Predictions for 2017

Given how well I did with my 2016 Predictions I thought I would give it another go and see what I thought would be likely for 2017.

At least 3 terrorist attacks in Western Europe resulting in double digit casualties.  Why?  Because Muslims will continue to be Muslim.

Angela Merkel wins the Nobel Peace Prize.  Because that is exactly the kind of retarded thing the Nobel Prize Committee would do.

Most of the ObamaCare (ACA) legislation will be repealed.  I say most because there are a few items that may be either too politically popular (keeping kids on their parent’s plan until 26) or were already part of Republican replacement plans (pre-existing conditions).

The FED will raise interest rates by at least three-quarters of a point.  The FED just recently raised the short term interest rates by a quarter of a point, the first increase in 2016.  This strikes me as a totally political decision, since Janet Yellen was a target of Trump and I’ve no doubt she’ll raise rates at least another ¾ of a point in 2017 in hopes of stalling the economy to punish Trump for his impertinence.

Articles of Impeachment against Donald Trump will be introduced in the House.  Why?  Because the Democrats are already talking about that now.  Waiting until Trump is President is merely a formality.

There will be at least one assassination attempt against Donald Trump this year. When the media has been promoting the “literally Hitler” meme for the past year, would it be surprising that some earnest liberals take the Dead Zone option and try to take Greg Stillson out?

Marine Le Pen will be elected President of France.  Although Michel Houellebecq’s novel Submission predicted an establishment deal to elect a Muslim political party winning the Presidency of France, in real life the current populist uprising may hit the French shores quicker than you can say The Camp of the Saints. Brexit, Trump, and the constant Islamic terrorist attacks may cause a public revulsion where people will just say, “enough.”  In some ways, that would be a bigger deal than Trump winning the Presidency.  The French establishment has been fighting populist nationalism a lot longer than the American GOP-Democratic-Media alliance.  So if that goes, dominos will fall all over Europe with dismal prospects for the EU.  That would slide in nicely with another prediction of mine, that the EU will be mostly undone by 2020.

Not really a prediction, more of a certainty, but every foreign policy decision made by the Trump White House will be called either idiotic or ignorant.

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If You Read One Story About the Economy This Year…

…make it this one.

Fed: US consumers have decided to ‘hoard money’

One of the great mysteries of the post-financial crisis world is why the U.S. has lacked inflation despite all the money being pumped into the economy.

Well it’s not that big a mystery.  Part of the answer is has been the interest rates the FED has been paying on excess reserves that Congress approved with the 2008 TARP bill.  That’s given the banks more incentive to sit on those reserves rather than loan them out.  With the current low interest rates, it’s a safer and better deal to draw interest from the FED than take a chance loaning out the money for not a substantially greater interest rate, but with much more risk.

The St. Louis Federal Reserve thinks it has the answer: A paper the central bank branch published this week blames the low level of money movement in large part on consumers and their “willingness to hoard money.” The paper also cites the Fed’s own policies as a reason for consumers’ unwillingness to spend.

That seems like a cheap shot to the American consumer, but what they are really describing is the Velocity of Money, “The rate at which money is exchanged from one transaction to another, and how much a unit of currency is used in a given period of time.”  In other words, how fast is money changing hands, going from one transaction to another.   Right now this low money velocity may actually be a good thing because otherwise:

Under normal circumstances, according to the Fed analysis, when the money supply increases at a faster rate than economic output, which has been the case since the Fed has instituted its aggressive easing practices, prices should keep pace. Factoring in the growth in the money supply against output, inflation should have grown at a whopping 33 percent annually, when in fact it has been rising less than 2 percent.

33 percent inflation rate!  That is what we should have been dealing with under conventional economic theory!

The reason that inflation hasn’t kept up with gains in the money supply simply has been that people are sitting on cash rather than spending it, which has kept money velocity at historically low levels.

So that makes me wonder, what happens when the economy eventually recovers, normal economic resumes, and the money velocity returns to its normal rate?  It’s unlikely to happen under the Obama administration, unless there is a major turnaround of economic policies, but one assumes that eventually there will be an administration that will right the economic ship.  Will we have to deal with a massive burst of inflation just to finally recover from our sluggish economic growth?