For February, March, May, June, July, and August, Federal revenues fell by $81.5 billion, or an average of $13.6 billion per month. As Bloomberg put it so elegantly, "The White House says the tax cuts will pay for themselves by creating more revenue through faster economic growth."

But it ain't happening, folks! Tax cuts are not paying for themselves. Yes, there's more economic growth, but there's less revenue. Of course massive deficits are stimulative. Even we non economists know that. But where's the revenue growth? It's nowhere to be found.


Furthermore, the uptick in GDP growth isn't even as high as a couple of quarters in 2014. So there's not even that much evidence that the tax cut is stimulating much. For sure the economy would have been slower without it, but the limited economic gains produced by this spending have a cost.

I hate to beat the horse that's already dead, but that cost is massive federal borrowing. The deficits must be paid for by the issuance of ever increasing amounts of Treasury debt. When that debt comes to market dealers and investors must buy it. The Fed stopped printing the money to buy all that paper at the end of 2014. And since October of 2017, the Fed has actually been extinguishing money. There's less and less money in the banks, making it that much tougher for dealers and investors to absorb all the new paper.

Because of that, Treasury bill and note yields have been blowing the roof off. Short term bill rates and 2 year note yields are skyrocketing. The yield on the 10 year note is knocking at the door of 3% again.''

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