Hughesair (Inflection Point)

Retired physician and air taxi operator, science writer and part time assistant professor, these editorials cover a wide range of topics. Mostly non political, mostly true, I write more from experience than from research and more from science than convention. Subjects cover medicine, Alaska aviation, economics, technology and an occasional book review. The Floatplane book is out there. I am currently working on Hippocrates a History of Medicine and Globalism. Enjoy!

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Thursday, November 01, 2018

Liquidity and the Current Market

Revenue for the US Treasury comparing year over numbers, correlates with investment market liquidity, not perfect, increased by corporate buybacks and deminished by new IPOs —- The Daily Treasury Report, www.fms.treas.gov/dts

I have a hypothesis that the tariff will stimulate the economy rather than slow it down. Seems counter intuitive, but there is a history of tariffs and strong economies, and there appears to be a scenario wherein alternative, more local purchases, due to the high tariff might result in an infusion of liquidity into the consumer market. There would be winners and losers, but the winner should be the consumer while the looser should be the multinational importers and offshore manufacturers. If the impact of the tariffs plays out that way, it would be a flow of capital away from the 1% back into the consumer market.

As of October 31, the end of the first month of the government fiscal year and the first month of the tariffs, the withholding and personal tax collected over the month increased by 2% while the excise tax (tariffs) increased by 9%, hardly a support to the theory, but it’s too early to see a change with all the inventory in the supply chain. The true measure of the consumer economy should be reflected in the personal withholding and taxes paid. If consumer alternative spending does indeed pick up, the personal withholding and taxes paid should pickup as well, while excise tax collected should fall off, and imports as well. The good news would be a giant infusion of liquidity into the consumer market. The bad news would be big business loses, and probably a fall off in the stock market. It would, however be a transfer of capital from the 1% to the rest of us, a feat that has been hard to arrange both recently and historically.

Imports for August were 262.67 billion with a trade deficit of 53.2 billion. (The lack luster 2% gain in personal tax revenue also correlates with the October stock market correction.) Stay tuned into the DTS, the biggest game in town, supply and demand.


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