China exported a bit if the EM deflation wave our way via the reserve currency channel.
Reserve currency is in demand by our guv, emerging markets are short dollars at risk adjusted rates. EMs increase internal prices, export deflation and strengthen local currencies.
EMs are not necessarily bad at this and the deflation causes more than offsetting tax cuts, deficit rises more than it should and guv does not have the liquidity to ride it out. Hard to operate an entitlement system ung the global reserve currency.
We are, in order, rolling over a boomers worth of generational debt, paying for the final costs of Obamacare, paying for the tax cut, paying for sudden earthquakes, forest fires and hurricanes.
We suffer from pension stampedes, failed state budgets, constitutional disorders with Calizuela, migration shift to the South West, and massive underfunding of pensions. Public Sector pensions will be glad if they can get 5% this year, and the realization is hitting local governments everywhere.
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