US Debt and Deficit Numbers Overlooked by the Mainstream

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…

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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