1023. Read Post 412 again re inflation, Mitigating pain by Gov't spending and handouts

 Reviewing the past sometimes reveals the destruction in progress by our current President and his administration and what's on our front steps waiting for the door to open.  Here's some snippets from Post 412 re "the Ten Million Dollar Gamble" by Russ Koesterich.

> 5/6 of budget = Entitlement programs, defense, and interest we have to pay on debt. 

> Slashing debt and deficits is hard to do when 45% of the population pay NO TAXES. The wealthy can't come close to helping us climb out of debt by increased taxes alone. Middle class MUST be taxed too. Even then, Entitlements must be reduced.

> Government tends to mitigate pain to those in trouble and the middle class INSTEAD of doing what must be done to reduce debt. Mitigating pain is a coverup that leads to much worse effects down the road. Handouts are killing us. Hard to take away and more and more want them. Just why do we continue to extend unemployment benefits? To mitigate pain. Result, we go further in debt to pay the extensions.

> Inflation signals (already knocking on our door):

1. Unemployment decreasing [note: inflation LAGS job growth by at least a year. Normally when inflation is 3% job growth will be <1.5%; If > 1% then there are more jobs than people. watch non-farm job reports 1st Friday of month at bls.gov/ces] which causes
2. Increase in Wages
3.Manufacturing Capacity Utilization >>80% means manufacturing can't keep up with demand and prices rise. [federalreserve.gov/releases/g17]
4.Money Supply grows too fast [federalreserve.gov/releases/h6/current/h6.html]. NOTE: there are long lags between money supply increase and inflation. In '60s it took 4 years. Watch M2 > 6% .
5. Fed Actions, like monetizing debt will increase money supply if banks loan out the money [federalreserve.gov/releases/h41/current/h41.htm balance sheet should now be shrinking from 2.3T. If not, look for inflation.

NOTE; Despite lags in inflation, the market reacts sooner anticipating the future.

> The vicious destructive cycle where large deficits lead to higher interest rates sometime in future and economic destruction:

Gov't needs to sell more Treasury bonds to spend OR what is happening today, Treasury will taper, i.e., gradually reduce the buying of bonds (same affects), which leads to (=>)

Higher supply of bonds =>

Lower price of bonds (supply & demand) =>

Higher interest rates (interest moves opposite bond prices) =>

Higher mortgage, student loans, car loans, all loan rates =>

Affects stabilization of housing market =>

Less people can qualify for a loan. 

Higher rates =>

Slows economy (both commercial and government will spend more on interest leaving less to put toward growth objectives) =>

Weaker job market. =>

Less productivity =>

Poorer economy

Humpty Dumpty Joe needs to stop reading Fairy Tales, dozing on the job, and pay attention to what affects Capitalism.

That's a wish that will never happen when Socialists and Marxists control Joe's strings! Guy can't even go to the bathroom anymore without a reminder to wipe and wash his hands.