Fabulously Fake Facts – “G” in GDP Stands for “Gullibility”

The Great Recession

While glowing presidential proclamations about US GDP growth last week did nothing to prevent the stock market from rushing headlong over the cusps of a FAANG stock ledge, the market is taking a breather today. So, let’s take a breather and go back and look at why that GDP report had no bite.

Quite simply, I think stock investors looked at the surfacing of real problems in their favorite FAANG stocks and, so, failed this time to find any fun in the frivolous fiction of government factoids. GDP reportage has been fake for years, and it is no less fake under Trump than under any other president. Fake is where you find it. You can find it as much on Fox as on CNN.  

Budget Mnunchkins advising the president

JPMorgan Chief Jamie Dimon says he knows that two of Trump’s advisors assured Trump there would be no retaliation toward his tariffs. While Dimon refused to say who the two were, I will speculate that they were none other than the wacky team of Kudlow & Moore. I think Krazy Kudlow has been sniffing the ether or has returned to his cocain habit because “no retaliation on tariffs” sounds like the kind of shoot-from-the-hip garbage-bin economic assurance for which Kudlow & Moore are branded. Oh, how lucky we are to have them as the president’s chief economic advisors!

Obviously, whoever gave Trump this advice, was wrong. The president’s planners were wrong also about their statements that the Trump Tax Cuts would pay for themselves. As a result of their malconcocted plan, the Treasury Department just released new predictions that its borrowing for the remainder of the year will rise to the highest amount since the financial crisis in the second half of 2008 when borrowing set an all-time record as an attempted escape hatch from the Great Recession was quickly cut into the deflating economy.

The department has raised its second-half borrowing estimate to $769 billion, a soaring amount beat only by the $1.1 trillion of emergency spending in July-December 2008.Only, this time we are told by the administration we are not in any emergency at all; we are, in fact, in the middle of a robust economic expansion. Would someone please explain to me why a robust economy needs the second-largest semi-annual deficit spending in the history of the nation just to keep afloat?

These Treasury Dept. estimates for new debt issuance that were “quite a bit higher than our expectations,” according to one economist, didn’t stop the president’s men from making additional rosy proclamations into the nation’s thought void:

Administration officials say a stronger economy will boost government revenue and help shrink the budget deficit. Treasury Secretary Steven Mnuchin said Sunday the U.S. economy is “well on the path” for four or five years of sustained annual growth of 3 percent. (Newsmax)

Sure — just like there won’t be any retaliation for Trump’s tariffs.

The government’s necessity to expand its bond auctions due to higher fiscal spending and lower revenue is being complemented right now by the Fed’s choice to unwind from its own government bond purchases. Higher spending, lower revenue, and higher need to refinance debt that had been carried by the Fed until now — sounds like the perfect fiscal storm to me! Bear in mind that the Treasury’s auction near the end of July resulted in the government having to pay the highest interest on its two-year bonds since 2008.

Read the rest here: The Great Recession