Saturday, January 7, 2017

Trump fiscal thrust

Pk sings the downer blues "So, the probable outlook is for not too great growth and deindustrialization. Not quite what people expect."


"Trump deficits won’t actually do much to boost growth, 
rates will rise and there will be lots of crowding out. 

a strong dollar and bigger trade deficit, like Reagan’s morning after Morning in America."

Crowding out ? De industrialization ? 

Yikes !

Notice The fed plays ogre here by sadistically raising rates that lift forex and increase the trade gap 
Even as the higher borrowing costs  and forex smothers investment in additional domestic output capacity 

But why assume a baleful Fed ? 

Wage push inflation ..commodity bottle necks ....etc etc 

Pk just loves that team of frauds among frauds with their sanctimonious 
Phillips curve ish modeling toys 

They worship 
 a devilish  wage rate accelerator lurking beneath 5% ...or around 4 % UE 
regardless of EPOPs 
Ability to increase inflow of job seekers as prospect brighten 

We just might  hang  in the mid 4's while employment grows rapidly 
If the fed doesn't or can't squelch 
the demand impact of a trump deficit surge 

Given about 4 points of slack in the present EPOP 
We got the latent output potential