Tax Revenue To Come Down, U.S. Dollar To Weaken Further

One of the main reasons why I think that tax revenues will not increase anymore is because the people don't have any savings left at this stage.



There is a correlation between what the government receives in taxes (blue chart), and the savings rate (red chart). When the savings rate makes a bottom, this coincides with a top in tax revenue.










The savings rate just dropped to 4.2% from 4.5% and this will eliminate all hope that tax revenue will continue its increase. What this also means is that the deficit will likely continue to increase.



We already see this happening in the budget deficit, which has increased again (yellow chart). An increased deficit will weaken the U.S. dollar and put pressure on U.S. bonds (higher yields). With this information, you can prepare accordingly.












Comments

  1. AnoniemDecember 24, 2013 at 11:02 AM

    Hi Albert, I like the post on tax revenues however on the US Dollar I think it will get stronger only. Jim Rogers says he is buying USD even though he doesnt like it.

    ReplyDelete
    Replies
    1. katchumDecember 24, 2013 at 11:11 AM

      Maybe Jim thinks the tapering will weaken stocks and that's why people will get into bonds and cash again. I'm not sure though.

      Delete
  2. AnoniemDecember 24, 2013 at 11:03 AM

    By the way, your feed on Jim Rogers not working. can you pls add it again
    Jim Rogers: www.jimrogerblog.com
    Feed url: www.jimrogerblog.com/feeds/posts/default

    ReplyDelete
    Replies
    1. katchumDecember 24, 2013 at 11:10 AM

      Wow, I didn't think anyone would pay attention to the links. I updated it and I feel that this new Jim Rogers blog is better than the old one. Thanks!

      Delete
    2. AnoniemDecember 24, 2013 at 12:01 PM

      Hi Albert, thank you,it looks good now.

      Merry Xmas to you and your family.

      Cheers
      Rick

      Delete

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