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News Link • Government Debt & Financing

Charting The US Fiscal Catastrophe

And if you are not scared enough by the above figures, here is Bill Buckler of the Privateer fame's condemnation of what anyone with half a brain realizes is pure, unadulterated fiscal lunacy (dictated in no small part by the same people at Goldman who are now in charge of monetary policy as well): Before fiscal 2008, the US Treasury had only run an official deficit above the $US 400 Billion level once - in 2004. In the three years between 1998 and 2000, the Treasury had even claimed to have run budget SURPLUSES, even thought its debt climbed throughout the period. In fiscal 2008 - the official Treasury deficit was $US 438 Billion Ten weeks into fiscal 2009 - the Fed cut its controlling rate to 0.00 - 0.25 percent In fiscal 2009 - the official Treasury deficit was $US 1.42 TRILLION In fiscal 2010 - the official Treasury deficit was $US 1.29 TRILLION White House projections for fiscal 2011 are for an official Treasury deficit of $US 1.5 TRILLION In fiscal 2009 and early fiscal 2010, the Fed directly monetised an official $US 300 Billion of US Treasury debt. Between November 2010 and June 2011, the Fed plans to buy another $US 900 Billion worth. Nobody, including the Fed knows what will happen after that. When looking at these figures, it is wise to remember that what is being “produced” here is the reserve currency of the world. This is why the US government has gotten away with this borrowing as long as they have. And it is also why the Fed has been able to accommodate them with non-existent official interest rates for as long as they have. But for how much longer?

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