Sunday, September 17, 2023

Philip Pilkington: "What If America's Economic Growth Is Fake? "

Ah, a fellow traveler.

From Philip Pilkington, free-range economist, via ZeroHedge, September 9:

....MUCH MORE

Related:

July 16: "Why Does The U.S. Economy Need $154 Billion-737 Million In Stimulus PER MONTH?"  which ended with our market recommendation: Keep on Dancing. 

July 26

My Spidey sense is tingling.

In markets and across wider domains it is starting to feel as if there is a rug-pull coming.

Actually multiple rug-pulls.

It is not here yet, still nebulous and somewhere out on the horizon but the outlines are starting to come into focus....

August 11
Big Money: "U.S. Budget Deficit: July Data"

J.P. Morgan was wrong to call it "stealth" stimulus. It's not stealth, it's right there out in the open for all the world to see.

The fact that it is stimulus is not in question. Every penny of deficit spending is stimulus....

And a random sampling of related posts:

The Diminishing Marginal Productivity of Debt in the U.S. 

Congressional Budget Office: "US will add $19 trillion to the national debt in the next decade" Annual Interest Payment To Reach $1.4 Trillion

The Real Problem With Stimulus  

Mohamed El-Erian: "The Growth Engines Are Sputtering"

We are in a situation where years worth of economic growth have been pulled forward from future years by deficit spending, call it stimulus, call it sweet, sweet Biden love, whatevs; and the only way to keep the hamster wheel spinning is to keep feeding money into the system.
And have I mentioned marginal productivity of debt?* ....

And as patient reader is well aware the smallest state is Delaware we have been beating this drum since the bailouts of the Great Financial Crisis.

Sorry about the Delaware ref, I was thinking about something else.

 It doesn't really matter what you call it:

Here's an example from 2012:

The Real Problem With Stimulus

I've mentioned a few times that Keynes was all about the countercyclical thing.
In the U.S. we have devolved to perma-stimulus, every dollar of deficit spending being stimulus, and have no plans to ever stop. Anyone who argues that stimulus isn't stimulus unless it is labeled stimulus is being sillier than I felt when I typed this sentence.
Deficit spending is stimulus whether you call it ARRA, sweet, sweet Biden love or Democracy's flaw.....
The Biden reference is to the fact the former Vice-President was overseer of the ARRA stimulus in 2009 - 10 and the Recovery Summer in 2010.....

June 15 reporting on the May deficit:
"US Budget Gap Widens to $1.2 Trillion in Fiscal Year Through May"
Keeping in mind that every penny of deficit spending is stimulus, why does the U.S. economy need over $100 billion of stimulus per month in what is considered by many commentators to be a good economy?

August 26
"Reflections On ‘Political Capitalism’"
From New Left Review, Issue 142, July/August 2023...

New Left Review?

September 8
"U.S. deficit explodes even as economy grows"
When the WaPo deigns to notice, you know something is up....

September 15
"US Government Runs Budget Surplus In August, But..."
Every penny of spending that isn't covered by taxes is stimulus. Full stop. And the way things have evolved, the stimulus cannot be allowed to stop or the whole system—it's not capitalism, I'm not sure what to call it—the whole system collapses.



And another fellow traveler:
"Citadel's Ken Griffin admits doubts about stock market, economy: ‘I’m a bit anxious’"

What's he have to worry about? Most of the markets they work on a prop basis are two-sided, pick a side.
Unless he's concerned about the two variables of the trade-matching business: volume and spread. They really emphasize that in junior market-maker class, volume and spread, volume and spread.

From Reuters via the New York Post, September 14:

Billionaire investor Ken Griffin, founder of hedge fund Citadel, said on Thursday that he has some doubts about the continuity of the markets rally and is concerned about the US fiscal situation.

“I’m a bit anxious that this rally can continue,” he said in an interview on CNBC. “I like to believe that this rally has legs. I’m a bit anxious. We’re sort of in the seventh or eighth inning of this rally, but part of it has been the soft landing story.”

The S&P 500 stock index is up 16.8% this year, in a rally mainly driven by optimism around artificial intelligence.

Griffin said the Federal Reserve is likely close to the end of the interest rate hiking cycle in its battle to tame inflation. “There’s a small chance of one more increase later this year,” he said.

Still, he said it is unclear when Fed chair Jerome Powell will be able to cut rates because of some ongoing stimulus measures....

....MUCH MORE

And many, many more.

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