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.
According to CBO projections, the federal budget deficit will come in at $3.3 trillion for fiscal 2020. That’s more than triple the budget shortfall last year and more than double the previous deficit record set at the onset of the Great Recession.
The federal budget deficit for July was only $63 billion, according to the latest Monthly Treasury Statement issued by the Treasury Department.
Of course, $63 billion is a huge budget shortfall. I say “only $63 billion” simply because it pales in comparison to the $864.1 billion deficit in June. In reality, the July deficit continues the trend of unprecedented borrowing and spending we’ve seen throughout the year.
The Federal Reserve serves as the great enabler. As I put it in a recent article, it is the engine that drives the most powerful government in the history of the world. The Fed’s ability to print money out of thin air backstops borrowing spending and removes any meaningful limits on the US government’s actions. It also creates the illusion that there are no consequences to the government’s actions.
We’re seeing that in spades in the central bank and federal government’s response to the coronavirus pandemic. The government is borrowing trillions of dollars and the Fed is monetizing that debt. On top of that, the central bank is propping up the stock market through its easy-money policy and corporate bond-buying programs.
The federal budget deficit in June totaled nearly the entire 2019 fiscal year shortfall and was bigger than the 2018 deficit.
The June deficit came in at $864.1 billion dollars, according to the latest Treasury Department report. To put that into perspective, the budget shortfall for fiscal 2019 was $984 billion and in 2018, the deficit was a “mere” $779 billion.
The Federal Reserve serves as the engine that makes all of the US government’s unconstitutional spending possible. Without the Fed, the entire system would collapse.
Just consider this: in March and April of this year, the Federal Reserve effectively monetized 100 percent of the new debt taken on by the U.S. government.
On June 9, the national debt surged above $26 trillion. Just over one month before that, the debt eclipsed $25 trillion. And 28 days before that, the national debt stood at a mere $24 million. May’s budget shortfall came in at a staggering $398.8 billion, pushing the fiscal 2020 deficit to $1.88 trillion
And there is no end to the borrowing and spending in sight.
After the stock market tanked last week, the Trump administration tried to do damage control and talk the economy back up. In his podcast, Peter Schiff said the damage control fell flat. In fact, everything the government is doing claiming to help isn’t helping at all.
Protests have rocked the US in the wake of George Floyd’s death at the hands of a Minneapolis police officer. In some areas, peaceful protests have crossed the line into violence and looting. But the real question is what are the long-lasting political ramifications that will come out of the unrest?
Peter Schiff talked about it during a recent podcast and worried that it could lead to bigger government and more socialism.
Federal Reserve Chairman Jerome Powell went negative in a webcast speech on Wednesday, May 13.
I’m not talking about negative interest rates, although that could be coming down the pike as well. Powell went negative on the prospects of a quick economic recovery.
He’s right about the prospects for the economy, but he’s wrong about the solution. That’s because he doesn’t even realize it’s Fed policy at the root of the problem to begin with.