So this afternoon the Congressional Budget Office or CBO released their updated budget projections for the US government and the numbers are both a shocker and a head scratcher. They are now projecting the US gov to run budget deficits, of $1.8 Trillion this year and $1.4 Trillion next year. That is the US government is projected to spend nearly 75% more money than they took in via taxes this year, and another similar percentage next year. To put this in perspective our budget deficit the last four years was about the same as what we'll now have in a single year.
Now here's the head scratcher, the projections assume a total GDP loss of 1.5% this year and growth of 4.1% next year, basically calling for an amazing economic recovery later this year. To call this projection insanely optimistic would be an understatement, and means their overall deficit projections are almost certainly way too low.
The US government is going to have to borrow an estimate $1.8 Trillion via the US Treasury market this year, plus roll over existing debt. We're going to be issuing somewhere close to 4X the amount of debt this year as last year. The primary source of this funding for more than a decade has been foreigners, primarily Asian and Middle eastern countries. These countries have recycled their massive surpluses from selling the US oil and cheap lead painted, plastic crap to the US into treasuries, effectively funding our government.
Guess what's happened to those surpluses as the global economy has cooled and the US consumer has slowed their buying? Yes, they are rapidly vanishing. In fact the available data from Jan, shows purchase of long term treasuries by foreigners slowed very significantly. To fund our budget they must buy several times the US treasuries than they have money to buy, the math simply does not work.
The Treasury, CBO and Congress are living in a complete fantasy land right now. This massive spending is not just imprudent, but it simply can't be funded no matter how many times we click our red slippers together.
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I have come to the conclusion that there is a vast left wing conspiracy to grab as much power as possible in the shortest amount of time in order to undermine the economy of the U.S. and make us dependant on foreigh governments, which are sympethic to the terrorists that wish us all dead.
At this point, there is no policy guidence from the White House, merely more conclusory statements and public relations. The Speaker of the House runs Congress. Treasury has been abandoned and left to twist in the wind.
In a market economy that has been led by housing for 50 years, we have been abandoned in favor of handouts to Wall Street who are also transferring huge monies to foreigh entities.
We may doomed. If all of this happened by accident, they're incompetent. If it was part of a conspiracy over the past 2 years, it's succeeding in subverting our system of government. Just this week the Congress voted to abrogate due process guaranteed in the U.S. Constitution. Next will be confiscation of firearms, property held by "the wealthy" and . . . .
Did I mention that I'm paranoid?