So the main thing that happened was my payroll tax holiday expired (I read that this was the only bipartisan bill passed into law in the last 4 years), which will reduce the average family’s take home pay (both working) by over $200/month.
That’s a lot, and its highly regressive. And about as high multiple as you can get, with a lot of that income is leveraged into car payments
and mtgs. and other debt service.
It all brings us back to very modest GDP growth, maybe a bit of (population adjusted) employment growth, and a bit of top line revenue growth for corporations.
Ok for stocks, not so ok for people trying to work for a living.
And more deficit reduction to come.
79% of households earn less than $100,000 per year. The savings from last years’s mortgage refi now gets nicked a bit. Can’t win for losing.
Yep.
But while we’re complaining about a 2% tax increase, Portugal is looking at a 30% increase.
The whole world has gone mad.
You’re more optimistic than me about employment, but I guess it’s like you say, we’ve never had a recession when the deficit is this large.
W, do you anticipate demand from credit expansion filling in for lost payroll tax gap? If not how can stocks do anything but go down with a 1.5% loss in GDP.
yes, borrowing to buy houses and cars and student loans should do the trick, but not by a lot.
and I could be wrong.
@WARREN MOSLER,
Student loan market is the next “Big Short”.
hope you caught the last big short- the yen
😉
@Ed Rombach,
Actually, both short & long Yen via long $ Index vs. long component FX basket.
All I can say is “idiots”. I wish we would just come out and say we have no use for the founding principles. Let us heap verbal scorn on it so that the words match our actions.
“If direct taxes upon the wages of labour have not always occasioned a proportionable rise in those wages, it is because they have generally occasioned a considerable fall in the demand for labour. The declension of industry, the decrease of employment for the poor, the diminution of the annual produce of the land and labour of the country, have generally been the effects of such taxes
…
Absurd and destructive as such taxes are, however, they take place in many countries. ”
-Adam Smith.
If the sequester is delayed as it likely will, GDP growth should still come in around 1%, which, like Warren said, is ok for stocks but not so ok for people. Think equities and bonds outperform gold and other commodities this year as the US economy continues to “muddle-through.”
Sign the White House Petition
we petition the Obama administration to:
Direct the United States Mint to make a single platinum trillion dollar coin!
@Clonal Antibody,
Good luck. They’re not so creative. So far, judging by their behavior, one can only assume they’re happy with the status quo.
@Clonal Antibody,
Heads up. Just heard $1 Trillion platinum coin mentioned on Blmbg TV in upcoming segment.
@Ed Rombach,
It’s the headline article on Huffington Post today.
@JJTV,
If the platinum coin is the ace up Obama’s sleeve, it could gain a lot of publicity for MMT. Maybe that’s what Obama meant when he declared… “I’m not going to play that game”, with regard to not allowing the debt ceiling to become part of the negotiations over taxes, spending and the deficit.
@JJTV,
Now featured on Drudge as well.
@JJTV,
ABC story quotes the Mint, that the specifics of coin minting are determined by Congress.
@Vincent,
See my comments below.
@Ed Rombach,
The process to determine the “specs” of the coin, U.S. Mint Public Affairs Specialist Genevieve Billia warns, must be “determined by legislation,” creating the potential for another congressional impasse…in other words congress can vote it down. Next idea.
not to mention the insurance on it and the guards needed.
😉
@Fin,
I don’t know about Warren’s reservations (if he is serious; I can’t tell), but did you see the language in the code?
31 USC § 5112 – Denominations, specifications, and design of coins
[…]
(k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.
[…]
yes, looks like it’s an open channel to me.
@Fin,
Hadn’t seen that but one would have to believe congress would have a way to block such an audacious end around…and the political damage to the administration in attempting and failing would be to great to chance.
@Fin,
Here’s Mike Norman talking about canceling some of the Treasury debt held by the fed as away to defuse the debt ceiling time bomb…..
that would leave the fed with negative capital which is ‘legal’ and which I have no problem with but
for the out of paradigm it’s highly problematic
In any case, however, govt. liabilities outstanding remain the same. it’s just about whether they are called ‘debt’ or not.
This whole thing is purely semantics
@Nihat,
Also
This law was passed in 1996, and became operational in 1997, and was reaffirmed in 2000 – H.R.5273 — United States Mint Numismatic Coin Clarification Act of 2000 (Enrolled Bill [Final as Passed Both House and Senate] – ENR)
All the other coins have these things specified by Congress, except for Dollar Coins. There also, there is a loophole – no weight, or thickness is mentioned. But nothing is stated as to who makes the decision on those matters.
However, the Platinum coin part of the law is very specific as to who has the responsibility. It is very likely that Billia was talking of non platinum coins. In that case, she would indeed be correct.
agreed
@Fin, by the way, i don’t think the language was a loophole. I think it was meant to stay obscure and used for catastrophe to replenish the trsy in one swift action.
Regardless, there has to be at least 3 or 4 movie plots all ready in the works….:-)
@Warren Mosler,
From A trillion-dollar-coin idea takes off, and a former head of the U.S. Mint doesn’t see why it shouldn’t
The ball is in the President’s court, just as it was in August 2011, when he decided not to end run Congress.
Unfortunately the ‘mainstream monetary analysis’ from the President’s out of paradigm advisers surrounding the use of the coin, etc. is of course way off base in a way that causes the President to at least hesitate to use it.
@Warren Mosler,
“This whole thing is purely semantics”
thanks for finally making that clear;
even MMT people have too often said that there’s no problem calling gov liabilities “debt”;
that really IS a stumbling block for many, since all those out of the MMT paradigm certainly do define “debt” differently than CB accountants do, and are NOT familiar with discriminating the context-specific semantics
The coin idea is political suicide. The initial reaction in the international markets will be to dump the dollar and you could very well have a crisis. From a trading perspective, that’s tremendous as everything will revert back after investors realize that nothing has changed.
That said…mint the coin. Looking for a great crisis/ post crisis trade!