{"id":634103,"date":"2018-02-13T22:56:19","date_gmt":"2018-02-13T22:56:19","guid":{"rendered":"http:\/\/juniorminingnews.com\/?p=634103"},"modified":"2018-02-13T22:56:19","modified_gmt":"2018-02-13T22:56:19","slug":"the-last-dying-breath-of-sound-finance-2","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=634103","title":{"rendered":"The Last, Dying Breath of Sound Finance"},"content":{"rendered":"
<\/a><\/div>\n

By Brian Maher<\/a><\/span> <\/p>\n

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This post The Last, Dying Breath of Sound Finance appeared first on Daily Reckoning.<\/p>\n

We have it on highest authority:<\/p>\n

Rising budget deficits are \u201ca very dangerous idea.\u201d<\/p>\n

The president’s budget director, Mick Mulvaney, conceded the point this Sunday on Face the Nation.<\/p>\n

But like a junkie long resigned to the needle and the alley, he could only lower his eyes\u2026 and shrug his shoulders:<\/p>\n

\u201cBut it’s the world we live in.\u201d<\/p>\n

The administration released a $4.4 trillion 2019 budget proposal yesterday.<\/p>\n

A through Z, it has it \u2014 defense increases, funding for the wall, infrastructure spending, veterans’ health care, money for opioid abuse.<\/p>\n

And the recent tax cuts mean less money to fund it all.<\/p>\n

The result?<\/p>\n

\u201cA very dangerous idea.\u201d<\/p>\n

If adopted, the proposal would add some $984 billion to the deficit next year\u2026 and $7 trillion over the next 10 years.<\/p>\n

But even these projections may be\u2026 generous.<\/p>\n

We might otherwise call them conservative.<\/p>\n

But given the word’s association with the Republican Party\u2026 it would seem a cruel jest.<\/p>\n

We call the projections generous, because the budget proposal doesn’t include spending already agreed to in last week’s bipartisan spending deal.<\/p>\n

The resolution unleashes $300 billion of federal spending over the next two years.<\/p>\n

Put the new budget proposal to one side for the moment.<\/p>\n

With its combination of new spending and tax cuts, last week’s agreement already plays the devil with existing Congressional Budget Office (CBO) deficit projections.<\/p>\n

Fortune:<\/p>\n

Deficits will probably reach $1 trillion in the current or next fiscal year, almost double what the Congressional Budget Office had projected less than a year ago for 2018. And U.S. debt is now on track to reach $30 trillion over the next decade. That’s over 100% of projected GDP, well into the danger zone where investors demand higher rates to buy government debt. <\/p>\n

\u201cNever in modern times,\u201d says analyst Sven Henrich, \u201chave we seen tax cuts being implemented and spending increased with debt to GDP north of 100%.\u201d<\/p>\n

But let us draw another cloud across the sky\u2026<\/p>\n

CBO projections for the next decade fail to include a possible recession.<\/p>\n

Meantime, the current \u201cexpansion\u201d is already the third longest in U.S. history, dating to 1854.<\/p>\n

By next July \u2014 if the gods are kind \u2014 it will become the longest-ever expansion.<\/p>\n

Can the economy peg along another decade without a recession?<\/p>\n

Or even half so long?<\/p>\n

It would seem unlikely.<\/p>\n

In the likely event of recession somewhere en route, authorities will flood the economy with money borrowed from the future \u2014 deficit spending.<\/p>\n

\u201cWe get a recession,\u201d claims the aforesaid Henrich, \u201cand you are looking at $2\u20133 trillion [annual] deficits.\u201d<\/p>\n

For context:<\/p>\n

These numbers don’t represent a slight increase; they represent a deficit explosion\u2026 At the current rate, we’ll be hitting $24 trillion by the next presidential election.<\/p>\n

What are the implications for markets?<\/p>\n

We’ve argued that stocks sold off last week \u2014 at least in part \u2014 because yields on the 10-year Treasury approached 3%.<\/p>\n

At that threshold, the cost of debt begins to drag.<\/p>\n

If markets are jittered with 10-year yields nudging 3%, how will they react if deficits soar\u2026 and yields spike?<\/p>\n

The historical average \u2026read more<\/a> <\/p>\n

Source:: Daily Reckoning feed<\/a><\/p>\n

The post The Last, Dying Breath of Sound Finance<\/a><\/a> appeared first on Junior Mining Analyst<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Brian Maher This post The Last, Dying Breath of Sound Finance appeared first on Daily Reckoning. We have it on highest authority: Rising budget deficits are \u201ca very dangerous idea.\u201d The president’s budget director, Mick Mulvaney, conceded the point this Sunday on Face the Nation. But like a junkie long resigned to the needle […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/634103"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=634103"}],"version-history":[{"count":0,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/634103\/revisions"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=634103"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=634103"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=634103"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}