September 20, 2016

Tuesday Off-Topic (Moderated) Open Thread (092016)

Filed under: Lucid Links — Tom @ 9:05 am

This open thread is meant for commenters to post on items either briefly noted below (if any) or otherwise not covered at this blog. Rules are here.

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  1. Pay no attention:

    All 4 Signals That Have Led To A Recession Before Are Present Again: Just One Thing Can Stop It

    http://www.zerohedge.com/news/2016-09-20/all-4-signal-have-led-recession-are-now-present-just-one-thing-can-prevent-it

    So yes, in 1986 the US avoided a recession. And here why: as DB explains, the reason the economy did not go into recession but back then was that the Fed cut rates by 550bps and the US dollar dropped by 40% after the Plaza Accord, boosting export growth.

    Needless to say, with rates at just above zero, there is no way the Fed can cut rates anywhere close to 550 bps, or even 50 bps; if anything it would either require trillions more in QE or for the Fed to join the ECB, BOJ and SNB in cutting rates negative. As for the dollar plunging 40%, that would mean sending other currencies of economies that are even weaker than the US, soaring by 40%, which may prevent a US recession, but would lead to a global depression.

    Exports are not going to save the economy this time because EVERYONE else is trying to do the same thing. The only way this turns around is a pro growth government policy that rolls back the barriers itself erected to business activity via regulations and taxes. Removing Obama’s “taming” of capitalism.

    Comment by dscott — September 20, 2016 @ 3:57 pm

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