Another Month Another Trillion Added to US National Debt
"With this level of debt, the raising rates would completely collapse the economy"
On Tuesday, the national debt pushed above $26 trillion.
Just 35 days ago, the debt eclipsed $25 trillion. And 28 days before that, the national debt stood at a mere $24 million.
Meanwhile, the federal government just set a record for the biggest budget deficit in any fiscal year — with four months left to go.
May’s budget shortfall came in at a staggering $398.8 billion, pushing the fiscal 2020 deficit to $1.88 trillion, according to the latest monthly US Treasury Department statement.
The previous budget deficit record for any year was $1.4 trillion in FY 2009. Before this year, the federal government had run deficits over $1 trillion in just four fiscal years, all during the Great Recession.
It took the nation 210 years to run the National Debt up to $2 trillion. It took exactly 2 months and 2 days to add the most recent $2 trillion. The National Debt just passed $26 trillion, and the Fed has given Congress the green light to keep borrowing, as it will keep printing.
— Peter Schiff (@PeterSchiff) June 10, 2020
It’s important to note that the fifth trillion-dollar deficit was coming down the pike this year even before the massive stimulus spending in response to coronavirus. In effect, the federal government was already engaged in fiscal stimulus despite what Trump kept calling “the greatest economy in the history of America.” The deficit featured numbers you would expect to see during a massive economic slowdown — before the pandemic. Response to the coronavirus just put spending and debt in hyperdrive.
For the month of May, receipts to the US Treasury fell 25% to $174 billion. There was a 16% drop in individual withheld taxes and a 62% drop in corporate income tax payments. This reveals just how much the coronavirus-induced government shutdowns squeezed the economy.
Spending in May came in at $573 billion. Year-to-date, Uncle Sam has spent $3.9 trillion. And these numbers don’t even include outlays for forgivable small business loans. A Treasury Department official told Reuters those numbers will show up in the budget as loans are forgiven between the end of June and late October.
More spending could be coming down the pike. Last week, President Donald Trump pushed for more stimulus, including a payroll tax cut.
According to the National Debt Clock, the debt to GDP ratio has risen to over 130.46%. Studies have shown that a debt to GDP ratio over 90% retards economic growth by about 30%.
During a press conference after the June FOMC meeting, Federal Reserve Chairman Jerome Powell indicated that the central bank has no plans to roll back its extraordinary monetary policy any time soon. Powell said the Fed was committed to “do whatever we can, for as long as it takes,” and, “We’re not even thinking about thinking about raising rates.” And no wonder. With this level of debt, the raising rates would completely collapse the economy.
The federal government paid $26 billion in interest on the debt in May alone. That’s with rates effectively at zero.
It’s hard to even fathom this level of debt. And nobody seems concerned. Virtually everybody agrees that trillions in government spending is “necessary” to boost the economy through the COVID-19 government shutdown – Republicans and conservatives included. Everybody is a Keynesian now.
But nobody seems to be asking the most significant question: who is going to pay for all of this? After all, borrowed money has to be paid back.
The answer is simple: We will all be on the hook for this massive bill. We will either pay for it in higher real taxes or a massive inflation tax — probably both.
But with everyone locked inside their homes tax revenue will be shrinking, would be a good time to buy some silver as primary minds are drying up.
Goddamn idiot in the WH.
The Federal Reserve spent Trillions through the company BlackRock to buy up Corporate bonds. The crisis created by the shutdown allowed the Federal Reserve to perform an otherwise illegal act. The FR circumvented the law by getting BlackRock to buy those bonds.
That means the American economy is being “nationalized” in a surreptitious manner. What that would do is give the FR the collateral to support increasing the national debt by trillions more since now the nation is hawked. It also allows DC to manage America’s economy in a similar manner to Beijing.
The WEALTH of the SRF is always increasing!
murikans are all indebted—status anxious people r required “to keep up with the jones”; don’t expect anything from these automatons expect more shallowness, 3 chord manure and self defeat—the debt to GDP ratio now approaches 120%. this cannot be sustained indefinitely regardless of the tricks employed: stock buy backs, junk bonds, imperialism, quantitative easing, crypto currency, etc—the US is a dependent society that produces little, exports little and imports nearly everything—vehicles, agriculture, appliances, technology, rare earth metals, textiles, etc…as US currency has become the least preferred reserve currency, the US has relied more on imperialism, 2nd, 3rd party sanctions tariffs etc to compensate for their incapacity to compete globally—they import gas from Canada, oil from Canada, Russia, etc—the US shale oil industry will be nationalized resulting from its uneconomic character…US agriculture, govt subsidized exports some soy, pork to China, some rice to Japan, corn to Mexico, some wheat to Cuba…China, the largest importer has frozen imports due to the amerikan sinophobia and found other markets—Russia for wheat, Brazil/Argentina for soy, pork, etc…and China trades extensively w southeast asian nations a positive balance of trade. this is also true of Russia—a positive balance w Japan, Germany, UK, China, India, Turkey, etc…both Russia and China are welcomed in African nations—having no history of imperialism, unlike the anglosphere, France, Belgium, Germany, Netherlands—even the former US colony Philippines has pivoted to China and Russia….India takes an independent direction, seeking to maintain practical relations w USA, Russia and even china. Mexico has always charted an independent course—the only nation that resisted amerikan imperialism in the Western Hemisphere and did not break relations with Cuba. They have many challenges, partly due to the cartels that serve the insatiable amerikan need for cocaine, meth, heroin; hopefully the recent discovery of more oil will help–however they r cursed by their proximity to USA, having lost much territory to US imperialism—-wheras the Spanish, French and Austrians all left Mexico —the amerikans stole Texas, Colorado, California, Az, NM, Nevada—between the choices of civilized society and socialism vs barbarism and imperialism, amerikans always prefer the latter