Trick or Treat

Trick or treat has been a customary American Halloween tradition since at least the early 1950s. Children in costumes travel from house to house asking for treats, usually candy but sometimes its money, with the question,” Trick or Treat?” The “trick” is usually a threat to perform mischief on the homeowners or their property if no treat is given.

Adults often see this as a form of extortion, with reactions varying from bemusement to anger, but either way just what has this to do with investment matters?

One could start in just about any Western part of the Globe and certainly include Japan and OZ as well, when we analyse the ongoing tricks completed by Government and others within the financial establishment, which are usually coated with a treat for compliance.

With just over a week until the US Presidential elections, we’ll focus on the apparent trick of the US requiring ever increasing amounts of debt, at least according to policymakers, to maintain or increase economic growth, known as GDP. The threat being “If we don’t get it, recession or even worse will follow.” And the treat inference “stronger GDP provides more jobs and greater prosperity.”

Well, one glance at the chart above will note that despite the ever increasing US Federal debt limit, now at $16,400,000,000,000, GDP has been falling since the late 1970s and in particular since the late 1990s. Yep, this puts it in perspective rather than $16.4 Trillion, which actually sounds inconsequential.

The “extortion” part is, of course, the ever increasing tax-load required to service the debt load, thereby reducing economic growth even more.


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