Skip to comments.As US Rakes Largest Monthly Deficit In History, 2012 Tax Revenues Net Of Refunds Trail 2011
Posted on 03/12/2012 12:51:28 PM PDT by Zakeet
A few days ago we noted that based on preliminary data, the February budget deficit would hit $229 billion (yes, nearly one quarter of a trillion in one month, about where real Greek GDP is these days) - the largest single monthly deficit in history. Unfortunately, this number was low: the final February deficit was just released and the actual print is $231.7 billion. It also means that in the first 5 months of the fiscal year, the US has raked up $580 billion in deficits, oddly matched by $727 billion in new debt issuance, 25% more new debt issued than needed to fund deficits... And that in itself would not be horrible - February is traditionally the worst month for deficits as the Treasury sees a surge in tax refund issuance - if it wasn't for something even more troubling. As the second chart below shows, through last Friday, and net of tax refunds, total US tax revenues were actually lower in the fiscal 2012 year to date period than compared to 2011, by just under $2 billion, at $625.5 billion. Which is the weakest link for any argument that the US is actually growing: what is growing is America's debt (now almost exponentially), while its revenues are at best unchanged. And the scariest: annualizing net tax revenues brings the number to $1.5 trillion. Which is just 50% more where total US debt interest will be in 2014 when debt is $20 trillion, assuming interest rates are somehow allowed to go back up... to the astronomical level of 5%. Monthly deficits: and net US tax revenues:
and net US tax revenues:
It is impossible to amortize the U.S. debt. It simply cannot be done no matter how much we cut spending and/or raise taxes. We do not have enough wealth in this country to make the necessary payments ... and never will.
Some time pick up an economic history text and read what happens to countries who have faced this situation. The consequences ... including hyperinflation, revolution, massive unemployment, breakdowns in society, and soaring poverty ... are horrible! All brought to you by Rats, RINOs and the Head Idiot.
__It simply cannot be done no matter how much we cut spending and/or raise taxes. We do not have enough wealth in this country to make the necessary payments ... and never will.—
Have you never heard of a printing press?
It’s what it will eventually come to. It’s the only way out. And even it is not really a way out any more than jumping out of a burning aircraft without a parachute is a “way out”.
This is why I wrote te book “Biflationary Depression”, every chart show the economic freight train going off the rails, through an oil depot, into a crowded stadium and exploding. The only question is when.
We used to think cutting taxes would “starve the beast”, but what has happened is the Federal reserve is now printing up Monopoly money to fill the gap between government revenues and outlays. The Fed now enables deficit spending through debasemant of the dollar.
But here is the real kick in te nuts. We all naively thought that increased money supply would result in immediate hyperinflation which would limit the Fed. But what the printed money has done is to both cause inflation AND deflation, which to an extent nets out. Thus gas and food go up, but wages and home prices go down.
Biflation is possible because GDP=M*V, which has two independent variables. As M goes up you can get inflation (stock market rising) but velocity V gets crushed as everyone loses trust and hordes money. The double whammy of biflation, thus leading to a Biflationary Depression even as Obama touts green shoots.
I’ve really written some pretty cutting edge stuff. http://www.futurnamics.com/biflation.php
There is no better test of economic strength than tax receipts. The governement can’t lie or spin this number. The commerce deparment can’t publish what is political.
If tax receipts do not keep up with inflation plus population growth (births + immigrants - deaths), we’re doomed. Nominally should be a 5% increase.
In California, they increase spending at a 7% rate while inflation and (births + immigrants - deaths) go up 4%.
And while this happens, Washington is occupied on how we should pay for the sex lives of Georgetown Co-eds.
It boggles the mind.
“The governement cant lie or spin this number.”
I’ve been trying to create a Biflationary Index which cuts out all the fake Ministry of Disinformation numbers. I’ve been using Gold, the Job Participation Rate, the real rate of return (interest rate minus inflation, though the inflation number is rigged it is at least consistent), Case Shiller. I should add the tax receipts.
Just another major story the msm will ignore.
It is his intention and goal to destroy the US economy.
FrankR you’ve moved from darn good to TOP RATE with this one.
“I WILL CUT THE DEFICIT IN HALF, BY THE END OF MY FIRST TERM!” Barack Obama, 2008.
Velocity of money went from 20 to 10 in just a few months when the Democrats took over congress January 07. I have brought this up several times in varies places and apparently those with an understanding of the principle of money moving are exceedingly rare or even nonexistent.
NASA is I think, the only government entity with a return on investment. Trying to explain why is a lost cause.
What I have been trying to show people is that the Fed is always by necessity pushing on a string, otherwise they would be running a perpetual motion machine. That means you end up with a raisin muffin economy of inflation and deflation depending on whether the M or V term is predominating.