Thursday, February 28, 2013

If This is Right

Michael Ramirez, probably my favorite editorial cartoonists, posted this earlier this week: 2/25.
Ramirez, of course, doesn't write analysis.  I don't know where he got the figures, and the deficit appears too small, but let's say he's right.

The 40% difference in overall size  3.8 - 2.7 is 0.9 (Trillion).  The deficit?  0.9 trillion.  The 40% larger "budget" isn't all increase in deficit; since the deficit was 161 B in 2007.  The growth in the deficit is 901-161 or 740 B larger.  740/900 says 82 % of the growth in the budget is deficit spending.

From other sources we know the Federal Reserve is creating about $85 billion/month.  Over a year, that's even more than the deficit - $1020 billion.  That says 113% of the deficit is being created out of thin air.  So the Fed is not just funding the deficit by buying out bonds, they're pumping money into the economy at large; probably the major banks.  "Pumping" in the same sense as pumping air into a tire: inflating the economy.

1 comment:

  1. If my household pulled this kind of Bravo Sierra, would my bank, and creditors be as obliging about floating credit my way or would I get issued 3 hot and a cot for a exteded stay in state custody on a fraud charge.
    Passing a budget is sorta like balancing the checkbook, and allows us stockholders. To get a look at how open and transparent our GOV is being.
    Maybe that is why we are 4 years with no budget, and doesn't look like we will see one this year either.