Friday, October 14, 2016

Why Fiscal Stimulus 
Won't Happen This Time Around
DAVID STOCKMAN: "The nation’s fiscal situation is very rapidly going to hell in a handbasket. And that there is virtually no prospect of another massive shovel-ready stimulus like the Obama $800 billion plan this time around .. There will be no budget headroom at all for fiscal stimulus or the kind of huge infrastructure packages that both Hillary and Trump have bloviated about. This economic turn is at the very heart of my latest book, Trumped! A Nation on the Brink… And How to Bring it Back where I speak to why Flyover America has had enough of a rigged system .. We are in a new ballgame, and there are no bailout fireman at the ready .. The Fed is completely out of dry powder and that there will be no post-crash reflation of financial assets owing to monetary stimulus. Indeed, even the mainstream commentariat is rapidly pivoting to the proposition that the central banks have shot their wad, and it now time for fiscal policy to pick-up the ball .. When you add back the trillions of phony spending cuts and revenue increase that are built into the current budget baseline and throw-in the next recession, I’ve estimated that the real world addition to the national debt will be at least $15 trillion during the next ten years .. And that will be piled on top of the $20 trillion of public debt that will be in place by the time of the 2017 inauguration .. When the Imperial City is faced with the next recession it will descend into unprecedented partisan acrimony and conflict over an exploding public debt that will scare the daylights out of even the spendthrift politicians of Capitol Hill. They have been in a dreamlike trance ever since the financial crisis scare was suddenly ended by the Fed’s printing presses. When the coming recession rudely awakens them, they will have no place to run and no basis for agreement on any kind of conventional fiscal stimulus whatsoever. And when that scenario begins to unfold, the Wall Street punters will truly give-up the ghost."
LINK HERE to the essay
CLIFF COMMENT: More unlikely things have happened:

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