05/13/10 Baltimore, Maryland –
Two big numbers made news yesterday as we approached the market close. No one, to our knowledge, made a connection between the two. But to us, the connection is screamingly obvious. And frankly, your financial future hinges on that connection.
Here’s the first number: $82.7 billion. That’s the deficit the US Treasury posted last month. That’s awful for April, which usually records a positive number, thanks to tax receipts flooding in around the 15th. Last year recorded a loss too. But that was only $21 billion. So this year, the bleeding is nearly four times as bad.
For the record, the government hasn’t posted a monthly surplus since that fateful pre-TARP month of September 2008.
That figure of $82.7 billion is merely the BS figure the Treasury puts out there when it reports the deficit. The real tell is how much the national debt grew. And in April, that figure was twice the size of the “official” monthly deficit – $175.6 billion.
We’re rapidly approaching a point of no return, says our friend Gene Steuerle of the Urban Institute. “Both liberals who want to maintain spending programs and conservatives seeking to keep taxes low seem to think – or, at least, want to think – that economic growth can once again solve our problems.”
No more. “In the past, fiscal imbalance was mainly a temporary, current issue only. Yes, congresses would occasionally spend much more than they collected in taxes, sometimes heedlessly. But as long as revenues over time rose with economic growth and most spending was discretionary, push never came to shove as long as the next congresses weren’t too profligate…
“Now so much spending growth is built into law in permanent or mandatory programs that these programs essentially absorb all future revenues.”
You can read all of this and quickly slip into an impotent rage. And it’s true, there’s nothing you can do to change the minds of politicians and bureaucrats who are wedded to the idea that they’re omnipotent. But that doesn’t mean you’re helpless. You can still tend to your own house…and take protective measures. In fact, we believe you must. It’s our raison d’etre.
Which brings us to the other big number that made news yesterday…
Gold reached an all-time high in US dollars of $1,241. The dollar has finally done what the euro, the pound and Swiss franc did already.
So maybe there hasn’t been a direct connection between the budget figures and the gold price. But it’s not hard to put 2 and 2 together at a moment like this.
Addison Wiggin
for The Daily Reckoning
Addison Wiggin
Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He’s the creator and editorial director of Agora Financial’s daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar… and Why it’s Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.
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very good observation….
regarding impotence, i would urge certain folks to consider expatriation….there is no other way to kill the socialist beast devouring amerika….
we are quickly running out of other people’s money and the marginal productivity of debt is negative….the exponential destructiveness of interest compared to s-curved economic growth has reached the tipping point – there is no turning back.
there are solutions to our problems but the lord has given us over to strong delusion and we are thus doomed….we are in the hands of sociopathic banksters and those types are not gentle overlords….
The worst thing that can happen for the most people, governments and businesses is for the dollar to strengthen for the forseeable future. If this happens, prices of real estate, autos, stocks, and stuff will fall. Jobs will become more difficult to find and wages will continue to fall. Oh, that’s what’s happening.
So much clarity in so few words, well done Addison.
Sadly, the American Empire has indeed passed the point of no return. Someday historians will argue where that point occurred and why leaders and population failed to recognize it. Yes, CYA if you don’t want to be roadkill…
oldbill -
You’ve confused the dog for his tail.
Tony Bonn, you are mistaken. No socialist beast got America and the world into the mess we are in now. If you will recall, it was unregulated capitalist greed, irresponsible right wing ideology, behavior, and propaganda that brought the world to its knees. You can be absolutely certain of that, and no amount of BS can ever change the facts, no matter how sincerely we wish it wasn’t so.