Note well: Although the budget deficit, over calendar year 2014, was the smallest since 2007. A lot of that has to do with low interest rates. Once interest rates start to climb. the deficit is going to explode. -RW
Monday, January 19, 2015
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The national debt increased during the entire time we supposedly had surpluses in the 90s. How is this possible?
ReplyDeleteOf course, Uncle Sam was raiding the Social Security "trust fund" to conjure up these "surpluses." It's akin to a CEO raiding his employee pensions and counting it as revenue. A CEO caught doing this would go to jail, but presidents and Congress has been cooking the books for decades without any accountability.
Lastly, it should be noted that the chart you're posting is using non-GAAP accounting. A truer measure has America running $5-6 trillion deficits. The accumulated GAAP-based liabilities dwarf the funded debt.
Can you say, "default"?
"Once interest rates start to climb. the deficit is going to explode. "
ReplyDeleteThus we will witness inflation.
If Europe and Japan start seriously debasing their currency by buying up eu debt, then rates could shoot up as demand for dollars would go up substantially. There would be almost no way for the Fed to intervene other than by buying up foreign debt of Europe and Japan. Politically that would be very difficult for the Fed to pull off for very long since once word got out, the public would be outraged. This is a scenario that has to keep the Fed board members up at night.
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