I don’t know. You don’t know. He doesn’t know. We don’t know. You all don’t know, and all of y’all don’t know either. They don’t know.
Conjugation complete. No one knows.
I am in the odd position of being relatively bullish regarding the debt ceiling in DC, which is near me, and affects my local economy. I think a deal will be struck, and that it will be passed by both houses, and signed by Obama. At least, I give that 60% credibility.
Though I don’t like the t-party, I admire their adherence to principle, which is usually lacking in DC. In general, we want more principled congressmen, except when they are more principled than we are. We are hypocrites, and delusional believers in magic.
Most people think that there is an easy solution that will not affect them, but will hit all of the evil people who sponge off our government. Sorry, the easy solution does not exist. There is a tough solution that will make the rich pay, and will eviscerate the Bush tax cuts, but not change tax rates. Change the definition of income such that improvements in economic position can’t be delayed. Make Warren Buffett pay his fair share now, and me too. Move back to the Tax Reform Act of 1986, and eliminate all of the deductions, and then go further, tax us all like traders, and make us pay each year on the net increase in unrealized gains.
With such a change, the inheritance tax would not be needed, because the rich, and corporations trying to avoid taxes by keeping cash overseas would all be taxed, at least for a little while, before they move to Ireland or Bermuda.
In 2013, no one expected that the US Military would descend on all of the tax havens of the world to reclaim their fair share. I jest, but what could be simpler than to force them to raise taxes, and remit them to the US.
In the present situation, my bond portfolio is largely in foreign bonds, the next part in inflation-protected securities, and the last part in long nominal US Treasury Bonds.
What I see here is an unstable situation with potential for goods price inflation or real deflation, making long dated claims valuable. Whatever. It is uncharted waters, and are there monsters here? Maybe. We’ll soon see whether there is some sort of agreement, or whether we get to find out the consequences of a drop in liquidity, or aggregate demand, combined with a drop in future claims on wealth.