The gap between the amount the government takes in and spends came in at $207.8 billion last month, the Treasury Department said (pdf) Wednesday, nearly 42% higher than a year earlier. The increase happened in part because of June 1 falling on a Saturday, a non-business day, meaning some benefit payments were made earlier than usual.Let me show my work. Eight months is 8/12 or 2/3 of the year. Multiply the deficit through eight months by the reciprocal of 2/3 (3/2) to extrapolate the same spending rate to the year and your calculator tells you $1.1 Trillion deficit this year. It's not a great way to determine the deficit for the year because each month doesn't necessarily have the same spending as every other month - but it gets you "close enough".
Lawmakers typically try to reduce the deficit when the economy is strong, but recent legislation has taken it in the opposite direction. In the first eight months of the fiscal year, the deficit increased about 39% from a year earlier to $738.6 billion.
As a matter of interest, while looking for some background information on this topic, I ran into a piece I posted in February of '18, "Ron Paul Was Right" that offered a prediction for this year's deficit that's remarkably close to what I just derived. The article started with a quote from Senator Paul saying that the government spends closer to $2 Million/minute.
The Committee for a Responsible Federal Budget (CRFB), an independent think tank, projects that the deficit for FY '19 will balloon to $1.2 trillion in FY 2019, or $2.3 million per minute.I don't know exactly whom to pin this deficit spending on. The House starts spending, and they're all Nancy's little babbling numb nuts. The Senate is in Stupid Party control, where spending bills can be modified, and President Tariff keeps talking about adding a trillion dollars of spending on infrastructure - although there are no real details to relay to you.
In the end, it probably doesn't matter who did it because the pattern over the years is that the party out of power complains about deficits and spending until they get power, and then the roles switch. Now the party out of power has economists telling them it doesn't matter and they can spend whatever they want. They can't run out of dollars like the football stadium can't run out of points. When they eventually get power back, it's going to be a fun experiment to watch. From another planet.
I tend to believe that things that can't go on forever won't go on forever and that all bubbles pop. Eventually "political reality" collides with real reality. There is a real world, with real consequences. It's not all in our minds. Economic collapses happen around the world all the time. I've been predicting one for nine years, now. So don't look at me.
One thing is certain. With record tax revenues, that's a vivid demonstration that it's not that we don't tax enough -- "It's the spending, stupid!!"
(I have to admit the way I report on economics isn't as ... interesting to read as John Wilder, who puts his economic plots on pictures of girls in bikinis)
Maybe we can drill and pump enough oil to stave off disaster. But as you point out the problem is spending and Congress.ReplyDelete
Politics tends to draw people who seek power over others. NOT people with real world skills. This means that more often than not they lack a basic understanding of economics, business or any of the other countless endeavors required to succeed in the cold cruel world. The quest for power is and has always been tied to the lust for money. Power and wealth have been intimately connected for millenia. Thus those seeking power spend money to attain power.ReplyDelete
And since they've managed to create a system whereby the money spent in the acquisition of power is OTHER PEOPLES MONEY they have no incentive to be frugal and EVERY incentive to spend. As long as we continue to elect people who seek to be elected we will ALWAYS continue to have people in office who have no business there.
I foresee the de facto demonetization of the dollar. People -- ordinary, ornery, private-citizen Americans -- will cease to accept it in trade. We will reinvent actual money by reverting to the precious metals that were once the linchpins of our currency: gold, silver, and copper.ReplyDelete
Washington will have no excuses for what will follow.
It's often stated that 'what cannot continue will not continue'.Delete
But it's utterly astonishing to see just how far and for how long
the people running the sham have been able to keep kicking the can
down the road.....with no apparent end in sight.
Someone I read said, "the market can stay crazy longer than you have the money to bet it's going to recover." They've been proven right.Delete
We're nearing a tipping point (past it?) where a majority of people don't remember stable money, and simply expect everything to continuously get more expensive. Well, they expect their houses to always be worth more and they expect to make more money every year. Neither of those is true in a sound money world.
All fiat currencies collapse. It's just a matter of when. And if there is enough cocoa butter.ReplyDelete
I say we base the new currency on eggs. Ten cents to the dozen for grade-A large eggs, paid to the farmer. The ten cent piece should have an egg-shaped hole in the middle.ReplyDelete
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