It’s not just the federal government running massive deficits and piling up enormous levels of debt. Thirty-nine US states don’t have enough money to pay all of their bills.
That was the grim conclusion of Truth in Accounting’s annual Financial State of the States report.
The report summarizes a comprehensive analysis surveying the fiscal health of the 50 states prior to the coronavirus pandemic.
To hear Federal Reserve officials, politicians and mainstream financial media pundits tell it – there is no inflation. In fact, the consumer price index remains “stubbornly low” according to those who view rising prices as an economic good. But inflation defined correctly is rampant. In fact, it is at all-time record levels.
Strictly speaking, inflation is an increasing money supply, and by that measure, it hs set records for five straight months.
The 2020 budget deficit surged passed $3 trillion in August even as the US government continues to borrow and spend at a torrid pace. Since March, the federal government has added $3.3 trillion to the national debt. That is on top of the $1.4 trillion in debt Uncle Sam piled on in the 12 months through February 2020.
So, who is buying all of this government debt?
There are a lot of buyers out there, but when you boil it all down, the US government wouldn’t be able to maintain this level of borrowing and spending without the backstop of the Federal Reserve.
If you go to McDonald’s, you expect to get a hamburger. If you go to KFC, you expect to get chicken. And if you go to the Federal Reserve, you expect to get easy money.
The Fed delivered exactly what you would expect at this month’s Federal Open Market Committee meeting that wrapped up Wednesday.
Every week, analysts and pundits pour over the latest weekly jobs report looking for signs of life. Every month, we dive into the monthly unemployment numbers hoping they signal economic recovery. But these unemployment numbers don’t tell the whole story.
The government economic shutdowns in response to the coronavirus pandemic have deeply wounded the economy in ways that won’t immediately show up in the numbers. In fact, they could leave scars on the economy that don’t fade for years.
The Chinese are threatening to dump US Treasuries even as the federal government borrows money at a torrid rate. If the Chinese were to follow through, it could wreak havoc on the bond market and send interest rates surging despite the Federal Reserve’s best efforts to hold them down.
The federal government added another $200 billion-plus to the budget deficit in August, pushing the fiscal 2020 budget shortfall to over $3 trillion with one month still left in the fiscal year.
Uncle Sam continues to rack up enormous monthly budget deficits. The August shortfall came in at $200.1 billion, according to the Treasury Department’s Monthly Treasury Statement, pushing the fiscal 2020 budget shortfall to $3.01 trillion. That’s more than double the previous record deficit of 1.413 trillion set in FY 2009 at the height of the financial crisis.
Globally, gold-holding in ETFs increased for the ninth straight month in August with the appetite for gold notably increasing in Asian markets.
ETFs added a net 39 tons of gold last month, according to the latest data from the World Gold Council.
Last month, we reported that mortgage delinquencies charted their biggest quarterly rise ever. Digging more deeply into the numbers, we find even more trouble brewing in the subprime mortgage market.
Of the 8 million active mortgages the FHA insures, 17% were delinquent in July. That ranks as the highest level in history. That translates to about 1.4 million delinquent FHA loans.
Central banks bought over 27 tons of gold in July, but big sales by two banks dropped net global purchases to 8.8 tons, according to the latest data by the World Gold Council.