Friday, December 30, 2016

Rising Confidence Maskings Higher Taxes and Looming Trade War

Expectations for the Trump Presidency is driving consumer confidence to highs not seen since 2001. While the majority views this as bullish, the invisible hand is still cautious due to rising costs of government (see below) and looming trade war that rarely see a political resolution.

A contracting European and Asian economies, both following the collapse of socialism, will only cause the dollar to rally against the expectation of the majority. The stronger the dollar becomes, the more illiquid debt issued in dollar but denominated in foreign currency becomes. Similar to the onset of the Great Depression, a rising dollar will be viewed as a negative trend to be contained by protectionist politicians. As Hubert Hoover quickly found out, ill-conceived policies will only make things worse.

Disappointment in Trump is inevitable unless does something unique.

Headline: These 7 states will have higher gas taxes Jan. 1

Motorists in nine states will see changes in gas taxes at the pump on New Year's Day, and more than a dozen states will examine adjustments in 2017.

Pennsylvania already has the largest gas tax in the country, at 50.4 cents per gallon, according to the Tax Foundation. The rate will rise 7.9 cents per gallon with the new year, based on a 2013 law.



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