US recession jitters stoke fears of impotent Fed and fiscal paralysis

The Telegraph ^ | September 2016 • 10:20pm | Ambrose Evans-Pritchard

[expat_panama]

Debt terrifies people but the paradox of macro-economics is that sometimes borrowing even more is the best way out Credit: Jon Elswick

An ominous paper by the US Federal Reserve has become the hottest document in high finance.

It was intended to reassure us that the world's hegemonic central bank still has ample firepower to overcome the next downturn. But the author was too honest. He has instead set off an agitated debate, and rattled a lot of nerves. ...

...federal debt is already 105pc of GDP - up from 54pc...

...nagging question is what happens at the onset of the next recession. If elected, Hillary Clinton is likely to be...

...new orthodoxy is emerging in elite global circles that the only way to escape of the liquidity trap and soak up excess savings is concerted fiscal stimulus on a world scale. The International Monetary Fund has become the fiscal cheerleader, yet even the IMF cannot seem to marshal its own staff,,,

,,,still pushing the old contractionary view in aggregate, if you tot up its 'Article IV' advice to each country. Follies die hard...

...our desperate deflationary age, and can cast aside deeply-ingrained and totemic beliefs about debt...

...survivors - will be those most willing to seize on the cheapest borrowing costs in history to fight back, preferably combining fiscal and monetary in a radical fashion. Call it helicopter money if you want, or 'overt monetary financing' of deficits. The accounting terminology is irrelevant.

Since no country can risk watching its precious national stimulus leak away to free riders in the austerity camp - at least in a crisis - this may imply some degree of calibrated protectionism. The twin liberal pieties of progressive public policy and global free trade may ultimately come into conflict. That is tomorrow's battle.

[expat_panama]

A lovely new morning!

Stocks are steady moving slightly up in slightly higher trade while our gold and silver hoards hang on to $1,348.91 and $19.96.  Futures promise more of the same for stocks but their a bit jumpy on metals @ -0.75%.

Data today:

8:30 AM Initial Claims
8:30 AM Continuing Claims
10:30 AM Natural Gas Inventories
11:00 AM Crude Inventories
3:00 PM Consumer Credit
 

fwiw:

Top 10 Lessons From 10 Years In The Trenches - Jason Trennert, Strategas
Stocks Inch Closer to 2nd Correction of '16 - Michael Gayed, MarketWatch
The U.S. Jobs Rebound Isn't Helping the 'Missing Men' - Conor Sen, BBW
Will Fed Deliver Another September Surprise? - Anthony Mirhaydari, TFT
Cash Is Freedom, Which Is Why Gov't Hates Cash - J.D. Tuccille, Reason
New Century Brings Big Downshift in GDP Per Capita - Alex Pollock, RCM
Fear Not, 'Brexit' Is Coming to America Too - Thomas Del Beccaro, Forbes
Couples' Money Secrets Imperil Retirement Dreams - Paul Katzeff, IBD

Threads:

• Victor Davis Hanson: Trump Up, Hillary Down, Obama Out
• Companies Finally Start Fighting Back Against Organized Shakedowns
• Obamacare Shrinks Economy through Medicaid Expansion and Tax Credit Cliffs

[ThinkingBuddha]

They say “be careful what you wish for”. A recession at this time might actually save the country. Hillary will loose big, and Obama will not be turned into a FDR.

[agere_contra]

new orthodoxy is emerging in elite global circles that the only way to escape of the liquidity trap and soak up excess savings is concerted fiscal stimulus on a world scale

Translation: 'we need to steal more purchasing power from everyone who holds fiat currency'.

Peter Schiff called this years ago. To paraphrase:

"There are going to be more QEs than Rocky Movies. And - just like the Rocky Movies - each QE will be worse than the one before."

[moovova]

“The only thing keeping the US out of recession is the US consumer.”

Thank goodness for credit.

[Pollster1]

A recession at this time might actually save the country. Hillary will loose big, and Obama will not be turned into a FDR.

I'm praying daily for our country's survival. As bad as another recession would be without a real recovery since the last one, it's a small price to pay for America. Even another civil war would be better than losing the legacy of freedom that our ancestors passed down to us in the Constitution and in the Bill of Rights, and a mere recession would be far better.

[Iron Munro]

Indebtedness Is Freedom

[Dr.Deth]

London's Million Pound Homes Hit Hardest By Brexit

"Women, Minorities Hit Softest"

[Buckeye McFrog]

We are in a recession now.

Only you would not necessarily know that as the media is working triple-overtime to cover it up.

[Diana in Wisconsin]

"We are in a recession now. Only you would not necessarily know that as the media is working triple-overtime to cover it up."

Don't worry. The MINUTE Trump is elected, they'll add a big, fat, gray bar to this chart...about a DECADE wide!

[Diana in Wisconsin]

I’ve got analysis paralysis, with just a touch of malaise and a,’smidgen’ of ennui! ;)

[Diana in Wisconsin]

[citizen]

Even then it might have to launch a further $4 trillion of QE and stretch its balance sheet to a once unthinkable $8.5 trillion.

---

Is there anyone that thinks this is not already a virtual certainty? And by doing so, giving another healthy nudge toward making my savings...not worthless but surely worth considerably less.

[citizen]

Gee, here is another money quote you left out.

---

Larry Summers...said the implication of the Fed paper is that the rates would have to be anywhere from minus 6pc to minus 9pc to extract the US from a deep recession...

---

So, here we are up against it.
The only path these fiat budgeters can see is massive confiscation of wealth. (By whatever name they choose to call it)

At which time there will no doubt be handshakes and cigars all around!