Siete
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- May 19, 2014
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That article is ridiculous.
1. If there is a recession, two or more quarters of negative growth, its normal, nothing unusual. However, with the tax cuts and the Fed lowering interest rates the probability of a recession is small. One will eventually come, but there is no time bomb like for the 2008 subprime mortgage crisis. Banks are well capitalized, and consumers are consuming.
When and Why Did the Stock Market Crash in 2008?
2. If there are any time bombs out there its probably the $22T National Debt, and the impending bankruptcies of Medicare and Social Security.
a. Social security will only pay 80% of benefits after 2034
b. "The government also concluded Monday that Medicare's hospital insurance trust fund will run out of money in 2026."
c. A Global financial crisis could affect the US economy
d. A major war would be bad too
3. If China dumps US bonds that may create a fiscal crisis where the US Budget would need to pay a lot more in "interest on the Debt" and might need to cut discretionary spending, like Medicaid, Welfare, and Defense.
Bottom line: No economic expansion lasts forever, there will be a recession eventually, and they are no big deal. The next crisis is scheduled for 2026 when Medicare goes bankrupt.