There are dunces and then there's Larry Kudlow:
Republicans are looking to create broad-based prosperity by taking a policy that has generated broad-based poverty for 37 years, to level '11'. It makes perfect sense to anyone with an IQ of 0 or lower.
Giving massive tax cuts to the bailout class on the theory that the bread crumbs will fall onto the heads of the indolent masses, has been tried twice before already. Each iteration leading to more job insecurity, more financial insecurity, and far more debt. Nevertheless, here they go again. It never once occurs to any of them that only by directly increasing the incomes of the middle class, can the roller coaster ride to penury end. But these are not bright people. They're serial failures, and their main skill is conning idiots.
The locus of imminent failure for this third iteration of the experiment of course comes on the monetary policy side. As the term "inflation" makes its way into the Wall Street lexicon, the bond market and even the dullards in the Fed begin to take notice. Even though there is actually no broad-based inflation, especially not in wages; however any minor lift in wages is seen as a threat to the temple of debt. Under the *free trade* race to the bottom, real wages can fall continuously, but they can never rise. Lest they pose a threat to corporate profit margins.
Therefore, working in close collaboration, the Fed and Republicans are generating insolvency for the U.S. middle class:
But it gets worse, because they are also generating insolvency for China which pegs its currency and therefore interest rates to the U.S.
And yet there is no offsetting tax cut for China.
"China’s central bank will increase money market rates as it seeks to curtail excessive borrowing and avoid too much divergence with U.S. policy"
In other words, Trump and the Fed are popping China's debt bubble for them. Free of charge.
Despite massive EM inflows (primarily to stocks), EM debt is lagging currencies:
Here is where it gets interesting. S&P 500 volatility sensitivity has never been higher. And volatility never lower.
So this will all end via overnight gap 'n crap, compliments of Emerging Markets:
In Ponzi World, what comes around goes around...
At least they don't see it coming.
How could they? They don't trust anyone with an IQ above zero...
