The government’s borrowing is set to explode, and it will have market repercussions. From the Northman Trader at northmantrader.com:
Have they all lost their collective minds? Look I get that some people are leaning Democrat versus Republican and vice versa and that’s fine, but what exactly are voters getting? If, on the one hand, you think Democrats tax and spend too much you get Republicans on the other hand who cut taxes with disproportional benefit to the top 1% and then spend even more. Fiscal conservatives? Please.
In early February the US government was already scheduled to borrow nearly $1 trillion this year.
A week later and that figure is already out the door as this week both parties agreed to expand spending caps seemingly preparing for World War III. An incremental hundreds of billions of dollars to the military budget alone in just 2 years. What for? To what end? It’s a bonanza for defense contractors surely and the president apparently wants a parade, but have we entered the math no longer applies zone?
The numbers are staggering:
Ok, if nobody will say it I will: This is insane.
Just the increase alone is larger than Russia’s entire annual military budget.
— Sven Henrich (@NorthmanTrader) February 7, 2018
The end result? Much, much more borrowing and deficits into the trillion+ range forever and ever amen:
2019? Looks lot be $1.4 Trillion.
I didn’t see these figures mentioned in any campaign brochures have you? And this is all pre-recession folks. We get a recession and you are looking at 2-3 trillion dollar deficits.
Think I’m going hyperbole on you?
Watch this: Here’s a chart I posted back in 2016 when I called all this Empty Promises. Look at what the CBO then had projected in terms of coming deficits for 2018 and 2019:
I spot roughly $500B for 2018 and a little over $600B in 2019. Now we’re looking at figures double these for the same time frame and that’s ASSUMING the rosy growth forecasts they’ve all baked into these forecasts come to fruition.
These numbers don’t represent a slight increase, they represent a deficit explosion and the CBO forecast from 2016 for the 10 years into 2026 are already hopelessly outdated. At the current rate we’ll be hitting $24 trillion by the next presidential election.
To continue reading: Rising Debt + Rising Rates