On Economy, Trump Going For Reagan-redux, But it Will Fail - Rickards

Laffer argues that tax cuts are self-financing; a derivative of the famous Laffer Curve. A case can be made that tax cuts are good for growth, but there is scant evidence they are self-financing. Trump tax cuts and spending plans will push the US debt-to-GDP ratio to 110pc.

The Federal Reserve is embarking on a rate rise cycle beginning on December 14. Even a 1pc increase in average US interest rates adds $100 billion per year to the US deficit in interest expense independent of Bannon's $1 trillion spending spree. Foreign investors are now net sellers of US Treasury debt.  A debt-deficit death spiral looms.

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The outcome of Trump's economic plans will pivot on the Fed's reaction. If the Fed prints helicopter money to accommodate deficits, a policy advocated by Larry Summers at Harvard, and Adair Turner in the UK, expect a boost in nominal growth and inflation, but no bump in real growth. The US is past the point of positive marginal returns on deficit spending.

If the Fed leans in against inflation, expect a stronger dollar that will hurt US exports. The Fed may tighten too fast, and throw a weak US economy into recession