• 19 hours The Fed Is Printing Money At Unprecedented Levels
  • 20 hours How Is The Real Estate Market Handling COVID-19?
  • 21 hours Gold Flat As Markets Await Fed Chair Speech
  • 22 hours What Is Day Trading And Is It Right For You?
  • 23 hours Energy CEOs See Big Payouts Despite Oil Price Crash
  • 24 hours Saudi Arabia Is Fighting A War On Two Fronts
  • 1 day 40 Million Jobless As Pandemic Fuels Economic Collapse
  • 1 day What Do India's Latest Reforms Mean For Its Coal Industry?
  • 1 day Copper Glut Continues To Grow
  • 2 days How A Pandemic Made Americans Better Workers
  • 2 days The Trillion Dollar Space Race Crosses Another Milestone
  • 2 days Gold Prices Fall As Stock Market Sentiment Turns Positive
  • 3 days Conspiracy Theories Set Tone For 5G Cold War
  • 3 days Working From Home Will Transform The Energy Industry
  • 3 days The Multi-Billion Dollar Race For A Vaccine
  • 3 days Can Domestic Tourism Bolster Emerging Economies?
  • 3 days Australia Considers $100 Million Investment To Kickstart Mining Industry
  • 3 days Has Re-Opening The Economy Been Successful?
  • 3 days Gold Miners Still Have Massive Upside Potential
  • 3 days The Risky World Of Oil Hedging
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  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