Best of the Week
Most Popular
1.Persecution of the Jewish Race Continues, Israel's Dark DNA Secret Revealed - Nadeem_Walayat
2. Gold Price $10,000 Is it Possible? - Jason_Hamlin
3.Bitcoin Price Sign of Reversal? - Mike_McAra
4.U.S. Stock Market Analysis and Forecast - Gary Tanashian
5.Gutting the U.S. Armed Forces, Committing Economic Suicide, France Imploding - Ty_Andros
6.Gold And Silver Price Trend Change Developing, Just Not Confirmed - Michael_Noonan
7.Gold Price Bracing for a Short-Term Correction - Jim_Curry
8.Massive Gold and Silver Futures Buying - Zeal_LLC
9.Most Hated Stocks Bull Market! - Puru_Saxena
10.Silver Up 10.3% YTD - Outperformance To Continue - GoldCore
Last 5 days
TransTech Digest: Super Battery Bio-Power vs. Dirty CleanTech - 21st July 14
How to Find Trading Opportunities in the Currency Markets - 21st July 14
Stock Market One More Pull Back - 21st July 14
The Conquest Of Real - Degenerate Philosophies of the Book - 21st July 14
A Clear Way to Profit from a Graying Population - 21st July 14
Last Chance Critical Financial Market Forecasts Special Total Access - 21st July 14
Stock Market Crash Nightmare! - 21st July 14
Why the Stock Market Is STILL Cheap - 21st July 14
From Gore-Bore To Gore-War - 21st July 14
Gold Price Looking Drab - 21st July 14
An In-Depth Look at Gold Chartology - 21st July 14
The Jewish Selfish Gene, People Chosen by God, Everyone Else is Goyim to Kill - 20th July 14
AUD NZD Taking The Forex Bull By The Horns - 20th July 14
US-backed Israeli Invasion of Gaza Unleashes Death and Destruction - 20th July 14
The Israeli Promised Land Dream - The Criminal Roadmap Towards “Greater Israel”? - 20th July 14
Stock Market in DANGER of Strangling the Bears to Death - 20th July 14
Sanctions and Airliners - What’s the U.S. Empire’s Agenda? - 19th July 14
Gold And Silver – BRICS And Germany Will Pave The Way - 19th July 14
Choppy Stock Market in Recent Weeks - 19th July 14
Is The Stocks Bull Market Over? - 19th July 14
Edward Snowden Towers Over His Enemies - 19th July 14
Will Gold Price Drag Down the Mining Stocks? - 18th July 14
Will Stock Market Investors Get Out In Time This Time? - 18th July 14
Stealth Tech Stocks Rally Catalysts - 18th July 14
Stock Market - Is It 1999 All Over Again? - 18th July 14
Bitcoin Price Medium-term Trend Being Tested - 18th July 14
Stock Market SPX Highs A Fed Illusion - 18th July 14
American Press Blames Russia for Downed Malaysia Flight MH17 - 18th July 14
Financial Market Forecasts Special Event - 18th July 14
U.S. Housing Buyers Fools Paradise. Lying Spanish Banks... - 18th July 14
U.S. Housing Market in Trouble Again - It’s 2009 All Over Again - 18th July 14
Oil Path Signals Wrong Way For World Energy - 17th July 14
Artificial Intelligence and Genuine Stupidity - 17th July 14
Channel 4 News Catches Israeli War Machine Killing Children Playing on Gaza Beach - 17th July 14
Stock Market Rally Gets Manic/Depressive - 17th July 14
Jurisdiction - So You Think Your Gold is Safe Outside The Country? - 17th July 14
Stock Market Top Or Just A Consolidation? - 17th July 14
Carbon No Longer Captures Australia - 17th July 14
Gold - The Million DOLLAR Question... - 17th July 14
Outlook for Gold, Stocks, Economy by Incrementum’s Advisory Board - 17th July 14
The Fed Needs to Raise U.S. Interest Rates Now! - 17th July 14
Silver Price Up Trend an Mining Stock Investor's Friend - 17th July 14
Germany Pivoting East, Exit US Dollar, Enter Gold Standard - 16th July 14
Which Way is Inflation Blowing? Watch Commodities - 16th July 14
U.S. Housing Market Ponzi Scheme Losses: American Homeowners Battling Wall Street - 16th July 14
U.S. Economy Quarterly Review and Implications for 2014-2015 - 16th July 14
Never Mind Their Distrust of Economic Data and Forecasts; Austrians Can Help You Predict the Economy - 16th July 14
Can We Expect Further Rally in USD/CAD? - 16th July 14
Stocks, Bonds, Currencies, Metals and Interest Rate Forecasts Special Event - 16th July 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

US Budget Deficit Soars in October; Do You Trust the Politicians to Solve This Looming Crisis?

Interest-Rates / US Debt Nov 15, 2012 - 12:49 PM GMT

By: InvestmentContrarian

Interest-Rates

Sasha Cekerevac writes: The U.S. Treasury Department recently released the budget deficit numbers for October, reporting a massive $120 billion deficit. This compares to a budget deficit in October 2011 of “only” $98.0 billion. While the U.S. economy is not growing at a rapid rate, it’s certainly not shrinking. So in the span of one year, with some growth in the U.S. economy, albeit slow growth, we’ve seen an approximate $20.0-billion monthly year-over-year increase in the budget deficit. I think this shows the true ineptitude of our political leaders.


One sign that the U.S. economy has shown some improvement is that receipts increased to $184 billion, compared to $163 billion this time last year. However, expenditures increased at a much faster rate. The monthly expenditures for October 2012 were $304 billion, a huge jump from approximately $262 billion in October 2011, which caused the rise in the budget deficit. Does anyone know where this money went?

While President Obama can talk about increasing taxes to generate more revenue, the truth is that receipts to the government are increasing. The government is taking in higher levels of revenue, as the U.S. economy has slightly improved. However, the spending side is growing at a far greater rate. I don’t believe Obama’s tax hikes can pay for the massive increases in expenditures. More likely, raising taxes to try and reduce the budget deficit will kill what little growth the U.S. economy is experiencing.

October is the first month of the fiscal 2013 year. The fiscal 2012 year has ended with another budget deficit in excess of $1.0 trillion. One trillion dollars is larger than the entire gross domestic product (GDP) levels of many countries, and we’re throwing around this money year after year, with no end in sight. Even as politicians talk about reining in the budget deficit, the evidence shows that spending continues to grow massively.

Now, there are some specific times during a financial crisis within the U.S. economy when there can be some justification over the very short term to run a budget deficit to try to prevent a systematic collapse. However, this does not mean that the budget deficit should be continuously run for years on end to try to artificially inflate the U.S. economy. That has never worked before, and it will never work in the future. For those who believe running a budget deficit is crucial to a successful U.S. economy, I would point to the economic records of other countries running a large budget deficit, such as Greece, Spain, and Italy.

The U.S. economy cannot continue down the path of running a large budget deficit forever. At some point, someone has to pay the bill. While no one wants to see the extreme cuts of the fiscal cliff enacted all at once, as that type of shock would be very severe to the fragile U.S. economy, a gradual implementation of reduced spending over time can work without having adverse effects. Either we rein in the budget deficit over the next couple of years or, eventually, the international markets will force us to do so.

Talk is cheap. All I see in the data from the government itself is that it is continuing to spend massively, but we are getting little in return. Politicians are just pandering to potential voters, and our children will be the ones to pay the price.

Source: http://www.investmentcontrarians.com....

By Sasha Cekerevac, BA
www.investmentcontrarians.com

Investment Contrarians is our daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”

Copyright © 2012 Investment Contrarians- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014