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Chasing the chimera of 3% growth is chasing the past. Trying to MAGA is trying to recreate yesterday. Like Humpty Dumpty you can not put American prosperity back together again. The circumstances that created that BROAD BASED MC after WW2 no longer exist. In the best case scenario America is reverting back to a demographic of 1910 economically. Small very wealthy "Robber Barron" Upper Class, smallish MC and large unwashed working poor class.

The Global economy of scale depends upon mass consumerism of that Broad Based MC, where people are continuously buying new product to feed that monster of growth. If you figure that the USA has a 21T USD economy a 3% growth rate means that it needs to grow by 630B this year and 660B next year, continuing on exponentially every year there after. At some point it does not work anymore. Consumers run out of money and credit not to mention the planets resources. Then the Global system implodes....sic deflates.

The US hit the wall in 2008, the banks had over leveraged themselves on residential RE and when my dog couldn't make the payment on the 500K loan the house of cards collapsed. Since then the economy has been struggling along, being helped by the juicing of the FED and the HEAVY deficit spending of the US government. The end result of this juicing is that the banks and corporations have returned to being healthy. Which in the scheme of things is necessary in that the modern life as constituted by the economy of scale could not continue on without those institutions functioning. NOTABLY while those institutions have amassed some 4T in ON SHORE CASH from corporate profits they have NOT DEPLOYED that capital back into job creating factories which would benefit the American people. Now why would that be? The answer is simple corporations are not going to invest capital to manufacture products where there is no one to buy them because the people do not have the where with all to do so.

The American consumer has been limping along being faced with off shoring of jobs, technology, lessor paying jobs, no more cash and credit to the eyeballs. This has been the trajectory of the American MC since 1975. The MC has shrunk and people like to cling to their guns, religion and notion that they are MC. When in fact most people no longer fit that metric. Their lifestyle is bought on credit and or increasingly government subsidies that at least keeps some food on the table. Hungry people create revolutions that get nasty real quick.

While the current tax reform bill is a transient factor in an ongoing trajectory it is worth nothing that the authors and sponsors of the bill are gambling that corporations are going to do the right thing and invest monies back into the US economy. So that not only is there a general prosperity but eventually an increased tax revenue stream to offset continually higher governmental expenditures most notably to SS and Medicare. Corporations failing to do the right thing will amount to the tax bill being a gift by the government to those corporations as the deficits will continue to explode with a vengeance.

There are two factors that are worrisome as they are not clearly defined nor dealt with in the elite leaderships assessment of the situation. The first is that the where with all of the American people to conspicuously consume as needed by the global economy is severely limited (they are broke). Secondly the governmental dynamic of the past 50 years of business as usual spending like a drunken sailor on shore leave has not abated. If the government moderated it's spending it would give the tax reform bill a better chance of being successful as it would relieve the pressure to perform.

Reality is that what broke in 2008 was not the banks who got caught holding the short end of the stick but the American people's ability to conspicuously consume. In the 2000's RE was the engine of growth and prosperity where the wealth effect propelled the economy forward. When that came to an end so did growth in the economy. There in essence is the situation and problem. Since 2008 the FED and government have picked up the spending slack with their juicing of the economies. Now with the Equity Markets as of late experiencing a "parabolic" rise and return of RE values we are once again creating a wealth effect bubble. The question here is it real or is it brought to you by the FED with it's guaranteeing an activist monetary policy and US governmental deficit spending. The FED balance sheet went from 800B in 2008 to 4.5T in 2017, that means the dollar in your pocket has lots of new siblings. The US government has gone from 11T in debt at the end of 2008 to nearly 22T at the end of 2017. All of those new USD's have to go someplace? Further deficits are set to explode as the Boomers hit SS and Medicare age. Those are contractual promises to pay the American people back for their contributions to the system for the decades of their working life.

So the question as of late becomes is the US creating another symptomatic wealth effect bubble with the rise in Equities and RE? Is this latest parabolic rise in Equities a euphoric blow off rally, only to be left with a massive hangover once the party is over? The underlying thing that makes all of this highly vaunted hoopla about a resurgent economy ring hollow is that the American people are not sharing in a broad based prosperity. They are struggling along with little or no savings and huge debts trying to make ends meet.


This is neither politics nor religion BUT economics.