Best of the Week
Most Popular
1. Ray Dalio: This Debt Cycle Will End Soon - John_Mauldin
2.Stock Market Dow Plunge Following Fake US - China Trade War Truce - Nadeem_Walayat
3.UK House Prices 2019 No Deal BrExit 30% Crash Warning! - Nadeem_Walayat
4.What the Oil Short-sellers and OPEC Don’t Know about Peak Shale - Andrew_Butter
5.Stock Market Crashed While the Yield Curve Inverted - Troy_Bombardia
6.More Late-cycle Signs for the Stock Market and What’s Next - Troy_Bombardia
7.US Economy Will Deteriorate Over Next Half Year. What this Means for Stocks - Troy_Bombardia
8.TICK TOCK, Counting Down to the Next Recession - James_Quinn
9.How Theresa May Put Britain on the Path Towards BrExit Civil War - Nadeem_Walayat
10.This Is the End of Trump’s Economic Sugar High - Patrick_Watson
Last 7 days
Bitcoin Price Wavers - 15th Jan 19
History Shows That “Disruptor Stocks” Will Make You the Most Money in a Bear Market - 15th Jan 19
What Will the Stock Market Do Around Earnings Season - 15th Jan 19
2018-2019 Pop Goes The Debt Bubble - 15th Jan 19
Are Global Stock Markets About To Rally 10 Percent? - 15th Jan 19
Here's something to make you money in 2019 - 15th Jan 19
Theresa May to Lose by Over 200 Votes as Remain MP's Plot Subverting Brexit - 15th Jan 19
Europe is Burning - 14th Jan 19
S&P 500 Bounces Off 2,600, Downward Reversal? - 14th Jan 19
Gold A Rally or a Bull Market? - 14th Jan 19
Gold Stocks, Dollar and Oil Cycle Moves to Profit from in 2019 - 14th Jan 19
How To Profit From The Death Of Las Vegas - 14th Jan 19
Real Reason for Land Rover Crisis is Poor Quality of Build - 14th Jan 19
Stock Market Looking Toppy! - 13th Jan 19
Liquidity, Money Supply, and Insolvency - 13th Jan 19
Top Ten Trends Lead to Gold Price - 13th Jan 19
Silver: A Long Term Perspective - 13th Jan 19
Trump's Impeachment? Watch the Stock Market - 12th Jan 19
Big Silver Move Foreshadowed as Industrial Panic Looms - 12th Jan 19
Gold GDXJ Upside Bests GDX - 12th Jan 19
Devastating Investment Losses Are Coming: What Is Your Advisor Doing About It? - 12th Jan 19
Things to do Before Choosing the Right Credit Card - 12th Jan 19
Japanese Yen Outlook In 2019 - 11th Jan 19
Yield curve suggests that US Recession is near: Trading Setups - 11th Jan 19
How Unrealistic Return Assumptions Are Ruining Your Stocks Portfolio - 10th Jan 19
What’s Next for the US Dollar, Gold, Stocks & Bonds? - 10th Jan 19
America's New Africa Strategy - 10th Jan 19
Gold Mine Production by Country - 10th Jan 19
Gold, Stocks and the Flattening Yield Curve - 10th Jan 19
Silver Price Trend Forecast Target for 2019 - 10th Jan 19
Silver Price Trend Forecast 2019 - 9th Jan 19
Did Strong December Payrolls Push Gold Prices Up? - 8th Jan 19
How to Spot A Tradable Stock Market Top? - 8th Jan 19
Why 90% of Traders Lose - 8th Jan 19
Breadth is Very Strong While Stocks are Surging. What’s Next for Stocks - 8th Jan 19
Half of Investment-Grade Bonds Are Just One Step from Junk Status - 7th Jan 19
Stocks Rallied Again, Still Just an Upward Correction? - 7th Jan 19
Gold Golden Long-Term Opportunity - 7th Jan 19

Market Oracle FREE Newsletter

Bitcoin Analysis and Trend Forecast 2019

Is President Trump Right About the Fed?

Politics / US Federal Reserve Bank Nov 05, 2018 - 04:51 PM GMT

By: Harry_Dent

Politics While Larry Kudlow (Treasury Secretary and Chief Economic Cheerleader) assures us that Trump is NOT interfering with the Fed, our dear president has proclaimed that our Central Bank is “crazy” for raising rates.

From his, ahem, unique world view, he believes they’re trying to wreck his new gravy train economy… the one he created with major tax cuts ($1.5 trillion), major repatriations from overseas ($2 trillion), deregulation, and a lot of positive talk about 4% to 5% growth again…

But, with no fear of sounding like a broken record: sustaining growth rates at that level are demographically IMPOSSIBLE!


With nine years of stimulus and accelerated fiscal BS, we’re running out of eligible workers to hire. That means wage inflation.

But the bigger problem is that natural workforce growth – people ages 20 to 64 becoming contributing members of the economy – is flat to slightly down for the next several years, and even for decades to come.

And productivity is declining from the aging of our workforce and the Baby Boom. It was 3%-plus in the 1980s and 1990s. Now it’s 0.5% and falling towards ZERO!

Once we run out of workers, after hiring back people who dropped out (something I see happening within the next year), there is NO growth in the workforce and no way productivity magically moves back to 3%-plus.

We’re also running out of affordable homes for sale.

Donald’s massive tax cuts have fueled growth and inflation, even if temporarily.

His stimulus plans and the Fed’s steady rate hikes to “normalize” are causing the dollar to rise and global borrowing rates to rise for emerging countries (and they’re the ones who borrowed most of the money, mostly in U.S. dollars after developed countries maxed out in 2008).

Now currencies are collapsing in countries like Turkey, Venezuela, Argentina, and Iran… and even China a bit.

Emerging stock markets are down 20% to 40%, with China’s down 29% recently.

So, here’s the thing, Mr. President: The sudden two-day crash last week had more to do with China’s desperate new monetary stimulus than the rising Treasury bond rates (which I warned was likely coming and will only accelerate ahead) or the Fed raising rates.

It’s YOUR trade war with China – even though it may have merit – that’s most driving your gravy train onto unstable tracks… and it’s your policies that are driving inflation and rates higher.

In fact, the “bloody nose” you’ve given the Chinese could well be the trigger for the next global bubble burst and debt crisis that starts in the emerging world and spreads back to the developed.

As preschoolers are quick to remind us: when you point a finger, Mr. President, you have four fingers pointing back at you!

Trump is miscalculating the risks of his approach.

He wants high growth with rising inflation as a result, but continued flat-to-low rates. That’s not going to happen at this stage.

He wants to save jobs by shifting production back to the U.S., but what about our exports and the global economy if China falls too hard?

What about the inflation from the tariffs that hit smack at the Walmart level and most impact his base supporters?

Besides, late-stage inflation was likely to occur around this time anyway… why add to it?

So, there is no question about it: Donald has fueled everything that’s causing the Fed to merely continue on a path of normalization after the biggest “gift” delivered to us over nine years. They’re being predictable. Donald is the one that’s acting crazy after putting the icing on the never-ending stimulus cake with massive tax cuts… I’m afraid, Mr. President, you can’t have your cake and eat it to!

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.

Copyright © 2018 Harry Dent- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Harry Dent Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules