"Despite today’s shrill discord between the parties, the political class is more united by class interest than it is divided by ideology. From left to right, this class has a permanent incentive to run enormous deficits — to charge, through taxation, current voters significantly less than the cost of the government goods and services they consume, and saddle future voters with the cost of servicing the resulting debt after the current crop of politicians has left the scene." - George Will
Actually George, the "left" never voted for a tax cut for the ultra-wealthy. 100% of Democrat Senators voted against it. You should check your facts on that.
Over the weekend, George Will squandered what remained of his ad-sponsored credibility by joining us perma-bears in the "sky is falling camp". He was instantly derided by the economics establishment for being "unconvincing".
Unfortunately the essay is too vague - never once mentioning China. Never once mentioning Emerging Markets. And never once mentioning trade war as a direct catalyst for collapse. In other words, it was "unconvincing".
The real reason Will "can't" be believed of course is because the seeds of destruction were directly sown in 2008 with the bailout and subsequent mega asset bubble. There is zero exit strategy for this asset bubble - which is even more amazing in light of the fact that it's being actively imploded by global central banks. He also never mentions the fact that the past ten years was yet another round of corporate Shock Doctrine - the swapping out of good jobs for junk jobs, to bolster corporate profit. The ever-increasing and unsustainable imbalance between supply and demand which is the real root cause of collapse.
On the topic of the tax cut and debt as "GDP", George Will perfectly describes the deep state of denial:
"Jerome H. Powell, chairman of the Federal Reserve, says fiscal policy is on an “unsustainable path,” but such warnings are audible wallpaper"
Contrary to his assertion however, the tax cut had nothing to do with "providing government goods and services". It was solely used for stock buybacks, hence the money bypassed the economy and headed straight for the Cayman Islands:
He might have also mentioned that the Trump tax cut is having the predictable "crowding out" effect by raising inflation and interest rates.
As indicated this past week by consumer sentiment now LOWER than prior to the tax cut. Money well spent:
The Fed is using the tax cut as cover for tightening monetary policy on the short-end and the long end at the same time. A double tightening that has never occurred before in U.S. history.
The resulting dollar rally is sucking liquidity out of the rest of the world and forcing global central banks to tighten alongside the Fed to defend their own currencies. In other words, the Fed is not tightening the U.S., the Fed is tightening the entire world.
There is an abject lack of understanding as to how global trade and capital flows are the opposite sides of the same coin. Trade deficits equal capital surpluses. In order for the U.S. to live beyond its means, the rest of the world must pay for it via the blank check dollar reserve currency. Instead, everything is seen solely from the U.S. point of view. China is "ruining" the U.S. economy by inflating corporate profit to record levels, and stocking Walmart with cheap merchandise. Mexican laborers are stealing the good berry-picking jobs.
One thing Will does get right - as alluded to in the title of his post - is the fact that the "future" is not as far away as today's gangster class need it to be in order to make a clean get away. What remains of the political party that voted for this criminality - when it all blows up in their face totally unexpectedly, again - remains to be seen. I'll go out on a limb and say, not much.
What archaeologists need to know is that it all fell on deaf ears.
