That's a great post CG.
But, gees, it's hard to figure out future pathways of economic outcomes. I come from a background in electronics and I see first hand the difficulty of negotiating through the modern world. Companies like IBM, with first class management completely missed the opportunity that Microsoft pinched from them. Ditto Kodak, who completely missed digital cameras, also Sony, who were once number 1 in mobile then completely missed developing new trends in mobile devices, Hitachi another example. All these companies had good management but could not negotiate new routes to survival. The truth is, no matter what we think of politicians and govermnent officials, they are no different to those that run those great companies.......negotiating the real and changing world is very difficult.
so to your post........It's very difficult to figure out if what you describe plays out. One thing is Trump has just reduced US International Aid by about .2% of GDP, so that may help with the budget, LOL! And that should drop further as other world economies continue to grow and take up the slack from the US in contributing to world aid.
Another big saving is around 1% of GDP drop in military spending over the last couple of years since the withdrawel from Afghanistan and the switch to more high-tech weaponary which should follow the path of all technology, ie get cheaper over time and therefore deflationary. The other really big surprise could come from the health budget. The 'obesity' boom of the last few years seems to be peaking/waning as new programmes take hold, and if a suger/fat tax were imposed that would have a big effect on the health budget botton line. Also the rise, way above inflation, of medications seems to be peaking with a fall in the rise of pricing occuring for the first time this year. There is a chance that the US health budget to GDP is peaking and could fall saving 2-4% of GDP over the next few years.
But, the big one is energy. If the 'tipping point' comes, sooner rather than later, whereby solar/battery displaces oil, then all economic calculations go out the window. That's an unknown. A tipping point is when market share escalates very quickly as prices tumble. (Think about computers in the nineties....prices tumbled and numbers rose quickly).That's deflationary.
And there is technology itself. As technology becomes more widespread and displaces workers it acts as a deflationary force. Actually since the 1920's, mining itself and the production of minerals has been on a giant deflationary slide, (with only short periods of price rises due to mismatch of supply/demand), due to technology in mining. (eg BHP using autonomous vehicles now instead of drivers).
just a thought, dunno!
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