Category: Economics

Inflation Expectations On The Rise Shifts Aggregate Demand Outward

10/26/2016

Inflationary expectations are the expectations that consumers have concerning future inflation. If buyers expect higher prices in the future, they increase their demand in the present. This shifts the aggregate demand curve outward (to the right) which is good for the economy. For example, if the price of a house is expected to be higher […]

Microeconomics and Taxation

10/23/2016

Most government revenue comes from the taxation of transactions and labor. Taxes impact both the supply and demand curves. Taxes cause a buyer to pay more for something and suppliers to receive less. The loss of value for both buyers and sellers is called the deadweight loss of taxation. Taxation has an enormous impact on […]

A supply and demand chart showing equilibrium at the center axis of where supply and demand cross.

The Aggregate Supply-Aggregate Demand Model

10/17/2016

Looking at the aggregate supply (AS), aggregate demand (AD) model, we can see where the US economy is currently at in the economic cycle. It is critical that traders and investors understand where we are at in the business cycle so as to be in on the right side of the trade. Timing Bull/Bear cycles […]

A Macroeconomic Analysis of ObamaCare

10/16/2016

ObamaCare has created massive shortages within the healthcare sector. In cities, it is common to wait many hours before being seen as hospitals have a shortage of beds. Doctors have stopped taking new patients as they are overwhelmed by the numbers of people coming to see them. Let’s examine what happened from a macroeconomics perspective. […]

Illegal Immigration and Job Wage Stagnation In the US

10/12/2016

Illegal immigration negatively impacts the hourly wage of US citizens. Illegal immigrants are pouring across the Mexico border, and we have no way of counting them but what we can do is track legal immigration from Mexico then double the number for a fuzzy-math estimate. With legal immigration and an impenetrable border, economists working for […]

A FRED chart of labor costs (red) versus corporate profits (blue). A clear pattern emerges from the chart. Profits rise after a recession as labor costs fall. When the labor market reaches capacity, profits fall as labor costs rise. When labor costs rise, the Federal Reserve raises interest rates to tame inflation which causes the next recession.

Rising Wages Are What Will Cause The Next Recession

10/9/2016

We all love rising wages, but it is rising wages that will cause the next recession and Bear market. Below is a chart of labor costs (red) versus corporate profits (blue). A clear pattern emerges from the chart above. Profits rise after a recession as labor costs fall. When the labor market reaches capacity, profits […]

Chart showing supply and demand lines crossing.

Macroeconomics of the OPEC Cartel

10/4/2016

All the recent talk of an OPEC deal to push up the price of oil is nonsense. Here is a hypothetical supply and demand chart of oil. In this hypothetical example, equilibrium is set where the supply and demand curves cross at a price of $40 a barrel at 75 MMbpd. Shifting the Supply Curve […]

With So Much Debt In the US Economy, Is It Even Possible To Grow Faster?

09/25/2016

The US national debt just broke above $19.5 trillion. Both Democrats and Republicans are to blame, but it is important to note that President Obama and Democrats increased the national debt more than all President’s before combined. George Bush exploded the national debt by $3 trillion in response to an imploding economy and 911. Obama […]

Mexico Devalues Peso To Dominate Auto Production In North America

09/22/2016

Mexico is devaluing its currency to gain a huge advantage in international trade. Democrats and the Obama Administration have done nothing to stop it. Like most economists, I am for free trade; however, free trade today is not Adam Smith or David Ricardo envisioned hundreds of years ago. The classical concept of free trade works […]

Government Spending and the Crowding Out Effect

09/16/2016

The velocity of money has hit the lowest level ever recorded as I wrote about here. I believe the crowding out effect is at least partially to blame for the slowdown in the velocity of money. President Obama has run the national debt up to nearly $20 trillion, more than all President’s before him combined. […]