Tag Archives: GDP

Tax revenues increased from $94 billion in 1961 to $153 billion in 1968 with lower taxes

The Gross Domestic Product in the United States expanded 2,30 percent in the third quarter of 2017 over the same quarter of the previous year, and President Donald Trump is not satisfied with that. His next action to fix that is to cut the taxes.

John F Kennedy was also dissatisfied with economic growth in the early 60s with a growth rate at «only» 2 percent. What he wanted is 4 or five 5 percent growth. Exactly what Mr Trump want, but what happened to Kennedys taxes and is it something to learn?

In a speech John F Kennedy said: “We have to secure 25,000 new jobs a week for the next 10 years in order to provide jobs for all of the people coming into the labor market. That is a terribly difficult task at a time when automation and new machinery has taken the jobs of men. And at the present rate of economic growth or productivity increase, we are not going to have those jobs for people.”

So, automation and new machinery made it difficult in the 60`s? Wow.

The labor force in the U.S in 1960 was 70 million. Now, it is more than twice (160,381 million as of October 2017). The unemployment rate under President Trump is 4,1 percent as the number of unemployed persons decreased by 281,000 to 6,5 million in October 2017.

The unemployment was 5,2 percent in 1964, but it sooner declined to 3,8 percent later on the same year. It continued to fall to 3, percent in 1969. In other words: JFK`s tax cuts were working, and economic growth creates jobs.

Kennedy`s tax cuts were not passed by Congress until his death on February 26, 1964, in the Revenue Act of 1964. Kennedy had the right mindset. Their tax rates was too high and their tax revenues too low.

In 1964, the bill reduced the top marginal rate from over 90 percent to 70 percent. Tax revenues increased from $94 billion in 1961 to $153 billion in 1968. Cutting taxes at that time was not to incur a budget deficit, but to achieve the more prosperous, expanding economy which could bring a budget surplus. And it did.

After the tax bill, made by President Lyndon B Johnson, real GDP grew at 5,8 percent in 1965, and 6,6 percent in 1966. Lower taxes generated more revenue for Uncle Sam.

The concept is very simple but difficult for many to understand. When people have more money, they spend it which means additional tax receipts. Not only that.

Lower taxes will reduce risk-taking which is good for the U.S entrepreneurship. You can imagine what entrepreneurs like Steve Jobs, Mark Zuckerberg, Jeff Bezos, Sergei Brin and Elon Musk have added to the growth of the economy using their ideas to create new firms and jobs?

What would have happen if they all had taken a new job as an ordinary employee with IBM? The answer is very simple: a slower tech industry.

John F Kennedys tax cut model were the model for Reagans. Now, it is time for Mr Trump and it remain to see his model.

 

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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India`s Prime Minister Narendra Modi is doing something right and they can surpass China very soon

Theresa May is negotiating with the European Union and investors are concerned about a hard landing on these Brexit deals. It`s difficult to know exactly the outcome of the Brexit deal but what we do know is that the British economy grew 1,7% YoY in the second quarter of 2017.

Not so much compared to Chinas 6,9% growth, which is the best G20 country followed by India at 5,7%. Britains economy fell from 2,0% to 1,7% and that is the opposite direction of India`s growth. Can India grow by a greater margin than China this year?

 

 

According to IMF, Indias economy will grow by a greater margin than China in 2017. Not only that. Indias innovation growth rate is expected to rise significantly over the next 15 years, placing it ahead of Russia and close to surpassing China, according to a new report.

China is the leading nation in terms of innovation among BRICS countries, but India`s Prime Minister Narendra Modi must be doing something right. India is set to see a surge in innovation and could surpass China by the end of the next decade.

According to Chinas Science Technology Exchange Center, Indias innovation growth rate is expected to rise significantly over the next 15 years, placing it ahead of Russia.

India`s economy is expected to grow by 7,2% in 2017, according to IMF. A new study highlights the growth that can be expected in intellectual advances, such as science and technology, which are often perceived as indicators of future growth.

It`s BRICS Innovation Competitiveness Report 2017 predicted that the innovation competitiveness of India would see a significant rise with its growth rate probably surpassing China between 2025 – 2030.

What is India`s Prime Minister Narendra Modi actually doing right? He has been taking notable steps forward in innovation, supported by a reform agenda.

Government schemes such as Digital India, which expands the countrys online infrastructure, and StartUp India, which promotes financial backing for entrepreneurs, have been unveiled to boost the countrys innovation and technology sectors.

India`s growing information technology and scientific expertise have also helped turn it into an increasingly dominant outsourcing hub.

So far, China is still the leader in terms of innovation competitiveness among BRICS nations, followed by Russia, South Africa, Brazil and India.

Europe is struggling to follow. Ireland is the best country with its 6,10% growth, followed by Romania with 5,9% growth and Estonia with 5,7% growth YoY.

At the bottom in Europe we find Norway with only 0,20% growth, Macedonia by its 0% and at the very bottom Liechtenstein with negative -1,9% growth.

Monaco, Liechtenstein and Luxemburg are the richest countries in the world measured by GDP per capita.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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The balance sheet assets of the six major central banks is up about 240%

All the worlds central banks are printing money like never before, and this is for the first time in history. The balance sheet assets of the six major central banks have just hit a new all-time record high of $17,3 trillion. Thats up from $4,987 trillion in May 2006.

People`s Bank of China (PBOC) has the largest balance sheet with total assets of $5,0 trillion, followed by the Federal Reserve with $4,4 trillion.

 

 

balancesheet

 

The SNB is at the bottom of the chart above, but it has the largest balance sheet as a percentage of GDP, with it currently up to 88,4% of GDP vs. 20% of GDP in May 2006.

The BoJ`s balance sheet is equal to 70% of GDP vs. 25% of GDP in May 2006.

The PBOC`s balance sheet is equal to 53% of GDP vs. 56% of GDP in May 2006

The Fed`s balance sheet is equal to 25% of GDP vs 6% of GDP in May 2006

The ECB`s balance sheet is equal to 25% of GDP vs. 13% of GDP in May 2006

The BoE`s balance sheet is equal to 22% of GDP vs. 6% of GDP in May 2006

The total assets of the world`s six major central banks is equal to 36% of their combined GDP, a new all-time record high vs. Only 14% of their combined GDP in May 2006, and well above the nine median of 26%!

Trumps goal is massive growth, and IMF in January raised its economic growth forecasts to 2,3% in 2017 and 2,5% in 2018, thanks to Donald Trumps plans to cut taxes and boost infrastructure spending. The World Bank will follow IMF with similar forecasts.

Trump`s bold plan is to create 25 million new American jobs in the next decade, which means it will only take 2% annual growth of the workforce to hit that target. Data shows us that 25 million jobs have never been created in a 10 year timeframe.

A 2% growth rate over 10 year will generate 25 million jobs, which means if the economic growth rate hits 2,5% it would take about 8 years. If the growth rate goes up to 3% per year it will take about 6 years. If the rate goes higher, Trump can reach his goal during his first period as a President.

I do not agree with Trump`s immigrant policy, but there is a drawback here; If Trump want to reach his goal, he need immigrants, because the number of people who are working dropped 3,7% over the past 10 years, and some of the reasons for that is the baby boomers demographic shift.

Janet Yellen also said she consider to hike the rates because the economy is improving. The Fed want to proceed with «normalizing» monetary policy, which means they want to have room to ease in case of a future shock.

President Donald Trump can help them to solve their fiscal policy by cutting tax rates and spend more money on infrastructure. At the same time, he need to keep the lid on federal spending. Will Donald Trump succeed? Betting against him have so far been a bad decision.

 

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Filed under Politics, Quantitative Easing

Where is the bottom in Europe and Euro

Many analysts are so positive and belive Europe`s financial crisis is over. ECB`s Precident Mario Draghi started to pump a lot of money into the market and will continue to do that until next year. The Euro has plummeted, trading at 1,07, and many think that this is the bottom.

I see different things in my TA.

Euro symbol

First of all; The inflation rate is still -0,1 percent, and that mean deflation, which is not a good thing. The figure is skewed due to the size of Germany`s economy. Actually, things are worse in other Euro areas. Take a look at this;

Finland -0,1
France -0,1
Greece -2,1
Ireland -0,6
Italy -0,09
Poland -1,5
Spain -0,7
Switzerland -0,9

This is deflation, and this is not a growth story like Venezuela which had an inflation rate of 68,5 (!) in December 2014. How is it going on with the buying power in Europe right now? Falling prices is good for the unemployed people in Europe, because their buying power is weak.

But how many are unemployed in Europe right now? The unemployment rate in the Euro Area is 11,30, but once again; it`s even worse in some areas in Europe. Worst is Greece with an unemployment rate of 25,70. This is worse than Nigeria (23,90), and South Africa (24,30).

Spain 23,7
Italy 12,7
France 10,4
Finland 10,1
Ireland 10,0
Poland 11,7

Unemployment rate in the U.S is 5,50 right now, and that`s much better than it was a year ago. The unemployment rate in the Euro Area is better than earlier this year (11,40), but it`s still very high and not low enough to claim that the reversal is underway. Again; the numbers are skewed due to Germany`s low unemployment rate of 4,8 percent.

Youth unemployment rate is 22,90 in the Euro Area, which means about 5 million Europeans under the age of 25 are unemployed. This is a big problem. Take a look at the Youth unemployment rate numbers below;

Finland 21,4
France 24,7
Greece 51,2
Ireland 21,6
Italy 42,6
Poland 20,8
Spain 50,7
United Kingdom 15,9

Youth unemployment rate in the U.S is 12,3, but what is that compared to Greece or Spain with their 51,2 and 50,7 percent youth unemployment? Can you belive that? More than half of the teenagers at the age of 25 or below is unemployed in Greece and Spain.

It`s very expensive for a country to have a lot of unemployed people.

Severe austerity measures continue to this day and they are hollowing out Europe`s economic growth. Just take a look at the numbers. Before the Greek crisis flared up, their debt to GDP stood at 113 percent, but today their debt to GDP is amazing 174,9 percent.

Debt to GDP in Euro Areas is 90,9, but take a look at the other countries in Europe;

Italy 132,1
Ireland 123,3
France 92,2
Finland 59,3
Germany 79,0
Spain 97,7

To compare; Debt to GDP in the U.S is 101,53. In Japan 227,2 to name a few. You can imagine how Europe`s debt is after ECB`s QE program is finnish?

All the austerity measures that Europe has implemented have done nothing to reduce debt levels. Instead, they are hurting the people of Europe, and the economic growth is far away from the truth.

There is NO evidence Europe`s economy is improving, and when you look at the numbers you know that this is gonna take a long time to recover, and I`m not talking about a few weeks, a couple of months or three. But I know there are a lot of them who belive so.

The Euro is trading at 1,07 and its long-term uptrend line is broken and minor cyclical support is declining. If you follow TA, you can see that the Euro can go down to about 0,75. Good news will make the opposite trend.

The Euro can go down to 0,35 but I dont`t think it will go that low. It will be complete chaos in Europe once the currency falls back to its 2001 low of 0,80. Analysts at Morgan Stanley say the euro is undervalued by about 20%, and fair value should be about $1,32, they said.

The Euro Area is in trouble and Greece is running out of money, and the future of the common currency itself is in peril, because some investors is worried that one member`s exit could trigger an unpredictable unraveling.

Analysts at investment bank Morgan Stanley say the euro should be worth $1,59 based on Germany`s strength, and it ought to be $1,09 for Greece. So, Greece is closer to haveing a fair value than Germany. This valuation should trigger the question of who should leave the eurozone. Greece? Germany? Others?

The euro has never been less popular with the international community. Bearish bets have reached a record. People hate the euro, and that is not only because the protester Josephine Witt showered Mario Draghi with confetti.

Average yield on German government debt fell below zero for the first time today. Lending to Germany for ten years will earn you just 0,088 percent in yield. That`s nothing. Investors will soon be paying for owning a 10-year German bond.

Why should you own euros invested in negative-yielding securities when dollars generate positive returns? And how popular will euro be if we face a Grexit?

«Without deep economic reform or further relief, S&P expects Greece`s debt, other financial commitments to be unsustainable,» the rating company Standard & Poor`s Corp said.

The recovery in the U.S has been slow. Now Europe is next with QE. It didn`t work in Japan. Will it work in Europe?

 


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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Consumer Confidence is declining

It is thanksgiving week and this week is usually a low volume week. Traders are off enjoying the extended holiday, and if something moves, it will move monday and Tuesday. Since we are at the all time high, maybe some people are thinking profit taking?

Consumer confidence is declining. This gives us an idea about the consumer spending in the U.S economy. If people don`t feel great about their own economy, they will not spend so much money. It is just that simple.

I wrote about Apple and their new products and they really need to do it well in Q4. If people don`t have money to spend, they will not buy any Apple products like phones, tablets or other innovative products. They will rather keep what they have and cut back on their discretionary spending.

If people don`t spend money this holiday season, companies will not earn so much money and the stock prices will not go up. Nor the GDP (gross domestic product) will go up.

What really drives the U.S economy are suggesting there isn`t much light at the end of the tunnel. What about the so-called economic recovery we have seen since the financial crises? Does it work?

Gold is trading at $1231,50. Down -1,01%. As long as the inflation is low, the gold will continue to decline. People expect hyper inflation, but Janet Yellen are fighting against deflation. News today: Pending Home Sales at 10:00am.

 um-consumer-sentiment-through-november-2013

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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