It Doesn't Matter
 

It doesn't matter if you understand the forces that are at work in the universe or not, you are still being effected by them unbeknownst to you on a daily basis in a myriad of ways.

So now let us see the Equity market rose parabolically from August till January, first on the basis of a Tax Reform Bill and then better economic news. This then has created a bit of a wealth effect as all those bigger 401K statements caused a sigh of relief. Now that Tax Reform has passed we then saw a bit of fracturing in the relentless rise in the Equities followed by more better than expected data which bumped interest rates and caused a over due and necessary correction in Equities. Taking some 5T in newly created wealth with it. This then will cause a revaluation of wealth effect spending which should slow the economy.

Meanwhile the ernest while American Congress passed Tax Reform, which in cutting taxes builds greater deficit and debt as spending was not ameliorated in the least. All in the hopes that the increased economic activity from tax relief will create a greater Income Tax stream down the road which will offset today's cuts. It is another version of a Trickle Down gamble, where there is a sunset on any tax relief for the individual taxpayer. Meanwhile back at the ranch the Congress passed a 2 year budget deal so that the government wouldn't shut down , that INCREASED spending by 300B without increasing revenues.* The biggest recipient of Government largess is the increase in military spending. Republicans love their big military defense spending. Since this is largely a Republican charge for bigger spending and BIGGER GOVERNMENT it gives light to the lie that the Tea Party conservatives are for small and balanced budget government. Give them a chance to spend something they do not have and they will take it. The hard and fast reality is that NOBODY is for government that lives within it's means. Everybody is for even bigger and better government without restraints. Buy me another aircraft carrier today and I will gladly pay you next Tuesday for it.

The upshot of it is that the logic is the convoluted logic of the lemmings headed for the cliff of fiscal oblivion. It is the mindset of a nation that lives under the illusion that everything is possible without consequences. America after all is a "RICH NATION" so put it on the card. Reality at some point dissuades that notion.


* So the government has already spent the increased TAx revenue that was going to be picked up by the Tax Reform Bill's increased economic activity. Ain't that sweet.