Despite the fact that we have added 1.3 trillion dollars to the total government debt in just the past year, there are signs that the increase in the Federal Debt Limit is NOT needed.
For the past 11 months, the government has piled on the debt like a starving sumo wrestler at an all you can eat buffet. Only three of the 11 months saw increases that were under 100 billion dollars per month. February saw the greatest chunk added to the deficit, 274 billion dollars in just 28 days. (Yes, that is nearly 10 billion dollars a day in money that was printed up, backed by the Full Faith and Credit of the American Taxpayer of the Future.)
Yet in December, the season of giving, holiday joy and Christmas plus New Year's vacations, the Federal Government has found its fiscal restraint. For the three weeks of December, the Federal government has only spent 10 billion dollars that it didn't have. That is down from the 50 billion it overspent in November, the 127 billion overspent in October and the 144 billion overspent in September. The Government must be right that the economy is turning around, for at this rate of change, we should actually be seeing a surplus in January.
Of course, while the government has found its restraint, it appears that the public portion of the debt has no such constraints. For you see, there are two sections of the debt owed by our government, the Public Debt and the Intragovernmental Debt, or what is owned between entities in the government. Out of that 1.3 trillion that we added in 2009, more than 95% was tacked onto the Public Portion. The public portion went from 6.369 on December 31, 2008 to 7.733 as of December 21st of 2009. The Intragovernmental portion rose from 4.330 to 4.365 during that same period or only about 35 billion dollars. Yes Virginia (and all the other states), the public is being stuck for all these bailouts, buyouts, bonuses and back door bargins that our government has been engaged in to "save the economy".
Even the month of December is a sobering reminder of the binge we have been on. That pesky public portion of the debt rose by 26 billion dollars so far this month, while the Intragovernmental portion actually fell by 16 billion. Yes, it fell to give us a net increase of only 10 billion for the month so far.
Yes, the Government is jockeying the numbers and the money like a streetwise shell game to avoid hitting the 12.1 trillion dollar limit (we are at 12.099 minus some few billion that doesn't count, except we do owe it eventually). Already the politicians are pulling out the "medicare and social security recepients" to justify adding another 1.9 trillion to the limit so that they can continue to spend money that doesn't exist except by printing press.
So grab another eggnog and drown your sorrows as we allow our government to further dig a hole from which we cannot escape. Our average interest on the debt is only 400 billion or so right now, wait until the interest rises to 7 or 9 percent and the figure jumps to nearly a trillion dollars in interest alone. For those of you wanting to know, we currently pay nearly 18 percent of our taxes just to cover the interest costs on the federal deficit and instead of keeping the debt level or reducing it, we just added another 1.3 trillion to it. Merry Christmas and to All, a good night.
Disclosure: No positions except I get paid in FRNs
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