• 15 mins Tesla Struggles To Compete In European Market
  • 18 hours China: The New King Of Caviar
  • 1 day Gold Mid-Tiers Rally On Fresh Earnings Reports
  • 2 days Can The British Pound Overcome Brexit?
  • 2 days Is A Gold Breakout Near?
  • 3 days Federal Reserve Downgrades U.S. Growth And Cuts Rate Hikes
  • 3 days Disney Beats Out Comcast In $71.3B Mega-Merger
  • 3 days The Feds Continue To Prop Up Equities Markets
  • 3 days Bejing's Sway In South China Sea Is Fading
  • 4 days Saudis Eye Billions As Stocks Get Emerging Market Boost
  • 4 days Airbnb In Acquisition Mode Ahead Of IPO
  • 4 days Gold Hangs At $1,300 Ahead Of Fed Meeting
  • 4 days Champagne Sales Slow As European Economic Worries Grow Louder
  • 5 days Putin Signs “Digital Iron Curtain” Into Law
  • 5 days Russian Metals Magnate Sues U.S. Over Sanctions
  • 5 days Tesla Looks To Jump Into Indian Market
  • 5 days Global Banks Lay Groundwork To Re-Inflate Asset Prices
  • 6 days Homeowners Experiment With Risky New Investment Trend
  • 6 days U.S. Tech Stocks Look Increasingly Vulnerable
  • 6 days De Beers To Expand World’s Most Profitable Diamond Mine
Lending: The Good, Bad, And Ugly

Lending: The Good, Bad, And Ugly

Aristotle said, “The most hated…

Tesla Struggles To Compete In European Market

Tesla Struggles To Compete In European Market

Tesla continues to catch the…

  1. Home
  2. Markets
  3. Other

Is Tax "Reform" Good for the US Dollar?

Let's investigate what happened after the last 3 major tax reforms. Another "reform" is on deck.

I picked up this idea from Holger Zschaepitz, @Schuldensuehner, who made the following Tweet, posting a chart from Bloomberg.

 

In the following chart, I add a key piece of legislation that someone inadvertently overlooked.

Tax Reform vs US Dollar 1986-Present

https://s3-us-west-2.amazonaws.com/maven-user-photos/mishtalk/economics/zmfATcSa4EegwR7v_znq6Q/CbTSXb6lnUWRR85pNJkiTA

Key Dates

US Dollar Synopsis

  • Following the 1986 legislation, the dollar fell about 22% over the next six years.
  • Following the 2001 legislation and continuing with the 2003 legislation, the dollar fell about 37% over the next seven years.

What's Next?

The Senate version of the bill is likely to add over $1 trillion to the deficit, while not even cutting taxes beyond 2027.

A bill that adds so much to the deficit is not US dollar supportive, to say the least.

However, one cannot view these things in isolation. How the dollar reacts also depends on events in the Eurozone, China, and Japan, as well as Fed interest rate policy.

Global Currency Debasement

Global currency debasement is underway.

Things may be even crazier elsewhere, so a decline in the dollar is not guaranteed.

A Driver for Gold

Sooner or later, competitive currency debasement will matter.

Gold is likely to be the primary beneficiary.

I wish I could tell you when this matters in a major way.

Gold vs. Faith in Central Banks

https://s3-us-west-2.amazonaws.com/maven-user-photos/mishtalk/economics/zmfATcSa4EegwR7v_znq6Q/bRye9oCqlUmlyJOYb4VAAw

 

Amazing Non-Reform Act of 2017

I have a suggestion for the name of the pending legislation: The Amazing Non-Reform Tax Act of 2017.

By Mike Shedlock

Back to homepage

Leave a comment

Leave a comment