US Budget Deficit to GDP Ratio Biggest Since WW2
Posted on: May 29th, 2009 | By Contrarian Profits | Filed under Notes From the Investment Underground
The ratio of the US budget deficit to GDP is at the highest it’s been at any point since World War II. Except there are no Nazis to fight. The only war going on is Team Obama’s war against capitalism.
Governments like to ‘stimulate’ the economy; it makes them feel like they’re doing something. They also, quite rightly, believe it will help them win elections. What they don’t like to think about is the long-term consequences of their actions.
Stimulating the economy is relatively easy. The Treasury borrows money and sets up a $700 billion slush fund for “too big to fail” corporations. It calls it the TARP and does what it likes with the money with little or no oversight. The Treasury then borrows more money and sets up a separate $787 billion slush fund – this time for Democratic Party pet projects. This gets spun as an “economic recovery package.” And the government does what it likes with the money.
When all this borrowing starts to cause trouble in the Treasury markets, the Fed steps in and starts to print money to buy surplus government bonds. It calls it “quantitative easing” or “credit easing.” But it’s really just plain old dollar printing. The Fed also buys junk securities from banks in return for more funny money.
The problem is all this stimulation sets the economy up for inflation. The government is happy because all the money it’s borrowed out of an empty pocket can be paid back on the cheap. Banks and borrowers are happy too: inflation makes it easier for debtors to pay back their loans.
Inflation is only a problem if you have dollar savings and investments in dollar-denominated assets. It makes every dollar you hold worth less. A lot of readers have been writing to us asking for practical advice on how to deal with inflation. That’s why in today’s Notes, we want to discuss four ways you can protect your savings from this menace.
There’s only 2 well 3 problems with this:
Lets take the first premise:
“Governments like to ‘stimulate’ the economy; it makes them feel like they’re doing something. They also, quite rightly, believe it will help them win elections. What they don’t like to think about is the long-term consequences of their actions.”
1. These concerns were ABSENT while CHeney-Dubya CONNED us into the ILLEGL Iraq War, which simply resulted in US PRIVATIZING this county’s once Nationalized Oil Industry. 1.5 Trillion and growing
2. The Bailouts. “The Treasury borrows money and sets up a $700 billion slush fund for “too big to fail” corporations. It calls it the TARP and does what it likes with the money with little or no oversight.”
THis was done under the CHene-Bus Administration. Again, No concerns.
3 Credibility…
THe Business Underground is written b an OBVIOUSLY Business-Skewed Journal. It says what it wants and most believe them. Try a CREDIBLE Natioanal NEWS Source..Like CNN:
President Clinton announces another record budget surplus
From CNN White House Correspondent Kelly Wallace
September 27, 2000
Web posted at: 4:51 p.m. EDT (2051 GMT)
WASHINGTON (CNN) — President Clinton announced Wednesday that the federal budget surplus for fiscal year 2000 amounted to at least $230 billion, making it the largest in U.S. history and topping last year’s record surplus of $122.7 billion.
“Eight years ago, our future was at risk,” Clinton said Wednesday morning. “Economic growth was low, unemployment was high, interest rates were high, the federal debt had quadrupled in the previous 12 years. When Vice President Gore and I took office, the budget deficit was $290 billion, and it was projected this year the budget deficit would be $455 billion.”
President Clinton announces that the federal budget surplus for fiscal year 2000 is the largest in U.S. history
Instead, the president explained, the $5.7 trillion national debt has been reduced by $360 billion in the last three years — $223 billion this year alone.
This represents, Clinton said, “the largest one-year debt reduction in the history of the United States.”
“Like our Olympic athletes in Sydney, the American people are breaking all kinds of records these days. This is the first year we’ve balanced the budget without using the Medicare trust fund since Medicare was created in 1965. I think we should follow Al Gore’s advice and lock those trust funds away for the future,” he said.
In June, the administration predicted the surplus would be $211 billion, and would increase by as much as $1 trillion over the next 10 years.
“The key to fiscal discipline is maintaining these results year after year. We need to put our priorities in order,” Clinton said.
The president’s news comes as lawmakers on Capitol Hill continue to wrestle with the fiscal year 2001 budget numbers. The new budget year begins October 1, and work has been completed on only two of the 13 annual spending bills, as the Republican-led Congress and the White House remain at odds over spending allocations.
“I am concerned, frankly, about the size and last-minute nature of this year’s congressional spending spree, where they seem to be loading up the spending bills with special projects for special interests, but can’t seem to find the time to raise the minimum wage, or pass a patients’ bill of rights, or drug benefits for our seniors through Medicare, or tax cuts for long-term care, child care, or college education,” Clinton said.
“These are the things that need to be done and I certainly hope they will be and still make the right investments and the right amount of tax cuts,” Clinton said.
Rep. J.C. Watts, R-Oklahoma, chairman of the House Republican Conference, said the GOP wants 90 percent of the surplus used for the debt. In a CNN interview, he said the other 10 percent should be used to “take care of a lot of priorities we have, like prescription drugs, making sure that our education needs are met, making sure some of our national security needs are met, and doing that while at the same time protecting the Social Security surplus and the Medicare surplus.”
That approach would be in lieu of tax cuts, which “we can’t do this year because the president vetoed it,” Watts said.
Clinton unveiled the new numbers in a statement at the White House before departing for fund-raising events in Dallas and Houston.
“This is part of our fiscal discipline to reduce the debt with the federal surplus,” said one White House official who asked not to be identified. Reducing the debt, the official said, has “real effects for real Americans.” It means lower interest rates for mortgages, car loans and college loans, and leads to an increase in investment and more jobs.”
It is the third year in a row the federal government has taken in more than it spent, and has paid down the debt. The last time the U.S. government had a third consecutive year of national debt reduction was 1949, said the official.
The federal budget surplus for fiscal year 1999 was $122.7 billion, and $69.2 billion for fiscal year 1998. Those back-to-back surpluses, the first since 1957, allowed the Treasury to pay down $138 billion in national debt.
When fact takes on Bullshit…Bullshit ALWAYS loses.
Now I DARE you to discredit the FIGURES, WITHOUT attacking ME, the messenger
Most sincerely, CJ Davidson,
Host, producer