You are viewing a single comment's thread from:
RE: Stock Market Analysis Report 6-7-18...Are The Markets Peaches & Cream Again???
Great analysis @rollandthomas. How do you think the upcoming proposed tariffs will affect the market? China's threatening a trade war, as well as some of our allies. Love him or hate him...I think many of Trump's policies have been great for the economy. Particularly deregulation and tax cuts. That said, I strongly disagree with the massive tariffs he's proposing. It may help a few industries at the expense of many. History has proven that over and over. Any thoughts?
Thanks. Regarding the tariffs, I agree with you. It's going to benefit a couple of industries, but will hurt economic growth. Big picture, I think the tariffs is biting off the hand that feeds us. We buy china products and in return they buy our debt in the form of bonds to finance our standard of living.
Regarding his tax cuts. I never heard of a tax cut in a growing economy. But this tax cut really really just benefits corporations. Employees will see very little...what is $1000 bonus....nothing. Corporations will add to their war chest and buy back more stock...and artificially inflating the stock market. So we will pay for this in shortly.
It will be cool when steemit has a way to verbally communicate. There is so much to talk discuss...did this response somewhat answer your questions?
Thanks for the response. As I said, I agree, tariffs are a terrible idea. China buying our debt is one aspect. An even bigger consideration is the major increase in cost for American consumers and industry. Tariffs are basically an indirect tax on American consumers and businesses. If history is any guide, business owners may stop expanding due to uncertain overhead. Consumers like you and I pay more for goods we use everyday. You would've thought history would've taught us this...but I guess not.
I'm just wondering if you think it will greatly affect the stock market.
I'd have to respectfully disagree on tax cuts. America had the largest corporate tax rate in the world. I think tax cuts were great for the economy and long overdue. It's not just companies buying back their stocks. The've been doing that for 10 years with bailout money. Companies are now investing in expansion and innovation. We also have new businesses opening up creating more competition...which is greatly needed. This is the life blood of a healthy economy, and always benefits the consumer in the end. For the first time in decades there are more job openings than workers to fill them.
Anyway...we can agree to disagree on tax cuts. My real question was on tariffs and how they may affect the market. I'm hoping this administration isn't foolish enough to create a trade war. Guess we'll see how it goes.
With the national debt as high as it is, I feel we're just delaying the inevitable anyway. No one thinks hyperinflation can happen in the US. I think it's mathematically certain, giving our current debt and rate of spending. We can no longer grow our way out of debt without cutting spending MASSIVELY...and we all know that's political suicide. I truly fear for out kids and grand kids. Unless we cut spending and start attacking out national debt, we're digging a hole that's going to be impossible to climb out of.
Nicely put, with many great points about the tax cuts. But how do we get out of debt, where is that money coming from, companies have very deep pockets, the tax cuts is just forcing more behavior.
Nevertheless, good healthy debate, I wish we could verbally discuss the topic more, but one day.
I'd love to have a healthy debate some day my friend. As I said, I have a great deal of respect for your market analysis. To answer your question on getting out of debt....
We certainly can't tax our way out of debt. I think every communist/socialist society in history has proven that to be a complete disaster. You can only tax so much before people just stop producing and innovating. So at a point, increasing tax rates will actually DECREASE overall tax revenue. Conversely, decreasing the tax rate can actually increase overall tax revenue...again, to a point.
I believe the sweet spot is around 20%. Generally, a tax rate higher than that, revenue goes down...and a tax rate lower than that, revenue also goes down. This could not be more obvious when looking at tax cuts in the past...going all the way back to JFK. Every time there was a major tax cut, overall take revenue either increased or remained the same. Why?
The reason should be obvious. While each individual may be paying less tax, the private sector is investing that extra money into growing and innovating. This leads to more jobs and more people paying taxes. That is the hallmark of a great economy. It also allows government to reduce spending as people become less dependent...which many in power do NOT want to see. Since when does any politician like to give up power? Answer...never in history outside of George Washington.
So to answer your question, the ONLY way to get out of debt is to continue incentivizing economic growth and innovation (i.e, less red tape/low tax rates), while massively reducing government spending.
If you look at overall tax revenue, the U.S govt is currently taking in more tax revenue in the last 10 years than at any other point in history...yet our national debt EXPLODED. Clearly this is not a tax revenue problem, but a spending problem.
Bush spent a ton...and then, as if not to be out done, Obama came in and spent MORE THAN EVERY PRESIDENT IN HISTORY COMBINED. Our national debt literally doubled from 2009-2016. Now Trump is starting to follow in those footsteps by just signing another massive spending bill. THIS CYCLE HAS TO STOP.
The only way to reduce the debt is unleash the private sector, while reducing government spending...which means reducing the size of government. Of course, politicians and govt bureaucrats will never vote to give themselves less control/power. Instead they find a boogy man called, "the evil 1%". Here's what they don't tell you...
Even if government taxed EVERY person in the U.S who makes $200,000 or more per year, at a 100% tax rate, they''d still only be able to fund the federal government for 253 days. And that was at 2012 levels of spending. We're far past that now. But hey...it's just easier to blame the 1% instead of solving the spending problem.
We have government departments within departments, within departments. Unless we reduce government spending, there is no hope to reduce the national debt. It just mathematically can't work.
Great post @workin2005 and I don't really disagree with any of your comments. My issue is our lack of discipline for fiscal responsibility from the government down to us the people. I truly believe the only way to fix this massive issue is a total default of the system, which is horrible to think and consider because we would all suffer. As long as we lack financial responsibility, I don't see a way out.
In the years to come things will only get more complicated when the robots start taking 40% of the jobs in the US, but that's a whole separate conversation.
Do you see ever see the system going back on to the gold standard?
We never should have left the gold standard. That's what began this whole trip down the rabbit hole. I agree..until people return to fiscal responsibility, we're doomed.
Do I see us returning to the gold standard? Not before the system implodes. The thing is, it's so predictable.
I think it was Ben Franklin who said, “When the people find that they can vote themselves money that will herald the end of the republic.”
He's exactly right of course. The problem is, no one wants to take responsibility....so they kick the can down the road. Well, it's been kicked so far now that we've entered into the denial phase. This is why I think crypto is so fascinating. I think it has the opportunity to be the new "gold standard" once the dusts settles. I realize we've got a way to go, but look how far we've come. What choice do we have?
I wrote an article on BTC vs BCH which indirectly explains why I feel crypto is so important right now. If you're interested, I'll post it below. Bottom line, unless people start electing fiscally responsible politicians, who tell the truth about our financial crisis, we'll continue down this path. We're heading towards hyperinflation and a complete melt down of the economy as we know it. For this reason, I'm investing in things I feel will have value once the system implodes...and the dollar isn't one of them.
https://steemit.com/cryptocurrency/@workin2005/bitcoin-vs-bitcoin-cash-the-debate-that-demands-a-verdict