Biden will propose a budget of $ 6 trillion for the fiscal year 2022. That is to say 2 trillion more than the pre-pandemic budget. The NY Times reports that the budget deficit is expected to increase by more than 1 trillion. Brrrr….
$ 6 trillion
The Biden administration’s projections are for a recurring budget deficit of $ 1.3 trillion per year by 2031. Debt is soberly expected to ” owned by the public Will only reach 117% of GDP by the end of the decade.
Fantastic, the NY Times no longer speaks of total debt, but of debt ” owned by the public ”Ignoring the debt bought back by the Fed. This is a crass manipulation because the total US debt already reaches 129% of the GDP!
As a reminder, we were at 67% of GDP just before the subprime crisis, to end at 100% 4 years later. The US debt now exceeds the level reached during the Second World War.
At the time, the debt had been partly written off “thanks” to the double-digit inflation generated by the FED. Growth had also contributed to it thanks to the productivity gains brought about by a gargantuan oil production (the United States reached its peak in 1971 and will then get out of the rut by creating the petrodollar).
Looking at the latest “official” inflation figures (4.2%), it would seem that the post-war strategy is once again in the pipeline… Indeed, when prices rise rapidly, state revenues increase more. faster than debt. Inflation makes it possible to repay the debt in monkey money through the theft of the purchasing power of citizens.
We are at the dawn of a very painful inflation, especially since we will not be able to count on productivity gains. Oil, on which 95% of global transport (and therefore growth) depends, passed its peak in 2018 …
The future is not bleak for everyone, however. America’s 650 billionaires increased their wealth by more than $ 1,000 billion during this pandemic. They now weigh over $ 4 trillion. Thank you FED…
FED = Inflation
Do not doubt it. We are on for a decade of very high inflation. It suffices to go back in history to the Second World War to be convinced of this.
At the time, the FED had multiplied its balance sheet by 11 between 1939 and 1946. US debt climbed to 110% of GDP. And as we said above, the weight of the debt was reduced by inflation from which the Americans could not protect themselves since Roosevelt had confiscated their gold in 1933.
These figures give an impression of déjà vu since the Report of the FED has already increased by 90% since the start of the crisis. In 2020, this money was used to buy back 55% of all the debts issued by the US government that no one wants anymore.
Central banks around the world know that the $ 7 trillion they own will be massively devalued by inflation. And while they bought 42% of new US debt between 2002 and 2019, they bought only 8% in 2020… How long before a big central bank buys Bitcoin?
All that being said, let’s not forget that Europe will have the same fate as Uncle Sam since the numbers are of the same order of magnitude. The European Central Bank is also preparing to follow in the footsteps of the FED since the governor Olli rehn recently declared that he wanted to let inflation, which already reached 3% in the whole of the Euro Zone, slip away.
Unlike the Americans robbed by Roosevelt and the FED, today we have elusive bitcoins to protect us from this theft in broad daylight.
Journalist / Bitcoin, geopolitics, economy, energy, climate
The comments and opinions expressed in this article are those of the author alone, and should not be considered as investment advice. Do your own research before making any investment decisions.