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We Need A Law, And Kudlow Needs To HANG
Karl Denninger

I'm tired of this horse**** and those who promulgate it and then cause the nation to self-destruct, along with intentionally blowing asset bubbles through this policy that destroys the lives of millions, need to have that behavior defined as a death-sentence felony with punishment to be meted out by public hanging.

Kudlow once again ran the same crap he ran during the Reagan years about "supply-side" tax cuts, admitting that they boosted deficits (duh) but trying to argue they were akin to a business investment and would be recovered through higher growth.

The problem is he lied about the outcome; what he claims never happened during Reagan's years in office.  The Fed Z1 along with the GDP series proves this.

Further, it's not going to happen now either -- OMB says we'll run north of a trillion in deficit in fiscal 2019.  The import of this is that such a figure would be right around 5% of GDP.

This means in order for the economy to "pay that back" the growth rate would have to exceed 5% GDP in nominal terms over a period of years without further expansion of the debt.  This has never happened because the deficit spending never stops.

Kudlow knows this because he was there for the Reagan stupidity and yet he continues to run this crap, knowing he's lying.  In fact it's much worse than it first appears because the borrowing at "ever lower" ratcheting down interest rates by other actors, other than the federal government, also adds to nominal GDP yet that addition is factually false.

This is basic arithmetic folks; you must measure a thing in non-variant units if you wish to know if that thing is expanding or contracting.

Consider the measure of a "foot" as a unit of distance.  If a "foot" was defined as the length of the right foot of the King, but when you began with this measurement the King was 4 years old, then in 20 years' time could you tell me a "foot" of length was the same as a "foot" of length 10 years prior?

Of course not and any attempt to do so would be instantly laughed down as beyond stupid.

Since the amount of circulating money and credit is the denominator of the unit of dollars then in order to determine the actual GDP in invariant units, that is whether the economy is actually expanding or contracting, you must subtract from the change in a given unit of time the addition of money and credit during that same period of time exactly as you must adjust for the growth of the King's foot in order to determine whether a foot today is equal to a foot tomorrow.

When you do this you find that at no time -- not for one quarter during Reagan's Presidency -- did actual economic output during Reagan's Presidency expand.  What expanded was nominal GDP but the entirety of the "expansion" plus more was actually the expansion of the public debt and other emission of credit.

In other words in an SI, that is, an invariant unit, economic output actually contracted the entire time, and that has, with few and short exceptions, continued since!

How do we know this is true, beyond mathematics which are not suggestions?

Well, what percentage of the people are on food stamps?  There are 42 million on them today, and the last time we saw this level of "unemployment" that number was 17 million.  That's more than a clean double.  If GDP is so great then why are there twice as many people, plus more, unable to afford to buy their own food?

Is that the only example?  Of course not but it's a damnably glaring one, and impossible to ignore.

In the end, however, the bottom line is that mathematics does not hew to either suggestions or politics.  It just is.

You can fake alleged "growth" by cranking up deficit spending for a while but the only way any organization, government or otherwise, can continue to debt-finance consumption is for rates to continually decrease so you can continue to roll over said debt at ever-lower interest expense.  The laws of mathematics make such an exercise literally impossible to maintain on a permanent basis and refusal to recognize and deal with that means that the deeper you have dug the hole before you're forced to stop the more it will hurt and the more people will be abjectly ****ed and even die as a consequence.

Those who press these policies should be held accountable, directly and criminally, as murderers -- because they are.

Take your spot in line for the gallows Larry.

You've earned it.

Oh, and **** you CNBC for repeatedly running that knowing lie, to which you willingly subscribe and promulgate for profit.

PS: Powell just admitted the entirety of the above (other than my recommendation to make pumping this crap a capital felony, of course.)  "US Fiscal Policy has been on an unsustainable path for some time.  It continues to be unsustainable."  One truth-teller who will be completely ignored -- right up until the gallows get built, with or without that law being passed first.









AG is the editor of report and creator of the Gold Predict Color Code. His members receive frequent updates and commentary regarding the gold, silver, and mining sectors. At his heart, he is a technician and prides himself on making his analysis easy to understand through the use of adaptive and creative charting techniques. You can reach AG at [email protected].





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