Hi Ray - Not much spin. Besides the short term tax blip, the rate of change has accelerated. We saw the same thing around the 1996-1997, and in a few years saw the surpluses at the end of the Clinton years.
Almost every forecaster was in catch-up mode, revising forecasts every quarter, and commneting that the trend towards a lower defict would not go much further.
When the surpluses started to arrive in the late 1990s, Paul Krugman was warning (a bit loudly) that they would result in a recession. He was one of the few warning about this. There is also a risk of deflation, which was increase by the price pressure from the internet and the raw materials being dumped on world markets from the former Soviet Union and it's parts.
I think that is around the time the Clinton people sort of pushed Paul Krugman out their informal group of economic advisors. Krugman started becoming more shrill in his articles. Reading him today, there is still some bitterness, but most of his anger is directed at GWBush & Company.
He may have lost much of his objectivity.
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More importantly, we may be seeing a economic cycle which swings from surplus to deficts and back again, over a period of about ten years.
A reduced Federal defict will effect the value of the US Dollar, the carry trades, and liqiudity.
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One of the constraints on US foreign military activity, besides the personell retention issues, is the Federal defict. If the defict declines, that constraint goes away, and actions based on the use of foreign "contractors" - South Africans, Bulgarians, etc. - become more feasible. |
