Why Reagan Tax Cuts Won’t Work Now

A subscriber asked a damn fine question in response to one of our columns. 

“I’m confused. Reagan overcame the worst economy with the highest interest rates I have seen in my lifetime. And started the biggest economic boom I have seen in my lifetime. Reaganomics worked extremely well for a very long time!

No, Reagan was LUCKY.  For reasons we will explain this morning.   After a few headlines, charts, and coffee…

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Comments

Why Reagan Tax Cuts Won’t Work Now — 6 Comments

  1. The end will come not because we stop innovating or inventing but because we have lost the will to maintain. JMHO

  2. Is K3 on the way? The Dow was strong today, but the rest were so so. The Reagan tax reform netted me $0. What breaks they gave me, they took away elsewhere. Looks to be the same with Trump Tax Reform except the wealthy will benefit greatly if Estate Taxes (Inheritance Taxes) are eliminated so the rich can get richer & the rest of us poorer. Not much info is being given out by the White House on tax reform proposal which in itself is suspect (probably have not written it yet).

    • K3 is done. From here we go down, but more Saturday. I went 50% short 10/18/17 | 10:41 AM ET says the trade chit.
      I see this AM the Dow futures are down 100…and since my short this time was SDOW I am feeling like a million bucks this morning.

  3. I’ll toss this out there for consideration.

    At around 1992, everything on the planet began to go hypercomplex. We had instantaneous communication, but it was voice only. When the internet came online, suddenly all computer files and larger datasets could be exchanged in real time.

    FFWD and now stock and most other financial instruments are run by algorithms rather than people. May (likely) result in a train wreck, but the reason for this is the number of rapidly changing variables – the quicker you grok them then the faster you can make a trade.

    If you look around you will find “smart” everything – all of it hypercomplex and relying on internet. Most of todays communications are smartphone oriented, and many people simply do not know what to do when they lose service. Many people cannot read a map or do math, and they no longer teach handwriting in schools.

    Nobody ever dreamed it would be this chaotic, but that is the nature of hypercomplex systems. They run normal and then go nonsensical then back to a new or former normal – unpredictably.

    I am in the middle of a CFD project that is hypercomplex and there is no off-the-shelf software to even model the problem. The models out there are so naive that they are useless. I have seen the weather models, and now I understand why universities are NOT the place to do research and why weather forecasting is best done by humans.

    While I agree with you regarding Reagan, the reasons for what happened are many, and not all of them obvious. In similar vein, as things crash in slow motion over the next few decades, it will not be one thing but many that cause this to happen.

    Self-organized criticality – we just keep adding grains of sand over and over, wondering why but never addressing the root cause – the way we do “business”…

  4. Great Article.. I had totally forgotten about milk money investment strategies.
    My problem with the eighties and the nineties was I was one of the 28% that very little of that affected.I tried to buy 2500.00 of microsoft stock when it first came out but they wanted no less than fifty grand to do the trade back then and was shunned I would have become a millionaire..
    If you have any medical expenses or a credit rating of six or below..there aren’t any loans available.. if you make below a certain level you don’t qualify for any of the federal home mortgage programs either. I paid 18% personal loan even now for my home its 6% because I didn’t qualify for any of the programs available.. I do now but the cost of writing the loan is almost as much as I needed.. can’t rent from a regular apartment complex your forced to seek out low income housing or a slum lord at three times the rent rates..
    Potential didn’t mean a thing and it still doesn’t..