Reading time: 2 – 3 minutes
Just in case someone might have missed the news … the Federal Reserve Flow of Funds accounts for Q2 2009, places the US fiscal deficit (annual basis) at $1,294.9 billion. (Table F.106 Federal Government, line 17, Net Federal Government Saving NIPA basis)
This “Obama Deficit” is about six times the fiscal deficit for the year 2003, well on the road to debasing the currency.
Gov’t spending doesn’t build confidence
The Rest of the World (which is already beginning to come out of the recession), is fleeing dollars, indicating that whereas President Obama may have earned the Nobel Peace Prize for what he has not yet done, he certainly has not earned good marks for his actual behavior on the economic front.
Obama administration falls off the cliff
It should be noted that the Q2 2009 deficit numbers are before most of the “spending is stimulus” packages have kicked in, and certainly before the looming spending spree represented by Obamacare and Cap and Trade legislation (directed towards a purported imminent danger of “global warming” — despite skepticism of many scientists).
Obama now “owns” the deficit
Most of President Obama’s spending has been his own doing (with the help of the Pelosi-Reid Congress) — the largest part of a problem that was not “inherited” from the Bush administration, as the graph shows.
In order to avoid a high level of inflation and further deterioration of the dollar, excessive expenditures will somehow have to be neutralized.
There is no clear plan, at this writing, as how this deficit will be unwound.
How do you think the government might proceed?
Is it plausible that the administration and Congress with reverse course and start cutting programs?
Won’t raising taxes only ensure higher unemployment and a further decline in public support for the Democratic Party?
Perhaps high inflation is the only solution that is politically feasible for the current leadership — just as in the Carter years.
If this is so, what are you doing to get ready for a level of inflation that will permanently debase the US currency?
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The sad part is the vast majority of the bail-out was spent on no risk covering on CDS’s which were written by the Large houses and AIG who wrote the protection and believed the cheap fees were free money and did not need protected. Sub prime mtgs. the total mkt. being $600B could not create trillions of loss globally.
The Stimulus as far as I can tell went almost 60% to save, keep and create Government Jobs and pensions.
One little fact. Since 1910-2004 our population grew 3x 90M to 270M appx. Federal Gov. grew 65x per-capita same time period!
Matt
Yes, indeed. Long-term demographic changes are often ignored when comparing current to past crises. The demographics of the Great Depression are considerably different from those of today.
Not only has government grown in size, but, perhaps more importantly, in complexity. Today, with hundreds of thousands of governmental units of all types, the inter-relationships and effects are virtually unknowable.
Foreigners got suckered by Wall Street corruption that has brought the global economy to its knees.
Very little in any Wall Street corruption caused this; if I am wrong, please provide me the specific factual examples?
Sad….look instead at the government agencies that were put in place and funded by Congress that setup the environment for this disaster! Congress blaming the free markets is an absolute outrage; only a non-thinking fool would believe otherwise!