that when they [Wall Street] begin to look at it, they’ll see it’s not even remotely paid for. This bill will go down for the count,” said Stockman.
He said White House economic advisor Gary Cohn and Treasury Secretary Steve Mnuchin “totally failed to provide any detail, any leadership, any plan. Both of them ought to be fired because they let down the president in a major, major way.”
Stockman pulled no punches about President Donald Trump…

This post was published at Zero Hedge on Oct 1, 2017.

AUGUST 21/NO RAID TODAY AS GOLD RISES BY$5.05 TO $1291.20/SILVER REMAINS FLAT/GLD ADDS ANOTHER 3.85 TONNES TO ITS INVENTORY/RUSSIA ADDS ANOTHER 12.44 TONNES TO ITS OFFICIAL RESERVES/MNUCHIN AGAIN…

GOLD: $1291.20 UP $5.05
Silver: $17.02 FLAT
Closing access prices:
Gold $1292.00
silver: $17.02
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $1290.86 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1285.95
PREMIUM FIRST FIX: $4.91
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SECOND SHANGHAI GOLD FIX: $1293.21
NY GOLD PRICE AT THE EXACT SAME TIME: $1285.30
Premium of Shanghai 2nd fix/NY:$7.91
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LONDON FIRST GOLD FIX: 5:30 am est $1287.60
NY PRICING AT THE EXACT SAME TIME: $1287.60
LONDON SECOND GOLD FIX 10 AM: $1292.90
NY PRICING AT THE EXACT SAME TIME. $1291.90 ????
For comex gold:
AUGUST/
NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 0 NOTICE(S) FOR nil OZ.
TOTAL NOTICES SO FAR: 4581 FOR 458,100 OZ (14.248 TONNES)
For silver:
AUGUST
24 NOTICES FILED TODAY FOR
120,000 OZ/
Total number of notices filed so far this month: 1075 for 5,375,000 oz

This post was published at Harvey Organ Blog on August 21, 2017.