US Federal deficit increasing rapidly

[dqhall]

Large tax cuts and greater spending are rapidly increasing the deficit. Trump is making the Federal debt greater again:
https://www.usatoday.com/story/opin...r-plus-deficits-fiscal-ruin-column/986236002/

The US is on track for higher inflation and/or increasing interest rates.

Trump declared bankruptcy six times. New York banks stopped lending to him. He went to Russians for funding. He went to the Russians for more than funding. He also went to them for help with a presidential election dirty tricks campaign.
https://www.ft.com/trumptoronto

 

[Yekcidmij]

The US is on track for higher inflation and/or increasing interest rates.

So your argument is that higher inflation and interest rates are because of an increasing deficit caused by Trump? I doubt it. Why do you think interest rates and inflation aren't correlated to economic growth (read: GDP increases)?

 

[Greg J.]

I am troubled that the American national debt is not taken seriously (and being reduced every year)—and it's not really the politicians that don't take it seriously. It is the American people who keep wanting more and more from the government without being willing to make sacrifices. Even worse, more and more people think they deserve certain things from the government. That's one of many effects of having troubles in life, but having abandoned Jesus. Even believing that some god will hold us accountable for our actions after we die would be better.

 

[dqhall]

So your argument is that higher inflation and interest rates are because of an increasing deficit caused by Trump? I doubt it. Why do you think interest rates and inflation aren't correlated to economic growth (read: GDP increases)?

Nixon took us off the gold standard in 1971. When they cannot collect enough taxes to pay for what they want, they have to borrow money, print money or both. If GDP growth does not result in higher tax collections and spending increases, you get deficits.

The Federal funds rate (interest rate) has almost doubled in a year. Inflation is rising. Wages are rising. Taxes are decreasing and Federal spending is increasing. The money supply is increasing.

In 1971 a loaf of sliced bread cost 16 cents in Ohio. Ten pounds of Idaho potatoes cost 98 cents.

 

[Greg J.]

The last couple decades I've thought coming off the gold standard was a bad idea, or more precisely, not maintaining a physical stock of valuables whether it is gold or something else. Bitcoin is a very bad idea, too, in terms of risk (not to mention, legality). Having the foundation of one's economy based on how people feel is crazy, and it's not the same as making an extremely risky investment; it's much worse. All kinds of things can shift public sentiment. A nuke going off on American soil in the middle of corn fields would likely grant us a 2nd Great Depression. (Note that a wise portfolio may include some risky investments, but only when the potential return is higher, and only when you don't need access to the money any time in the next 20 years.)

 

[archer75]

Maybe we could just cancel all the trillion-dollar-a-year wars of choice for the next 50 years?

 

[CRAZY_CAT_WOMAN]

Large tax cuts and greater spending are rapidly increasing the deficit. Trump is making the Federal debt greater again:
https://www.usatoday.com/story/opin...r-plus-deficits-fiscal-ruin-column/986236002/

The US is on track for higher inflation and/or increasing interest rates.

Trump declared bankruptcy six times. New York banks stopped lending to him. He went to Russians for funding. He went to the Russians for more than funding. He also went to them for help with a presidential election dirty tricks campaign.
https://www.ft.com/trumptoronto

It doesn't surprise me. This is what happens when they cut taxes. And increase spending on things.

 

[Yekcidmij]

Nixon took us off the gold standard in 1971. When they cannot collect enough taxes to pay for what they want, they have to borrow money, print money or both. If GDP growth does not result in higher tax collections and spending increases, you get deficits.

Not sure how this answers my question.

The Federal funds rate (interest rate) has almost doubled in a year.

Put another way: the Fed Funds Rate remains way below historical averages. Some perspective:

https://fred.stlouisfed.org/graph/?g=l73T

Inflation is rising. Wages are rising.

So is GDP - which goes back to the question.

Taxes are decreasing

What's your time frame? Tax receipts are near historical highs.

https://fred.stlouisfed.org/graph/?g=lc5D

and Federal spending is increasing.

Yea.

The money supply is increasing.

But velocity of money is not (at least if by "money supply" we're talking about M1 and M2)

https://fred.stlouisfed.org/graph/?g=kGiW

https://fred.stlouisfed.org/graph/?g=kHmm

In 1971 a loaf of sliced bread cost 16 cents in Ohio. Ten pounds of Idaho potatoes cost 98 cents.

And what was household income in 1971? Real disposable personal income has increased:

https://fred.stlouisfed.org/series/DSPIC96

 

[dqhall]

Not sure how this answers my question.



Put another way: the Fed Funds Rate remains way below historical averages. Some perspective:

https://fred.stlouisfed.org/graph/?g=l73T



So is GDP - which goes back to the question.



What's your time frame? Tax receipts are near historical highs.

https://fred.stlouisfed.org/graph/?g=lc5D



Yea.



But velocity of money is not (at least if by "money supply" we're talking about M1 and M2)

https://fred.stlouisfed.org/graph/?g=kGiW

https://fred.stlouisfed.org/graph/?g=kHmm




And what was household income in 1971? Real disposable personal income has increased:

https://fred.stlouisfed.org/series/DSPIC96

You have seen increasing tax receipts, but the deficit is near $1 trillion. Your increasing tax receipts are not enough to shrink the deficit.

I recall M2 was increasing 4% YOY recently.

The price of aluminum was higher in 1986, but the price of a college education is much higher now than in 1986.

Medical costs are not included in the CPI. The cost of a home is not included in the CPI (Consumer Price Index). The cost of a home has been rising faster than the CPI.

Compared to the Venezuelan bolivar, the dollar is a strong currency. Some people is collapsing economies prefer to keep dollars rather than their own shrinking currencies.

 

[Yekcidmij]

You have seen increasing tax receipts, but the deficit is near $1 trillion. Your increasing tax receipts are not enough to shrink the deficit.

You said taxes were decreasing, I was simply pointing out that tax receipts are near historical highs.

I recall M2 was increasing 4% YOY recently.

But M2 velocity has been falling. An increasing M2 doesn't mean anything by itself.

The price of aluminum was higher in 1986, but the price of a college education is much higher now than in 1986.

Ok...

Medical costs are not included in the CPI.

I'm pretty sure it is:
https://data.bls.gov/PDQWeb/cu

The cost of a home is not included in the CPI (Consumer Price Index).

...pretty sure that falls under "shelter" in the CPI.

The cost of a home has been rising faster than the CPI.

A little for the last few years, but if you're talking since 1971, then the CPI and "shelter" have tracked pretty closely together.

https://fred.stlouisfed.org/graph/?g=lcpT

Compared to the Venezuelan bolivar, the dollar is a strong currency.

Compared to the Bolivar chicken eggs are a strong currency. Not sure what the point is.

[seriously, some have been using eggs as money:
https://www.economist.com/finance-a...hat-venezuelan-savers-can-teach-everyone-else ]

 

[durangodawood]

We fall for this tax cuts = increased revenue = lower deficits ruse over and over.

Probably no one remembers the Reagan era anymore.

Oh well.

 

[ThatRobGuy]

Maybe we could just cancel all the trillion-dollar-a-year wars of choice for the next 50 years?

<sarcasm>Why do you hate the troops???</sarcasm>

Seriously...you're correct. Even members of military brass have said that we could scale back military/defense spending by 20% abroad, and 30% domestically, and still be a superpower that nobody would want to mess with, and still have a world presence that would deter attacks on our allies.

 

[archer75]

<sarcasm>Why do you hate the troops???</sarcasm>

Seriously...you're correct. Even members of military brass have said that we could scale back military/defense spending by 20% abroad, and 30% domestically, and still be a superpower that nobody would want to mess with, and still have a world presence that would deter attacks on our allies.

Okay. Let's do exactly that and have NO TAX CUT to waste it on. Instead...just use that money for education and public services.

 

[jhwatts]

I wouldn't worry about the debt. It's all about to reset. The stock market is gonna tank and so goes the dollar. Trade this and trade that, smoke and mirrors.

 

[Nithavela]

That's one of many effects of having troubles in life, but having abandoned Jesus. Even believing that some god will hold us accountable for our actions after we die would be better.

How do you explain states with lesser religious tendencies that also have higher taxation and a smaller deficit?

 

[Greg J.]

How do you explain states with lesser religious tendencies that also have higher taxation and a smaller deficit?

There are no nations on earth whose population is largely voluntary, genuine worshipers of the God who gave up his Son for the forgiveness of sins.

Jesus replied: “ ‘Love the Lord your God with all your heart and with all your soul and with all your mind.’ This is the first and greatest commandment. And the second is like it: ‘Love your neighbor as yourself.’ All the Law and the Prophets hang on these two commandments.” (Matthew 22:37-40, 1984 NIV)

 

[Nithavela]

There are no nations on earth whose population is largely voluntary, genuine worshipers of the God who gave up his Son for the forgiveness of sins.

Jesus replied: “ ‘Love the Lord your God with all your heart and with all your soul and with all your mind.’ This is the first and greatest commandment. And the second is like it: ‘Love your neighbor as yourself.’ All the Law and the Prophets hang on these two commandments.” (Matthew 22:37-40, 1984 NIV)

You're aware that calling people's self-professed christian faith in question is against the forum rules?

 

[Greg J.]

I did not say anything against "Christians." I said there are very few people who are worshiping God with their whole being every waking moment.

 

[Nithavela]

I did not say anything against "Christians."

Why the scare quotes?

 

[dqhall]

You said taxes were decreasing, I was simply pointing out that tax receipts are near historical highs.

The tax rates are decreasing. 2019 corporate and personal taxes will be lower. That is not a tax increase

But M2 velocity has been falling. An increasing M2 doesn't mean anything by itself.

I am not interested in day to day fluctuations.

...pretty sure that falls under "shelter" in the CPI.

The CPI measures rents, not housing prices. It is a catch 22 to hide housing inflation. Housing prices have been rising faster than rents in the United States. Housing bubble 2.0 might be forming. I own my own home with no intentions of selling and renting.

Compared to the Bolivar chicken eggs are a strong currency. Not sure what the point is.

If I invest in eggs, my funds will rot. Gold may keep up with inflation over the long run, but there are better investments available for the prudent investor.