MN Gordon Blog | America’s Recline and Flail Goes On | Talkmarkets - Page 2
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MN Gordon is President and Founder of Direct Expressions LLC, an independent publishing company.  He’s the Editorial Director and Publisher of the Economic Prism – an E-Newsletter that brings clarity to the muddy waters of economic policy and targets investment opportunities for ... more

America’s Recline and Flail Goes On

Date: Saturday, November 7, 2020 6:00 AM EDT

Congress hasn’t truly balanced the budget for over 50 years. Day after day, year after year, Washington spends more than it takes in via tax receipts.  Public debt makes up the difference. The situation is beyond reconciliation.

The national debt in 1971, the year Nixon closed the gold window, was $398 billion. By comparison, the deficit for 2020 alone was $3.1 trillion. Add up the yearly deficits, and the national debt now stands at $27.2 trillion. Add on all the unfunded liabilities promised by politicians over the years, including social security and Medicare Parts A, B, and D, and we’re facing a debt burden of $155.3 trillion.

For many decades, annual budget deficits were financed by American and foreign investors via purchases of U.S. Treasury notes. These days, as the empire reclines and flails, the Federal Reserve is the big buyer of Treasuries…using new credit that’s created from thin air. These coordinated fiscal and monetary policies by the U.S. Treasury and the Fed deliver limitless government.

Senate Majority Leader Mitch McConnell, upon winning reelection for a seventh six-year term, said his top priority is passing a new economic stimulus bill before the end of the year. He even wants the package to include bailouts for state and local governments. A new stimulus bill would all but assure the 2021 budget deficit’s over $2 trillion. The $2 trillion deficit, of course, would be financed by the Fed’s fake money.

On Wednesday, Wall Street celebrated these fake money prospects by running the Dow Jones Industrial Average (DJIA) up over 367 points. On Thursday, they bid the DJIA up another 542 points. What to make of it?

America’s Recline and Flail Goes On

By and large, the tests facing America’s economy have little to do with markets and everything to do with central government. Over the last 50 years, as the Fed and the Treasury colluded to rig the financial system in totality, wealth has become ever more concentrated in fewer and fewer insider hands. The effect over the decade long expansion that ran from Q2 2009 to Q2 2020 has been a disparity that’s so magnified few can ignore it.

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Flat Broke 7 months ago Member's comment

Mitch McConnell has had plenty of time to pass on a new stimulus bill, but he has failed to do so. And Americans have suffered as a result.