Heroes of Ukraine

«Market Leader» - news and previews making you rich.

Friday, 18 September 23:45 (GMT -05:00)



Business And Politics News

Laurence Kotlikoff Says the USA is Bankrupt, the US Dollar is Doomed. Is He Right?


 

Laurence Kotlikoff, a famous American economist and professor of Boston University, says the USA is already bankrupt and the US Dollar has no future! This should have been a sensation but eventually wasn’t… He is the author of numerous bestsellers, a respected expert and a consultant for "The Financial Times", "Bloomberg", "Forbes", "Vox", "The Economist". He says the situation around the US budget and debt ceiling has gone out of the US government’s control. Is it really so? Let’s try to ponder on this question together…
 
 
Should We Trust Kotlikoff?
 
This is the key question. If a major economist or politician announces something that is capable of causing panic in financial markets worldwide and having even more serious consequences, first of all it is necessary to find out to what extent this person is competent.
 
Obviously, Mr. Kotlikoff is a well-respected person in economic circles. Still, there are some questions and arguments indicating that his point of view looks questionable…
 
Expert in pension policies. On the one hand, the respected professor of Boston University is one of the leading economic personalities and experts in the world. Still, like most American scientists, Kotlikoff has narrow specialization. The field of his activity can be reduced to the so-called demographic economy. He even developed his own method of economic analysis based on demographic figures. The method implies budget planning with a glance at future demographic dynamics.
 
He reasoned the necessity of reforming the US pension system in order to ease the tax burden on future generations. At this point, he is busy studying the impact of the US pension system and social policies on the country’s budget policy.
In other words, the well-respected professor studies the field of governmental backing of the US social sector, continuously comparing the amount of the employed and the unemployed. It turns out that he predicts the future ratio between the two groups and makes his global conclusions based on this ratio.
 
Why Do Many Experts Listen to an Expert in Pensions?
 
Being an expert in taxation, personal finances and social insurance, Mr. Kotlikoff consulted the IMF, the World Bank, the OECD, the finance ministries of Sweden and Norway, the Bank of England, Japan, Italy, the Russian and Ukrainian governments, the US Department of Labor  etc.
Why does an individual scientist get so much attention? It is because the topic studied by him (pension provision) is one of the most urgent issues these days. Whether a certain country is capable of fulfilling its social liabilities determines its solvency.
 
Let’s recollect last year’s Congress debates on the US debt ceiling issue. If the US Congress hadn’t raised the ceiling at the last moment, millions of Americans would have lost their pensions and other social benefits.
Detroit is a fresher example. In July 2013, it was recognized a bankrupt. It is the biggest bankrupt city in the US history.

 

 

Apart from Detroit, other 12 American cities were recognized bankrupts. 350 American towns are insolvent as well.
 
In 2010, Mr. Kotlikoff warned the USA that neither tax cuts nor spending hikes would help the country to resolve its debt problems. He said the USA should have simplified its, taxation, finances, pension and social systems.
 
Basing on the data provided by the Budgetary Department of the US Congress, Kotlikoff calculated that the USA’s fiscal gap is 15 times as big as the US debt – 202 trillion dollars. In order to eliminate the gap, the USA will have to reconsider the budget on an annual basis, thereby cutting it by approximately 14% of the US GDP. At that point, the budgetary income was equal to 14% of GDP. In other words, it was necessary to double the taxes.
 
Kotlikoff urges us to face the truth: the USA is bankrupt. The US government is trying to conceal the truth by excluding pension and unemployment benefits out of the official US debt figures.  
 
Dollar Stays Strong
 
According to Eugene Olkhovsky, Masterforex-V Academy’s leading experts in financial markets from Canada, all those talks about the end of the USA and its dollar have been going on for decades.
 
Still, the power of the USA rests on 4 cornerstones:
·         The power of its army and navy
·         The printing press that prints the world’s reserve currency
·         The leadership in numerous fields including space, nanotechnologies, pharmaceuticals, internet, hi-tech, banking etc.
·         The hegemony of the US ideology on the global scale
 
Until these cornerstones remain strong and untouched and other powers (like Russia, China, the EU, the UK) are willing to accept them, the USA will stay the global leader while its currency will be strong.
 
The chart below, courtesy of Masterforex-V Academy, reflects the current state of affairs in the market of EURUSD:

 

 

 

You are free to discuss this article here:   forum for traders and investors

 

Add to blog
Got a question? – Ask it here »
 

Raygan's Former Advisor Accuses the Fed of a Big Fraud

The former budget advisor under Ronal Raygan's administration, of the founders of the so-called Rayganomics, David Stockman, is a big adversary of the Federal Reserve's policies. He thinks that artificial interest rate cuts coupled with uncontrolled QE (money printing) creates madness in financial markets, thus separating asset evaluation from their intrinsic value of those assets.

Publication date: 23 August 07:32 AM

U.S. Labor Market Disappoints, Economy Slows Down

The employment rate in the United States increased by 167.000 people in July 2020. It's important to mention the fact that the data came in much worse than expected. According to Reuters, this increase was expected to reach 1.5 million people. At the same time, July's figures were much worse than those revealed in June 2020.

Publication date: 06 August 10:06 AM

iPhone as a Payment Terminal: Apple Bought a Startup For That

Apple has recently acquired Mobeewave, a startup specializing in online payments. The price of the deal is 100 million dollars. According to Bloomberg, the company's technology may allow Apple to turn iPhones into mobile payment terminals accepting mobile payments. To be more specific, Mobeewave developed a technology making it possible to make financial transactions between mobile devices through the built-in NFC module.
Publication date: 05 August 09:27 AM

China Makes Blockchain Professions Official

There are 1838 officially recognized professions in China. Now, there list is up by 2 professions - blockchain engineer and blockchain app operator. The Chinese Ministry of Human Resources and Social Security (MOHRSS) has recently confirmed that by updating the list of official professions.
Publication date: 20 July 11:42 AM

South Korea Invests Billions In Blockchain Technologies

By 2025, South Korea is planning to invest over 48 billion dollars in  blockchain. The goal is to digitize all of the industrial sectors of the national economy in this post-pandemic era. According to ZDNet Korea, the president highly rated some of the benefits this process may bring to South Korea.

Publication date: 18 July 09:40 AM

Black Lives Matter - Investors Keep Ignoring Major Riot In US In 50 Years. Why?

Everyone has probably heard of the #BlackLivesMatter riots, which have been going on in the United States for a while. However, international financial markets seem to have been underestimating this event, which happens to be the biggest riots in the USA in 50 years! Why is that?

Publication date: 18 June 07:56 AM

Donald Trump Influences Bitcoin Exchange Rate

Publication date: 05 June 04:42 AM

Only 4 Of All Existing Billionaires Made Their Fortunes With Cryptocurrencies

Forbes has recently published the list of 2095 billionaires from different parts of the world. It turns out that 4 of them owe it to cryptocurrencies. Who they are, the cryptocurrency billionaires?
Publication date: 13 April 11:54 AM

Life After Brexit: EU-UK Talks Are Underway

Publication date: 07 March 09:03 AM

USA May Take Steps To Support National Economy After COVID-19 Pandemic

Publication date: 07 March 08:15 AM