Bloomberg reports that Bill Gates is out in favor of raising tax rates on capital gains to target America’s wealth. Raising the tax rate on capital gains in the name of generating more revenue or narrowing the wealth gap is a half-baked and incredibly lazy idea. It’s one thing for Senators Bernie Sanders or Liz Warren to propose soak-the-rich tax policies to rile up their base, but Mr. Gates should know better. A higher capital gains tax rate will do nothing to narrow the divide between rich and poor, nor will it generate higher tax revenue for the government. America’s richest … [Read more...]
Will the Fed ever Keep Bernanke’s Promise to Unwind?
Ten years after Ben Bernanke's famous 60 Minutes interview, the Fed is looking less likely than ever to unwind the unconventional monetary policies it used to fight the Financial Crisis. Danielle DiMartino-Booth writes for Bloomberg: If the primary goal was recovery without inflation, the Fed delivered. Since the onset of recovery in June 2009, the core personal consumption expenditures index, which measures the prices paid by consumers for goods and services net of food and energy prices that tend to be more volatile, has been above 2 percent in in just five months in 2018, four in 2012 and … [Read more...]
Bianco: Devaluation to Fund Government Has Never Worked
Writing at Bloomberg, Jim Bianco explains to readers that devaluing a currency to fund government has never worked. The Modern Monetary Theory, a current hot topic among the Socialist-leaning politicians and activists in Washington D.C. today, is very much the devaluation of money to fund government. Bianco writes: MMT is basically a sibling of quantitative easing. While QE allowed the Fed to print money to buy securities such as U.S. Treasuries, mortgage bonds and bad loans, MMT proposes printing money to fund the government. The Fed has hailed QE as a success, bringing the economy back from … [Read more...]
Grantham on Stocks: You Can’t Get Blood Out of a Stone
In a recent interview with CNBC, famed investor Jeremy Grantham explained that despite new stimulus from the ECB, and a halt on tightening measures by the Fed, he isn't optimistic that a boom in stock prices is forthcoming. Mark Decambre reports at MarketWatch: Jeremy Grantham, an investor credited with predicting the 2000 and 2008 downturns, told CNBC on Thursday that investors should get inured to lackluster returns in the stock market for the next two decades, after a century of handsome gains. “In the last 100 years, we’re used to delivering perhaps 6%,” but the U.S. market will be … [Read more...]
Big Oil “changing the way that game gets played” in the Permian
Big oil companies like Exxon and Chevron came late to the party in the Permian basin, but are now heavily invested in the oil play. Faced with certain difficulties ahead, they are looking to "change the game." Ed Crooks reports for The Financial Times: The Permian’s oil output has already shown prodigious growth in recent years: it has doubled since the summer of 2016, to 4m barrels a day, or roughly a third of total US daily production. The announcements from Exxon and Chevron were a signal that the boom would continue. “It is quite a stunning development, in terms of the scale and the … [Read more...]
Will Disney+ be Bigger than Netflix?
Disney is close to unveiling its new streaming services, Disney+ and ESPN+. Those new services, along with Hulu, which Disney recently acquired a controlling share in, will serve as the platform for Disney's digital delivery future. The question many analysts are asking is, will Disney's services be as popular as Netflix? Barron's Nicholas Jasinski reports: The back story. Disney (ticker: DIS) so far has been coy about providing specific details, other than revealing that it plans to take a three-pronged approach to direct-to-consumer streaming. One service, called Disney+, will include … [Read more...]
The Surge in American Economic Growth Could Pay for Tax Cuts
Phil Gramm and Michael Solon explain in The Wall Street Journal's Opinion section, that the Trump tax cuts are on their way to paying for themselves with increased economic activity. They writes: For a midterm report card on the economy under President Trump, take a look at two recent government reports. The Commerce Department reported Thursday that real gross domestic product grew by 3.1% from the fourth quarter of 2017 to the fourth quarter of 2018—the largest rise in 13 years. And last month the Congressional Budget Office reported that even if the current surge in economic growth isn’t … [Read more...]
Is Fed Policy Sparking Socialism?
The Financial Times' David McWilliams makes a convincing case that what has empowered "millennial socialism" is the policies of the Federal Reserve. He writes: Is Ben Bernanke the father of Alexandria Ocasio-Cortez? Not in the literal sense, obviously, but in the philosophical and political sense. As we mark the 10th anniversary of the bull market, it is worth considering whether the efforts of the US Federal Reserve, under Mr Bernanke’s leadership, to avoid 1930s-style debt deflation ended up spawning a new generation of socialists, such as the freshman Congresswoman Ms Ocasio-Cortez, in … [Read more...]
Will Democrats Break Up Big Tech Companies?
Rhode Island Congressman David Cicilline (D) has suggested imposing on tech companies a form of the Glass-Steagall rules that have been applied to banks. The rules would seek to break up functions of the tech companies to avoid anti-trust issues. Kiran Stacey reports in the Financial Times: David Cicilline, the head of the House antitrust subcommittee, has suggested imposing a version of the Glass-Steagall rules — which forced banks to separate commercial and investment banking — on the technology industry. His comments add to growing calls from senior figures in the Democratic party to … [Read more...]
The 3 Disturbing Implications of the Fed’s Flip
The Fed was on a good path last year. After nearly a decade of punishing savers with zero and ultra-low interest rates, Chairman Jerome Powell oversaw a move toward more normal monetary policy. From his start in January of last year through December, the Fed hiked interest rates a total of four times and allowed its asset portfolio to fall by about $325 billion. Over Bernanke’s eight years at the helm of the Fed, interest rates were increased a grand total of three times. Yellen wasn’t much better. It took here four years to get in five hikes. Powell did four in one year. Powell’s more … [Read more...]
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