Category Archive: The United States

A Radical Critique of Universal Basic Income

This critique reveals the unintended consequences of UBI. Readers have been asking me what I thought of Universal Basic Income (UBI) as the solution to the systemic problem of jobs being replaced by automation.To answer this question, I realized I had to start by taking a fresh look at work and its role in human life and society. And since UBI is fundamentally a distribution of money, I also needed to take a fresh look at our system of money.

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Giant Sucking Sound Sucks (Far) More Than US Industry Now

There are two possibilities with regard to stubbornly weak US imports in 2017. The first is the more obvious, meaning that the domestic goods economy despite its upturn last year isn’t actually doing anything positive other than no longer being in contraction. The second would be tremendously helpful given the circumstances of American labor in the whole 21st century so far. In other words, perhaps US consumers really are buying at a healthy pace,...

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Reduced Trade Terms Salute The Flattened Curve

The Census Bureau reported earlier today that US imports of foreign goods jumped 9.9% year-over-year in October. That is the second largest increase since February 2012, just less than the 12% import growth recorded for January earlier this year.

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Bi-Weekly Economic Review: Who You Gonna Believe?

We’ve had a pretty good run of data recently and with the tax bill passing the Senate one would expect to see markets react positively, to reflect renewed optimism about economic growth. We have improving economic data on pretty much a global basis. It isn’t a boom by any stretch of the imagination but there is no doubt that the rate of change has recently been more positive.

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The Cost Basis of our Economy is Spiraling Out of Control

What will it take to radically reduce the cost basis of our economy? If we had to choose one "big picture" reason why the vast majority of households are losing ground, it would either be the stagnation of income or the spiraling out of control cost basis of our economy, that is, the essential foundational expenses of households, government and enterprise.

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Stock Market 2018: The Tao vs. Central Banks

The central banks claim omnipotent financial powers, and their comeuppance is overdue. will be the first to admit that invoking the woo-woo of the Tao as the reason to expect a reversal of the stock market in 2018 smacks of Bearish desperation. With everything coming up roses in much of the global economy, there is precious little foundation for calling a tumultuous end to the global Bull Market other than variations of nothing lasts forever.

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Global Asset Allocation Update

There is no change to the risk budget this month. For the moderate risk investor the allocation to bonds is 50%, risk assets 45% and cash 5%. The extreme overbought condition of the US stock market did not correct since the last update and so I will continue to hold a modest amount of cash.

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Fading Black Friday

Black Friday was once the king of all shopping. A retailer could make its year up on that one day, often by gimmicking its way to insane single-day volume. Those days, however, are certainly over. Though the day after Thanksgiving still means a great deal, as the annual flood of viral consumer brawl videos demonstrate, it’s just not what it once was.

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Addictions: Social Media & Mobile Phones Fall From Grace

Identifying social media and mobile phones as addictive is only the first step in a much more complex investigation. For everyone who remembers the Early Days of social media and mobile phones, it's been quite a ride from My Space and awkward texting on tiny screens to the current alarm over the addictive nature of social media and mobile telephony.

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Durable Goods Only About Halfway To Real Reflation

Durable goods were boosted for a second month by the after-effects of Harvey and Irma. New orders excluding those from transportation industries rose 8.5% year-over-year in October 2017, a slight acceleration from the 6.5% average of the four previous months. Shipments of durable goods (ex transportation) also rose by 8% last month.

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Beware the Marginal Buyer, Borrower and Renter

When times are good, the impact of the marginal buyer, borrower and renter on the market is often overlooked. By "marginal" I mean buyers, borrowers and renters who have to stretch their finances to the maximum to afford the purchase, loan or rent.

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Bi-Weekly Economic Review: A Whirlwind of Data

The economic data of the last two weeks was generally better than expected, the Citigroup Economic Surprise index near the highs of the year. Still, as I’ve warned repeatedly over the last few years, better than expected should not be confused with good. We go through mini-cycles all the time, the economy ebbing and flowing through the course of a business cycle.

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Want Widespread Prosperity? Radically Lower Costs

As long as this is business as usual, it's impossible to slash costs and boost widespread prosperity. It's easy to go down the wormhole of complexity when it comes to figuring out why our economy is stagnating for the bottom 80% of households. But it's actually not that complicated: the primary driver of stagnation, decline of small business start-ups, etc. is costs are skyrocketing to the point of unaffordability.

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Industrial Production Still Reflating

Industrial Production benefited from a hurricane rebound in October 2017, rising 2.9% above October 2016. That is the highest growth rate in nearly three years going back to January 2015. With IP lagging behind the rest of the manufacturing turnaround, this may be the best growth rate the sector will experience. Production overall was still contracting all the way to November 2016, providing the index favorable base comparisons that won’t last past...

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Can’t Hide From The CPI

On the vital matter of missing symmetry, consumer price indices across the world keep suggesting there remains none. Recoveries were called “V” shaped for a reason. Any economy knocked down would be as intense in getting back up, normal cyclical forces creating momentum for that to (only) happen. In the context of the past three years, symmetry is still nowhere to be found.

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Retail Sales (US) Are Exhibit #1

In January 2016, everything came to a head. The oil price crash (2nd time), currency chaos, global turmoil, and even a second stock market liquidation were all being absorbed by the global economy. The disruptions were far worse overseas, thus the global part of global turmoil, but the US economy, too, was showing clear signs of distress.

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What Central Banks Have Done Is What They’re Actually Good At

As a natural progression from the analysis of one historical bond “bubble” to the latest, it’s statements like the one below that ironically help it continue. One primary manifestation of low Treasury rates is the deepening mistrust constantly fomented in markets by the media equivalent of the boy who cries recovery.

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Is This Why Productivity Has Tanked and Wealth Inequality Has Soared?

Needless but highly profitable forced-upgrades are the bread and butter of the tech industry. One of the enduring mysteries in conventional economics (along with why wages for the bottom 95% have stagnated) is the recent decline in productivity gains (see chart).

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Forget the Bogus Republican “Reform”: Here’s What Real Tax Reform Would Look Like

The point is to end the current system in which billionaires get all the privileges and financial benefits of owning assets in the U.S. but don't pay taxes that are proportional to the benefits they extract. As has been widely noted, the Republicans' proposed "tax reform" is not only just more BAU (business as usual, i.e. cut taxes for the wealthy), it's also not real reform. At best, it's just another iteration of D.C. policy tweaks packaged for...

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The Fetid Swamp of Tax Reform

The likelihood that either party will ever drain the fetid swamp of corruption that is our tax code is zero, because it's far too profitable for politicos to operate their auction for tax favors. To understand the U.S. tax code and the endless charade of tax reform, we have to start with four distasteful realities: 1. Ours is not a representational democracy, it's a political auction in which wealth casts the votes that count.

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