Main Street Asks, ‘Why Save?’ While Wall Street Wonders, ‘Why Short?’
For the world's largest economy, a "no landing" is far more likely at this point than the fabled "soft landing."
So suggested... well, so suggested the incoming US macro data, but also BofA's Michael Hartnett who, in his latest, said Main Street and Wall Street are asking two questions: "Why save?" and "Why short?", respectively.
The 2020s, Hartnett wrote, are "the era of big government intervention." Whether it's stimulus checks during a public health crisis, rebates and subsidies to cushion
I am so tired of hearing about deficits. You pretty much only hear about them when a Democrat is in the white house. Where were these deficit hawks when reagan, w or trump with congress made big tax cuts? Crickets. I will make a modest proposal. Let’s increase capital gains taxes and income taxes for folks with 300m AGI or higher. The street and GOP will be screaming about class war and killing incentives guaranteed. But at least they will stop whining about the deficits.
And those increased taxes are already there. The passing of my wife four years ago, with no income increase, kicked me up two brackets. Capital gains do go up and investment income gets a 3.8% surtax. My SS check is docked more than $6000 a year for Medicare premiums because of my income. Trump raised taxes on all of us who saved and invested (except for himself, of course).
Looking back to the later 1970s when I started as a trader, we were facing stagflation. As well as a loss of confidence in US global leadership. “Coincidentally”, gold and silver were in demand.
History repeating itself?
Agree that Harnett’s take for the masses was disappointing — akin to if the deficit were represented by a stack of dollar bills, it would reach halfway to the moon. This immediately made me think of Kelton, before I had reached your mentioning her. She recently appeared as a guest on The Daily Show, which I was eager to see. While she desperately tried to draw the distinction between government and household finances, sadly the interview (as aired on TV) devolved into a jokey, “economics is confusing” back and forth that failed to clarify the issue much for the general publc (IMO), although the host Jordan Klepper provided a nice summary about halfway in. One point that did come across, however, was Kelton’s view that our legislators are essentially committing a fraud upon the public by likening the government’s finances to those of households. My takeaway was that the distance between politics and fraud is becoming more negligible by the day.
If allowed, here is a YouTube link to the interview. https://www.youtube.com/watch?v=1JpZZcD8C4M
The version of the interview above is NOT the same as the one that aired, which was cut down by half and much more difficult for a layperson to understand,. This longer version is much better.
A couple encouraging signs — the video has 338k views and nearly 2,000 comments, so maybe we’re getting there despite the legislators.
Long ago the Beatles asked the question, “Will you still need me, will you still feed me when I’m 64?” The answer is generally no. That’s why we save.
Have you considered renting a cottage on the Isle of Wight (if it’s not too dear)?