Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

The Federal Reserve Broke The Budget. Buckle Up For What Comes Next.
Investors Business Daily ^ | 11/26/2023 | Jed Graham

Posted on 11/26/2023 9:51:54 PM PST by SeekAndFind

The 10-year Treasury yield set off roaring alarms about the U.S. budget when it surged to 5% last month. Now those warnings look like a fire drill. Federal Reserve rate hikes seem to be over for now, giving the bond market a reprieve and allowing a powerful S&P 500 rally to resume.

Enjoy it while it lasts. The next debt scare may be the real thing, and it could rock the U.S. economy and stock market.

Here's why: The Fed's historic turnabout, from enabling massive budget deficits to directing the sharpest rate hikes in 40 years, has seemingly broken the budget. Treasury market stress is almost certain to return.

The era of Fed quantitative easing and near-zero interest rates promoted carefree fiscal policies that led the U.S. to rack up $20 trillion in federal debt since 2008 financial crisis.

Federal Reserve Fuels Red Ink

Exhibit A in the case of the broken federal budget is the deficit's surge in fiscal 2023, which ended Sept. 30. Unemployment was near a record low and GDP growth was strong. Under those conditions, the budget deficit usually shrinks. But it essentially doubled to $2 trillion, if you ignore accounting for Biden's student loan forgiveness that was struck down by the Supreme Court.

The Federal Reserve's fingerprints are all over the red ink. After the Fed sent more than $100 billion in interest on its bond portfolio to the Treasury in fiscal 2022, it had to halt those payments last year as bond prices fell. Having let inflation get out of the bag, an 8.7% cost-of-living adjustment stoked a $134 billion increase in Social Security checks.

Another roughly $100 billion went to FDIC bailouts, as banks like Silicon Valley Bank that loaded up on Treasuries when rates were ultralow became insolvent when Treasury yields surged.

(Excerpt) Read more at investors.com ...


TOPICS: Business/Economy; Front Page News; Government; News/Current Events
KEYWORDS: bidendestroyseconomy; bidensfault; budget; debt; deficit; economy; federalreserve; inflation; unemployment
Navigation: use the links below to view more comments.
first previous 1-2021-4041-6061-66 next last
To: cherry
and besides, many people have easy desk jobs and don’t have the damaged joints from constant physical work but you would expect them to keep working til age 70.....right...

Ideally, when they turn 60, they'll move in with their children. And they'll get part time jobs at Walmart.

41 posted on 11/27/2023 7:04:51 AM PST by MinorityRepublican
[ Post Reply | Private Reply | To 20 | View Replies]

To: Jonty30

There is no comfortable way out. The comfortable way out died out around 2005 or so. Then, we could have cut the deficit to zero and not really notice any changes.


Tough times is the cure. It has been delayed to long.

So how to prepare for tough times?


42 posted on 11/27/2023 7:22:18 AM PST by PeterPrinciple (Thinking Caps are no longer being issued but there must be a warehouse full of them somewhere.)
[ Post Reply | Private Reply | To 4 | View Replies]

To: PeterPrinciple

Ways to prepare:

Buy and store food and other essentials

Buy and store some gold and silver and junk silver.

Buy and store items that can be traded/bartered.

Start another income stream with your skills and abilities.

Buy a weapon and learn how to use it.

CD


43 posted on 11/27/2023 8:40:15 AM PST by Coffee_drinker (Drain The Swamp.)
[ Post Reply | Private Reply | To 42 | View Replies]

To: SeekAndFind; All

Wasn’t all that long ago that folks, probably some on here, that said that Ron Paul was fringe. That his son is fringe for wanting to audit the Fed

MSU professor does a little research and finds $21,000,000,000,000 in unidentified spending.

Perot campaigned with a thesis that was completed by a college kid that documented every program and every cent. And all the waste that went with it. But Perot was a kook and spoiler.

The Democrats figured out, during the early part of the GWOT, that budgets weren’t needed. Give Bush what he wanted for the war, no budgets and they get everything they want with CRs and Omnibus. No questions asked.

Of course Obama loved it, as he could get anything he wanted and threw republicans the scraps.

Pres Trump asked for a budget every year. Was snubbed every year. Why would Congress want a budget and budget negotiations, when they could just wait til the last minute and force the Presidents hand?

Gee, I wonder why that was one of Gaetz’s arguments.

Keep voting for Graham, thune, Cornyn, etc. they’ll do better next time. They promise.


44 posted on 11/27/2023 9:38:25 AM PST by qaz123
[ Post Reply | Private Reply | To 2 | View Replies]

To: qaz123

Wait what? Did President Trump ever submit a balanced budget?


45 posted on 11/27/2023 11:16:13 AM PST by Old West Conservative (President Reagan - 3rd greatest POTUS after Washington and Lincoln)
[ Post Reply | Private Reply | To 44 | View Replies]

To: Old West Conservative

Don’t all budget bills originate in the House?


46 posted on 11/27/2023 12:12:00 PM PST by qaz123
[ Post Reply | Private Reply | To 45 | View Replies]

To: Old West Conservative

Don’t all budget bills originate in the House?

https://abcnews.go.com/politics/president-trump-releases-2021-budget-proposal-calls-cuts/story?id=68884449

President Donald Trump unveiled a $4.8 trillion budget Monday that seeks to balance the budget in 15 years, falling short of the the traditional Republican target of doing so over 10 years.


47 posted on 11/27/2023 12:13:47 PM PST by qaz123
[ Post Reply | Private Reply | To 45 | View Replies]

To: SeekAndFind

“Next time could be the real thing” bump.


48 posted on 11/27/2023 12:15:00 PM PST by SamAdams76 (6,390,901 Truth | 86,874,940 Twitter)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Old West Conservative

https://trumpwhitehouse.archives.gov/briefings-statements/administration-presents-president-trumps-fiscal-year-2020-budget-request/


49 posted on 11/27/2023 12:15:40 PM PST by qaz123
[ Post Reply | Private Reply | To 45 | View Replies]

To: Old West Conservative

https://thehill.com/policy/finance/373529-five-takeaways-from-trumps-fiscal-2019-budget-proposal/


50 posted on 11/27/2023 12:17:15 PM PST by qaz123
[ Post Reply | Private Reply | To 45 | View Replies]

To: cherry

As there are 2.3 million military retirees and 62 million social security retirees, I’d say most of the money is going to social security. That doesn’t include another 8 million social security recipients that are under retirement age.


51 posted on 11/27/2023 1:55:23 PM PST by damper99
[ Post Reply | Private Reply | To 19 | View Replies]

To: SeekAndFind

Bidenomics is another way to say TIME BOMB.


52 posted on 11/27/2023 1:56:57 PM PST by 1Old Pro
[ Post Reply | Private Reply | To 1 | View Replies]

To: 1Old Pro
Well, we're gonna need a World War III to cover THAT up....


53 posted on 11/28/2023 7:14:37 PM PST by SaveFerris (Luke 17:28 ... as it was in the days of Lot; they did eat, they drank, they bought, they sold ......)
[ Post Reply | Private Reply | To 52 | View Replies]

To: qaz123

Does the President sign or veto laws approved by Congress?


54 posted on 12/04/2023 1:53:51 PM PST by Old West Conservative (President Reagan - 3rd greatest POTUS after Washington and Lincoln)
[ Post Reply | Private Reply | To 46 | View Replies]

To: qaz123

15 years to balance the budget. Had President Trump been reelected, it wouldn’t even be balanced when he would have left office in Jan. 2025

15 years to balance is not a serious proposal.


55 posted on 12/04/2023 1:59:59 PM PST by Old West Conservative (President Reagan - 3rd greatest POTUS after Washington and Lincoln)
[ Post Reply | Private Reply | To 49 | View Replies]

To: Old West Conservative

So I guess you’ll be submitting your plan tomorrow for everyone to review.


56 posted on 12/04/2023 2:26:00 PM PST by qaz123
[ Post Reply | Private Reply | To 55 | View Replies]

To: qaz123; Old West Conservative
Don’t all budget bills originate in the House?

To be more precise, Art. 1, Sec. 7: "All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills."

Spending authorizations and raising revenue are not exactly the same. Spending may exceed revenue which results in a budget deficit.

The last President to lower the federal debt in a fiscal year was Eisenhower, 1956. The debt then was $273B. The debt first topped $1T in 1982. We currently see $33.8T.

https://www.investopedia.com/us-national-debt-by-year-7499291

57 posted on 12/04/2023 3:31:36 PM PST by woodpusher
[ Post Reply | Private Reply | To 47 | View Replies]

To: woodpusher

One thing I feel that is lost in all of the budget talk is how long it’s been since the country actually had a real budget.

Gaetz said it’s been the 90s.

I was under the impression it was 2005, when the Democrats knew that Bush2 needed money for his wars. They wanted their stuff, too.

Pelosi says that in order to get money for the wars, Bush2 has to sign whatever she puts in front of him. Which he did.

Congress then learns…wait until the last minute - scare the hell out of everyone with cuts and shutdowns - everyone gets to toss their pork and pet projects in the kitty - on the last day the President has to sign it and no one knows exactly what’s in it except for what they put in.

Of course, Soetero liked it because he got whatever he wanted and it relieved him from having to do one of his jobs: negotiate a budget for the people. He could blame everything on Congress

Pres Trump submitted a budget every year and asked for one from the House to get the negotiating going.

Those POSs, having successfully changed the rules, ignored him and threw CRs at him.


58 posted on 12/04/2023 5:11:28 PM PST by qaz123
[ Post Reply | Private Reply | To 57 | View Replies]

To: qaz123
Government accounting can create miracles. They can spend more than they take in, increase the debt, and balance the budget at the same time. Moving items "off budget" is a thing of wonder. Image your household finances if you could just move your mortgage off budget. That sort of thing created the specious balanced budget of the Clinton administration.

Government by contnuing resolutions and omnibus bills is a way to have unlimited spending and uncontrolled debt increases with nobody being responsible. It is a great way to redistribute wealth into desired pockets.

Trump could have refused to sign the first CR, and made clear he would refuse to sign any subsequent CR. The Congress could override his veto, but then they would own it.

Digressing slightly with another observation, I have seen numerous complaints about spending taxpayer dollars on Ukraine. After defense, debt interest, Obamacare and Social Security, taxpayer dollars are gone. We borrow the money to give to Ukraine to spend on defense contracts from the U.S. It's magic.

The rules did not change. There is no enforcement mechanism when the Congress does not answer to the people.

Congress can add $1T to the debt in a year and a congress critter can get life tenure in office if enough of the pork gets delivered to their district. They keep getting reelected so we have the government we deserve.

59 posted on 12/05/2023 2:09:05 AM PST by woodpusher
[ Post Reply | Private Reply | To 58 | View Replies]

To: woodpusher

Lots and lots of truths in this comment, woodpusher.

I remember reading about the gimmicks Clinton used to create his “balanced budget”.

And for all the truths you wrote, none is more truthful than.....They keep getting reelected so we have the government we deserve.

Many think we’re past the point of being able to change things through the ballot box. Maybe they’re right. I’m not one of them, although I don’t discount those ideas. However, if one day(and it has to be really soon) the people will stop being lazy and not allow the RNC, etc to brainwash them, maybe something can be done.


60 posted on 12/06/2023 2:19:23 PM PST by qaz123
[ Post Reply | Private Reply | To 59 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-2021-4041-6061-66 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson