An End to Exponential Easing at the Altar of Bernanke's Faith-Based Inflation!

• Welcome to Capital Account. The top executives at more than 80 big US corporations sent a letter to Congress asking for “comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit.”  The CEO statement, organized by the Fix the Debt campaign, calls for a Simpson-Bowles type approach to reign in the US deficit: three dollars in spending cuts for each dollar of tax increases. The US has been running trillion dollar budget deficits for more than four years, amounting to more than $16 trillion in national debt. With no plan in sight for politicians to significantly rein in spending or balance the budget, the chief executives, including General Electric’s  Jeff Immelt and BlackRock’s Larry Fink, have stepped out of the shadows to pressure congress into action. We talk to our guest, Simon Mikhailovich of Eidesis Capital, about potential approaches for tackling the US debt.
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  And Japan’s finance ministry will hold crisis talks with bond dealers tomorrow, according to the Financial Times. Japanese politicians are at odds over a bill that would allow the government to borrow 38.3 trillion yen (479 billion dollars) to finance the deficit. In Japan, one lost decade has turned into two, as the country’s government has racked up more than 200 percent debt-to-GDP in that time. Yet, even with the high debt burden there has not been a cataclysmic explosion in the Japanese bond market, and the yen has actually seen a dramatic appreciation in its value as compared to the dollar over the past four years. In fact, the government of Japan can borrow for 30 years at less than 2 percent, a better rate than the US. We talk to Simon Mikhailovich, Co-Managing Member of Eidesis Capital, about lessons the US can learn from the Japanese economy.
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  Plus new GDP numbers from the UK show the country emerged from recession, with economic output rising by one percent. Some attribute the rebound to the 2012 Olympic Games, while others cite austerity measures. Lauren and Demetri discuss how sustainable this GDP boost really is in today’s “Loose Change.”

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