Image source: Wikipedia

Last month the Federal Government spent $589B and ran a $314B deficit. To pay for the $314B they didn’t have, they said they borrowed $261B from the public and drained their savings account by $73B. That doesn’t quite add up but that doesn’t surprise anyone. What’s $34B between friends?

When the Fed’s savings account gets low, they have to come to the public to raise bonds. The Feds bank accounts were replenished from extra borrowing in Q3 this year and from extra tax receipts that came in October.

Treasury has forecast that they won’t have to dip into savings at all during Q4 2023 or Q1 2024 and that the balance will remain at $750B. It’s currently at $667B.

Net Borrowing in perspective:

Last 3 months = $771B

Q4 2023 = $776B

Q1 2024 = $816B

When government savings balances drop, they increase borrowing. They’ve filled their coffers and raised their level of borrowing, so I don’t expect this to be an issue. But since they’re already 10% below their forecast balance, we’ll have to watch if this rebounds or if they raise issuance estimates or just let it drop as budgetary wrangling continues.

The government suspended the debt limit until Jan 1, 2025, and has since gone on a borrowing spree. The CBO forecast $32.5T in government debt at the end of 2023. We are currently looking at that number being $33.9T.

The CBO forecast $34.5T in government debt at the end of 2024. At current rates of borrowing, we are looking at that number being as high $37.5T. What’s $3T between friends…2024 is an election year, so count on this being a big issue.

More By This Author: