Tuesday, August 4, 2020

US Treasury Spending Likely to Increase the Money Supply By More Than $2 Trillion in the Current Quarter

It just doesn't stop.

Here is Treasury spending over recent quarters.

The Treasury spent $3.4 trillion in the most recent quarter largely to fund the lockdowns.

Now, the Treasury reports that during the July - September 2020 quarter (Q3), it expects to borrow $947 billion in privately-held net marketable debt, assuming an end-of-September cash balance of $800 billion.

The borrowing estimate is $270 billion higher than what was just announced in May 2020. 

The increase in borrowing is primarily driven by higher expenditures due to a shift from the prior quarter and anticipated new bailout legislation.

It should be added that this $947 billion in borrowing will be added to the current cash balance the Treasury holds of $1.7 trillion.

Since the Federal Reserve is likely to monetize the $947 billion in borrowing. And the Treasury will spend approximately a trillion of cash balances into the system, the amount of additional new money in the system will be near $2 trillion. This is an annualized increase in the money supply of around 44%.

On top of this, in its first Q4 estimate, the Treasury reports that in the Oct-Dec quarter it expects to borrow another $1.216 trillion in privately-held net marketable debt

This is all irresponsible spending. This is all irresponsible Federal Reserve money printing.

On the other side of this massive money pump will be a super acceleration in price inflation, conservatively I expect at a 5% annualized price inflation rate but it could be much more.

Hug your gold coins, they will climb at a multiple of the price inflation rate.


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