Here’s How to Make America Great Again by Richard Duncan
This is an interesting video made by Richard Duncan, author of several best sellers including The Dollar Crisis, and what he thinks will make America great again. There are many interesting points that I have to agree in this video…
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You CAN make America’s economy great again. Here’s how: INVEST, Mr. President – not only in infrastructure but also in the industries and technologies of the future.
You have been elected President at a unique moment in history that gives the government of the United States the ability to borrow and invest in the US economy on a scale not only large enough to rebuild America’s infrastructure, but large enough to also induce a new technologic revolution that would restructure the entire economy and make it great again, greater than ever!
If you grasp this opportunity, the United States will have unassailable supremacy in the industries of the future; you will lock in another American Century; and you will improve the well being of every American – and the well being of every person on this planet.
However, you have also been elected at a time when the global economy is in grave danger of collapsing into a depression, one from which it might not recover for decades – if ever. One misstep on your part and instead of making the economy great again, you will make the Great Depression again.
Here’s what you need to know and to act on to succeed.
The global economy is an enormous economic bubble that has been inflated by Credit. If the Credit contracts, the bubble will pop and the New Great Depression will begin. If interest rates go up significantly, the bubble will pop and the New Great Depression will begin. One wrong move on your part and the economy will spiral out of control into a depression. It won’t be short and sharp like 1921. It will be long and devastating like 1929 to 1945. That’s the bad news.
Here’s the good news. You are absolutely right to call for government investment in infrastructure. DON’T STOP THERE. During your administration, the government can borrow and invest trillions of dollars in the US economy without causing inflation. The combination of Globalization and Fiat Money makes this possible.
You not only have the opportunity to rebuild American infrastructure so that it is second to none as you promised to do in your victory speech. You also have the opportunity to invest in 21st century industries and technologies on a scale that is too big to fail, thereby guaranteeing that the United States remains the most prosperous and powerful country in the world for many decades to come.
In the past, the government could not run large budget deficits without causing high rates of destabilizing inflation. Today, the United States government can borrow and invest many trillions of dollars at little to no cost – and do so without causing inflation.
In this presentation, I’ll explain why. I’ll also describe the kind of government investment that is required to pull the United States and the world out of this economic crisis – and the extraordinary benefits that such investments would produce.
The stars are aligned. You instinctively understand the desperate need to invest in American infrastructure even if that means increasing the national debt AND you have the political clout to make sure that Congress funds this investment, something it was unwilling to do until now. At the same time, the combination of Globalization and fiat money makes it possible for the US government to borrow and invest trillions of dollars at little or even no cost whatsoever. Now that you have shattered the taboos that blocked fiscal stimulus and an increase in the national debt, all that remains to do is to determine is what kind of investments will generate the greatest benefits – and then to make those investments.
This is a once in history opportunity, Mr. President. Grasp it. INVEST. And make America’s economy greater than ever.
Invests Mr. President – not only an infrastructure, but in industries and technologies of the future. You’ve been elected president at a unique moment in history that gives the government of the United States the ability to borrow and invest in the US economy. On a scale not only large enough to rebuild America’s infrastructure, but large enough to also induce a new technological revolution that would restructure the entire economy and make it great again, greater than ever!
If you grasp this opportunity, the United States will have unassailable supremacy in the industries of the future; you will lock in another American Century; and you will vastly improve the wellbeing of every American – and well-being of every person on this planet.
However you’ve also been elected at a time when the global economy is in grave danger of collapsing into a new depression, one from which it might not recover for decades – if ever.
One misstep on your part and instead of making the economy graded yet you’ll make the Great Depression again.
Here’s what you need to know and gone to succeed. The global economy is an enormous economic bubble that has been inflated by credit. If the credit contracts, the bubble will pop and a new Great Depression will begin. If interest rates go up significantly the bubble will pop and a new Great Depression will begin.
One wrong move on your part and the economy will spiral out of control into a depression. It won’t be a short and sharp depression like 1921, it will be long and devastating like 1929 to 1945. That’s the bad news.
Here’s the good news. You are absolutely right to call for government investment in infrastructure, but don’t stop there. During your administration, the government can borrow and invest trillions of dollars in the US economy without causing inflation. The combination of globalization and Fiat money makes this possible – possible for the first time ever.
Not only have the opportunity to rebuild American infrastructure so that is second to none as you promise to do in your victory speech, you will have the opportunity to invest in 21st-century industries and technologies on a scale that is too big to fail, thereby guaranteeing the United States remains the most prosperous and powerful country in the world for many decades to come.
The government investment in infrastructure will create jobs and generate strong economic growth in the short to medium term. The government investment in industries of the future will bring great job and strong economic growth for Americans for the rest of the century.
In the past the government couldn’t run large budget deficits without causing high rates of destabilizing inflation. Today the United States government can borrow and invest many trillions of dollars of little to no cost and do so without causing inflation. In this presentation, I’ll explain why. I’ll also describe the kind of government investment that’s required to pull the US and the world out of this economic crisis – and the extraordinary benefits such investments would produce.
The last eight years have demonstrated that the US government can borrow and spend trillions of dollars and finance much of that new debt with Fiat creation – without causing inflation. This has never been possible before. In the past, such a large increase in government spending, financed with huge amounts of money creation, would quickly led to hyperinflation, but not now.
When Presidents Johnson, Nixon, Ford and Carter ran large budget deficits, those deficits overstimulated US economy and led to high rates of inflation that’s what you can see in this chart the US government budget deficits from 1950 up until 1980 under the Johnson administration, the Vietnam War and the great Society programs caused larger budget deficits and had been typical in the past – and then Nixon and Ford and then Carter.
Those unusually large budget deficits overstimulated US economy. Inflation served when the economy reached full employment at full capacity utilization is what you can see in this chart consumer price inflation up to 1980 it peaked at 14.6% in 1980 because of this overstimulation through the budget deficits.
Then Ronald Reagan became president in 1981 and his government ran budget deficits that were a great deal larger than the ones in the 1960s and 70s. They were the largest peacetime budget deficits in US history up until up until then. During his first five years in office they averaged 5% of GDP. So you can see the revenues; 81 – 82 – 83 – 84 – 85 that was 5% of GDP a year much larger than the budget deficits that came before. But inflation fell sharply from 1981 So what had changed?
Well Fed Chairman Volker crush inflation with very high rates of interest in 1981 but the massive Reagan budget deficits should have reignited inflation why didn’t they. They didn’t because the US started running very large trade deficits with the rest of the world for the first time ever. Those deficits allowed the US to circumvent the domestic bottlenecks of full employment and limited industrial capacity. The United States could now acquire whatever it wanted in the global economy where the supply of low cost labour was nearly limitless.
So that’s what you can see in this chart shows the current account balance up until the breakdown of Bretton Woods trade had to balance. Afterwards the US started running big budget deficits during the Reagan years for the first time ever, very large trade deficits. The US has had very large trade deficits ever since. These trade deficits fundamentally changed, the way the economy works, so you can see the current account deficit up until last year during the Reagan years it peaked at 3% of US GDP that was considered incredibly large. But by 2006 these blown up to 6% of US GDP $800 billion that year alone.
After 1980 the US continued to buy more and more goods from low-wage countries and that caused inflation to continue to fall. Globalization is very deflationary – so that’s what you can see in this chart the CPI consumer price inflation has been falling and falling and falling ever since United States started running large trade deficits with the rest of the world. The deflationary forces of globalization and more recently quantitative easing by the Fed, the Bank of Japan, the European Central Bank and the Bank of England have driven US government bond deals to record low levels.
So you see here the tenure the US government bond deal and that has pushed mortgage rates to record low levels. So this globalization explains why inflation has been so low, before globalization each country had a relatively closed economy. Those economies experienced inflation when the domestic labour force and the domestic production facilities were fully utilized. Now we have a global economy with the labour force numbering in the billions and production facilities that stretch around the world. That means that domestic bottlenecks are now irrelevant.
Consequently inflation is no longer ignited by domestic constraints and the global economy is very far from hitting full capacity. 2 billion people live on less than three dollars a day, globally we won’t hit labour constraints for decades perhaps not for generations. Meanwhile seemingly limitless credit growth in China has produced excess capacity there across all industries on a mind-boggling scale, full capacity utilization there certainly won’t be reached during your administration.
This means we can use a combination of fiscal and monetary stimulus on a much greater scale than ever attempted before and generate much higher rates of economic growth and we have now – all without causing a significant pickup in inflation. There’s another reason interest rates of fallen since the early 1980s and it too is related to the US current account deficit. It’s the balance of payments. Every countries balance of payments must balance the United States very large current account deficits must be financed by equally large capital inflows from abroad. So here you can see the US balance of payments, the black line is the US current account deficit which we’ve been looking at and the orange line is the US surplus on the capital and financial account in other words the foreign capital inflows that must come into the country to finance the current account deficit.
These exactly offset each other, which means the larger the US current account deficits became the more foreign money came in the United States to finance them. And much of that foreign capital inflow weighted US government bonds that made it much easier to finance the US government’s budget deficits at very low interest rates. So the large US trade deficit drove down interest rates in two ways – importing cheap goods made with low-cost labour pushed down inflation and (2) the foreign capital that enter the country to finance the current account deficits was invested in US government bonds pushing up the price of those bonds and pushing down their yields.
Low inflation made quantitative easing possible. When the economic crisis began in 2008 the Fed was able to print money and reflate the economy because there was no inflation and quantitative easing kept the United States and the world from collapsing into a new Great Depression.
Here you can See the Fed’s total assets that created $3.6 trillion since the crisis began and quantitative easing drove up the stock market every time there was a round of quantitative easing the stock market went up it also reflected home prices is what you can see in this chart so because the Fed bought $3.6 trillion of financial assets with new money. Household net worth rose by $33 trillion or by 61% between the post crisis low in the first quarter of 2009 and now $33 trillion of new wealth.
That had enormously positive impact on the US economy and the global economy but the game is over if interest rates rise significantly credit would contract as it would become less affordable and asset prices would fall for the same reasons that asset prices rose. While interest rates were falling, credit contraction and falling asset prices would most probably plunge the United States economy into a severe depression and that would cause the global economy and financial system to collapse as it did during the 1930s.
As interest rates fell credit became more portable so credit expanded and credit growth drove economic growth as on this chart you can see interest rates the federal funds rate fell to zero and the green line shows the ratio of total credit to GDP, it rose from 150% in 1980 up to 370%. So as interest rates fell credit became more portable and credit growth expanded and it drove economic growth, but now if interest rates rise credit will contract and the economy will crash. This chart shows household networks as a percent of disposable personal income you can think of this as a ratio of wealth to income so notice that this ratio of wealth and income is near record high levels because very low interest rates and quantitative easing have pushed up asset prices, so the ratio of wealth and income look at the time of the NASDAQ bubble this one up to about 600% and then it crashed.
The average going back to 1950’s has been around 525 – 550% at the time of the property bubble 2006 and seven this peaked at 650% and it crashed. Now it’s back to 640% – so if interest rates rise now then asset prices are going to crash. What this means is that you must not allow interest rates to rise – therefore you cannot impose trade tariffs and you should not cut taxes.
Trade tariffs would push up interest rates because first they would push up the cost of imported goods causing inflation rise and second they would also reduce the current account deficit, and that would reduce the financial account surplus, and so reduce the foreign demand for US government bonds. With less demand prices would fall in interest rates would rise.
Don’t cut taxes don’t do it you cut taxes budget deficit will increase so the government will have to borrow more as long as interest rates remain low the government will be able to borrow an enormous amount of money and even finance part of it with quantitative easing. But there are limits to everything.
Do you want to cut taxes for the wealthy or do you want to make America’s economy great again you probably can’t do both tax cuts could destroy your chance to restructure the US economy and they won’t help the economy in the long run if you cut corporate taxes corporations still won’t invest in the United States unless you stop them from building of factories in low-wage countries that already have a great deal of excess cash that’s what I keep buying back their stocks instead of investing in America.
If you cut income taxes for the wealthy they won’t spend more so that won’t help the economy but it will increase income inequality, if you cut income taxes for the middle class and the poor they will spend the extra cash so that will help China’s economy but it won’t help the US economy. One of your economic advisors was quoted as saying that the tax cuts were necessary to help small and medium-size businesses if that’s true and you really feel less important than only cut taxes for those businesses with revenues of less than $15 million a year not for the large corporations and pay for those tax cuts by increasing the tax rate on personal incomes greater than $5 million a year.
Don’t run up the budget deficit and the national debt to pay for tax cuts for corporations and the wealthy every dollar the government waste on tax cuts could be used to restructure the US economy through government investment in new industries and technologies investments that would make America’s economy great again. You have to choose. Do you want trillions of dollars of tax cuts? Or do you want to make the US the world undisputed technological superpower for the rest of the century? Tax cuts or cure for cancer tax cuts are three limitless clean energy tax cuts will drive up US government debt and only boost China’s growing power.