Lion of the Blogosphere

Second Great Depression coming?

Massive government budget deficits because of increased spending combined with Trump tax cut.

Even though the Fed Funds rate has recently gone up a bit, it remains historically extremely low.

If the stock market has a major crash bringing the economy down with it, there is no monetary or fiscal ammunition left to stimulate the economy. It’s already at full stimulus.

This could mean the next recession turns into a second Great Depression. Also, the Illuminati will be happy to have this blamed on Trump so won’t be motivated to stop it from happening.

Written by Lion of the Blogosphere

February 12, 2018 at EDT am

47 Responses

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  1. At least the immigrants will stop coming. Mission accomplished!

    IHTG

    February 12, 2018 at EDT am

    • Oh no they won’t. The only reason why immigration dropped to a historic low in the 30s was the 1924 immigration act.

      gothamette

      February 12, 2018 at EDT pm

  2. Couldn’t the stimulus be financed at least partially by borrowing from China.

    Roli

    February 12, 2018 at EDT am

    • And every other country that starts throwing money at US treasury bills when the shit hits the fan.

      Magnavox

      February 12, 2018 at EDT pm

    • The U.S. government doesn’t need to borrow from anyone. They can create money out of thin air.

      CamelCaseRob

      February 12, 2018 at EDT pm

      • Which will generate massive price inflation, far greater than that from the 1970’s, unless rest of world absorbs those printed dollars via our debt, which is what’s been happening for 40 years.

        Andrew E.

        February 12, 2018 at EDT pm

      • just like it has in japan over the last 25 years.

        A way a lone a last a loved a long the

        February 12, 2018 at EDT pm

      • just like it has in japan over the last 25 years.

        Japan funds its own debt, which is why they don’t have inflation. The US doesn’t. We rely on foreigners to fund ours.

        AE1

        February 12, 2018 at EDT pm

      • the BoJ is the largest holder of JGBs at 33% iirc and the largest shareholder in japan. its money came from thin air. no inflation. US debt to gdp is 100%. japan is 250%. monetizing the debt does not necessarily cause inflation. in the early 90s japan’s debt to gdp was less than that of the US.

        A way a lone a last a loved a long the

        February 12, 2018 at EDT pm

      • that was a while back. in dec 2017 the BoJ owned 46% of JGBs.

        that’s monetization.
        https://www.japanmacroadvisors.com/page/category/economic-indicators/financial-markets/jgbs-held-by-boj/

        A way a lone a last a loved a long the

        February 12, 2018 at EDT pm

      • Japan has a very high savings rate so additional currency always finds its way back into the domestic bond market which keeps inflation under control. It’s hbd. And they run trade surpluses for the most part so they’re not vulnerable to foreign pressure on their currency.

        Andrew E.

        February 12, 2018 at EDT pm

  3. I’m embarrassed to be an American. We have so much waste and stupidity, not to mention incompetence, because we have dodos running the most basic levels of gov’t.

    A friend just sent me a package from Spain and the USPS tells me that it is being returned to the sender based on their internal tracking system (certain tracking numbers are not trackable in their consumer website). Now, I just got it today, and I was already advised by my friend that the Spanish postal system is correct with their information, the package was on its way, so no worries.

    Now why is USPS such an atrocious postal system, on par with those of the 2nd and 3rd worlds?

    JS

    February 12, 2018 at EDT pm

    • I don’t know why anybody points to the USPS as an example of what is wrong with our government. I am not friends with any postal employee but it seems to me that the post office is one of the most efficient parts of government.

      You can mail a first class letter to Alaska or Hawaii or anywhere else for pennies and it will arrive in days. If you send it within your state it will probably come the next day.

      OK, now I just looked up what the experts say and I am right:

      A British consultancy found the US has the most efficient postal service in all of the G20, and presumably the rest of the world.

      Here’s the report:
      http://www.oxfordstrategicconsulting.com/wp-content/uploads/2017/09/Delivering-the-future-16-03c.pdf

      The USPS delivers far more mail per employee than any other country. In that study:

      USPS delivers 268,894 pieces of mail per employee.

      Second best post office Japan delivers 103,149 pieces of mail per employee.

      Of course the US is more than 20 times larger than Japan, which makes it that much more impressive.

      USPS can’t make money because UPS and FedEx get all the profitable package business while USPS is stuck with unprofitable letters in a world of email. USPS is required by law to let you pay just 50 cents for rapid first class from Key West to minor islands of Hawaii, even if there are hurricanes at both ends.

      USPS employees have an exact job to do and they do it.

      The part of government to hate are agencies such as the CIA and DOJ and State. Their job description isn’t clear on a good day and on a bad day they are doing their best to undermine civilization. Obama’s State Department’s biggest focus was on pushing the LGBTQ agenda around the world, not even actual problems like third world overpopulation. Holder’s Justice was trying to restart race riots and punish urban cops for fighting crime. Now these orgs seek WWIII with Russia while ‘resisting’ the duly elected government.

      Against that I’ll take USPS any day!!

      Dan

      February 12, 2018 at EDT pm

      • Last week I mailed a letter to a foreign country, and never had to deal with a human! I walked right up to a machine with no line, I used the menus, and it gave me a $2.14 stamp, a real bargain considering the letter is literally going to the other side of the world.

        Lion of the Blogosphere

        February 12, 2018 at EDT pm

      • “letter is literally going to the other side of the world”

        You have pen pal in India or Pakistan Lion?

        Roli

        February 12, 2018 at EDT pm

      • A buddy of mine is a record collector (vinyl) and sells on E-Bay. He lives in Toronto and drives down to Buffalo regularly to post his records (all over the world).

        Tells me that he could not afford to sell them if he did it through the Canadian Postal system (at least 3 times the cost).

        Of course, this is why the US Postal system loses it’s shirt each year.

        gda

        February 12, 2018 at EDT pm

      • My husband sells on ebay and delivers via USPS. Over thousands of packages, including international delivery, he’s never had a mishap. He has had a few customers fraudulently claim not to receive a package when tracking info shows otherwise (surprisingly few, it gives you faith in humanity).

        He did get banned from a local post office branch because he kept showing up five minutes before they close. If you’re in the door, they have to serve you. They threatened him they would open every package he sends (legally they can do this to verify certain classes of mail) if he ever stepped foot in there again.

        JS I can’t explain what happened to your package but the USPS, surprisingly, is one of the best in the world.

        toomanyspiders

        February 12, 2018 at EDT pm

      • “Of course, this is why the US Postal system loses it’s shirt each year.”

        Fake news. The USPS is doing fine.

        Its massive yearly loss is an accounting fiction, it represents “underfunding” of its juicy pension plan. By regulation the USPS must fund its pension plan as if every USPS employee will retire later today, which is stupid. It has complained about this for decades but Congress has never acted.

        It’s like how conservatards menstruate over muh Social Security’s $384 quadrillion in unfunded liabilities!!!, as if every American will later today cash out the entirety of their Social Security earnings as a lump sum. Not possible, a stupid meaningless analysis.

        hard9bf

        February 12, 2018 at EDT pm

      • @hard9bf,
        I’m relying on your analysis to pull my portfolio out of the crapper in a month. All those guys who made money will now buy my stocks. I “only” lost 5% overall.

        gothamette

        February 12, 2018 at EDT pm

      • But if USPS won’t subsidize Amazon’s globohomo business model, who will?

        Paul Ryan's Sickly Old Lap Dog

        February 12, 2018 at EDT pm

      • “Its massive yearly loss is an accounting fiction, it represents “underfunding” of its juicy pension plan. By regulation the USPS must fund its pension plan as if every USPS employee will retire later today, which is stupid. It has complained about this for decades but Congress has never acted.”

        This is all nonsense. If you promise your employees more retirement benefits for every year that they work for you proper accounting requires that you account for what these additional benefits will cost you to provide as part of their wages. The post office would like to ignore this extra cost which is ridiculous. And if I recall correctly it is the retiree medical benefits that the post office is promising which are the real problem.

        James B. Shearer

        February 13, 2018 at EDT am

    • it’s funny that businessmen would dislike government. wouldn’t they like the US to be run like a business, every man woman and child an employee or potential employee? if it were so run government would be much bigger, the country would be much richer, and the people would be much happier.

      A way a lone a last a loved a long the

      February 12, 2018 at EDT pm

    • Sure, America is a mess, but if you live abroad eventually you’ll discover that every other country is also messed up in its own idiotic way.

      And if you are talking about postal service, the US is much better than Austria. A friend of mine has been complaining for weeks about the inability of anyone to successfully deliver Amazon parcels to his address in an apartment building in a decent neighborhood of Vienna.

      Peter Akuleyev

      February 12, 2018 at EDT pm

      • All my uncles and aunts and cousins are Austrian. This year I sent several pieces of Christmas mail to Austria a week before Christmas and it arrived well into January. I am pretty sure the problem is on that end because in the US you can send Christmas mail seven days before Christmas and it will arrive five days before Christmas.

        Dan

        February 12, 2018 at EDT pm

      • The USPS is $2 billion in debt due to underfunded pensions. They make money on the mail. Also letter class mail makes more money than packages do. Fed Ex and UPS are prevented by law from delivering regular 1st class mail. And as many others have pointed out, the USPS is the most efficient postal service in the world, believe or not. Canada post by comparison is expensive, slow, and only delivers Mon-Fri.

        tsnamm

        February 12, 2018 at EDT pm

  4. Massive government budget deficits because of increased spending combined with Trump tax cut.

    In other words, back to the unprecedented success of Reaganomics.

    The Undiscovered Jew

    February 12, 2018 at EDT pm

  5. Ooooh man. You haven’t experienced bad government until you’ve gone to a post office in Canada. Or a bank in Montreal.

    SWPL2

    February 12, 2018 at EDT pm

    • How worse can it be?

      It’s all relative, when you compare it with the US.

      America has more manpower, more non-whites, and more money to dole out for the public sector.

      The only reason why America has a highly efficient postal service — to suit the needs of frivolous consumption.

      JS

      February 13, 2018 at EDT am

  6. I’d say we’re already there were it not for social entitlements. Imagine if every person on medicaid and SNAP had to pay cash for those services/goods, or every person in the projects lost their subsidized housing, or people on unemployment or disability lost their income and services. Things would look even worse than the great depression with swarms of homeless families and disabled looking for food and shelter. The swath of persons employed in social services would lose their jobs and the medical sector would take a huge hit without medicaid reimbursements.

    toomanyspiders

    February 12, 2018 at EDT pm

    • Yes, but there would be more for cops and jailers!

      E. Rekshun

      February 12, 2018 at EDT pm

    • By looking for food and shelter don’t you mean rioting?

      Mike Street Station

      February 13, 2018 at EDT am

  7. 90% of my Amazon packages are delivered by USPS. Amazon is a huge user of USPS, as far as I can see. It used to be UPS, but now it’s all USPS.
    The one I hate is Fedex. Their website is a mess and their (definitely foreign) Customer Service department is a disaster. USPS is much better.

    amused observer

    February 12, 2018 at EDT pm

    • I believe the USPS uses FedEx for logistics.

      onetwothree

      February 12, 2018 at EDT pm

  8. Relax, the Laffer Curve will take care of everything. Lower tax rates = increased velocity of money and higher net tax revenues.

    Besides, I thought trillion dollars deficits were good. Heck, the White Genocide Party all thru the Obama years told us a $1.4 trillion deficit was far too small, that it should be at least double that.

    hard9bf

    February 12, 2018 at EDT pm

  9. Actually, it is the government that works very well here in the US. Libraries work well. USPS works well. Out of thousands letters and packages that I mailed in my life none were lost. I was active buyer and seller on eBay since its inception. Literally none were lost. Only one package out of everything mailed to me in my life was lost. Content was lost because the envelope was not strong enough for three books. The empty envelope was delivered. I never purchase extra insurance when shipping by USPS. DMV and other government services work very well. County, State and National parks are excellent and consistent with their rules, unlike private parks. Public schools are excellent. On the other hand, private businesses screw you all the time and can refuse to deal with you complain or if they do not like you. A good example: you can get expelled from private school for any reason and there is not recourse. My friend’s son was expelled from fancy private Jewish school because of a minor complaint of the other child. No warning, no investigation. The principal told my friend that the other family is more valuable to the school.

    My Two Cents

    February 12, 2018 at EDT pm

    • Buncha commies here.

      gothamette

      February 12, 2018 at EDT pm

      • I once had a friend from San Francisco who was coming to town and he checked out the Mid Manhattan NYPL and he thought it was dusty, dirty and not very conducive as a library (there were plenty of NAMs – a lot of homeless types). Public institutions run less efficient in NYC — you know the reason and it requires no explanation.

        JS

        February 12, 2018 at EDT pm

      • The Mid-Manhattan on 40th/5th was a known dump. It’s closed now and will re-open but I don’t know when. The 42nd Street Library is a gem. But tourists ruin it – they are loud and make noise. However the Rose Reading room is still quiet.

        gothamette

        February 12, 2018 at EDT pm

    • Let’s be realistic here. It’s not the government that works well, it’s the people.

      Men make laws and men enforce them. Laws are meaningless words on a page barring man’s enforcement. Which is why 40 years of muh constitution has delivered to us the most unconstitutional age in America ever.

      But rest assured, grown men are back in charge.

      Paul Ryan's Sickly Old Lap Dog

      February 12, 2018 at EDT pm

  10. It seems the Republicans have given up on the idea of cutting spending. They still love tax cuts but they don’t want to do anything perceived as mean like cutting spending. I would agree the combination of less tax revenue coming in while we spend more than ever will eventually lead to a fiscal collapse.

    Jay Fink

    February 12, 2018 at EDT pm

    • Yes, but when the fiscal collapse comes, then almost certainly the spending will be cut. Cut taxes, max out deficit, and bring in a sovereign debt crisis. Then the government will be forced to choose between A) cutting spending, B) raising taxes, and C) letting inflation blow up. Inflation is controlled by the independent Federal Reserve, who will never in a million years let CPI exceed 20% just to accommodate the party in power. And no Congress in their right minds will raise taxes in the middle of a crisis.

      So spending cuts become the default, most likely via the failure to pass a long-term budget. Medicare and social security get cut automatically if Congress can’t agree on a budget, as does most discretionary spending. So cutting taxes, and inviting a debt crisis is really the only feasible way of permanetely reducing the size of government.

      Doug

      February 13, 2018 at EDT am

      • I agree SS and Medicare would be the first programs to be cut. This is unfortunate because people pay into these programs all their lives and should get some kind of return. I just hope if/when they do cut SS and Medicare they means test it instead of cut it across the board which would be cruel to poor, old people.

        On the other hand I don’t think they would dare cut welfare programs for young, able bodied people….partially to avoid urban riots.

        Jay Fink

        February 13, 2018 at EDT pm

  11. Massive government budget deficits because of increased spending combined with Trump tax cut.

    Even though the Fed Funds rate has recently gone up a bit, it remains historically extremely low.

    If the stock market has a major crash bringing the economy down with it, there is no monetary or fiscal ammunition left to stimulate the economy. It’s already at full stimulus.

    This could mean the next recession turns into a second Great Depression. Also, the Illuminati will be happy to have this blamed on Trump so won’t be motivated to stop it from happening.

    Disagree with all of this , Lion. The economy can recover without stimulus. The fed still has some more options though such as lowering rates back to zero or restarting bond purchases. The Trump tax cuts will increase the deficit but won’t increase economic growth much, and hence cannot be inflationary. Like the Bush tax cuts, inflation will remain low despite the added spending. The stock market is a good buy on this dip. Will go higher.

    grey enlightenment

    February 13, 2018 at EDT pm

  12. It does not matter how low the Federal Funds rate is historically. What matters is the percentage increase from the base rate.

    For example, if the Fed Fund rate is 0.5% and it goes to 1.5%, then that is a 300% increase in borrowing costs. Also, remember, there is a fixed relationship between the fed fund rate and the prime rate of 3 percentage points. The market is reacting to that solid increase in the prime rate, not just the fed funds rate.

    map

    February 14, 2018 at EDT pm

  13. Massive government budget deficits because of increased spending combined with Trump tax cut.

    Drudge reports that the government has run a surplus for the month.

    map

    February 14, 2018 at EDT pm

  14. Lion, I think you are right to think this way. I’ve been expecting a horrific market crash followed by a currency/debt crisis and been writing about my portfolio management at my blog.

    Timing the crash has been very challenging, you may remember I commented here on your blog about a destructive events triggering a crash before 2016 election. That didn’t happen and instead we got a massive Trump Rally. but now the market is even more out of balance than it was under Obama and when the authorities inevitably lose control of the situation, stocks will crash with unimaginable speed and power.

    This is what I expect, so I think your thinking behind this post is right on the mark.

    Karl

    February 15, 2018 at EDT am


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