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The Blatant Lie That The Deficit Is Declining


economicdisaster111The Federal Government now claims the deficit is declining. That claim is a blatant lie. The magnitude of the lie is so great as to suggest the desperation that government officials must have with respect to the economic future of the country.

We are now into the sixth year of a declared economic recovery. That is a pathetic joke. No recovery takes more than a few quarters and during this “take-off” the economy grows at very high rates. That has not happened, PERIOD! Nor is it about to happen.

The size of  government lies may be a reasonable barometer of the degree of danger facing the economy and the country’s citizens. As the end nears, the lies must grow bigger in order to continue the confidence game that things are normal. Surely no one with an ounce of sense any longer trusts the numbers coming from Washington.

The latest “feel-good” lie is truly a whopper. Government claims the Federal deficit has been reduced to $589 billion dollars for the first 11 months of this year. Wow! That sounds great! We must be making great progress on cutting spending or raising revenues or managing the debt. Sadly, that number is a bold-faced, blatant lie which any government official referencing it should be called out on. That person either lacks integrity or common sense.

Michael Snyder blew the whistle on this latest deficit claim:

The idea that the Obama administration has the budget deficit under control is a complete and total lie.  According to the U.S. Treasury, the federal government has officially run a deficit of 589 billion dollars for the first 11 months of fiscal year 2014.  But this number is just for public consumption and it relies on accounting tricks which massively understate how much debt is actually being accumulated.  If you want to know what the real budget deficit is, all you have to do is go to a U.S. Treasury website which calculates the U.S. national debt to the penny.  On September 30th, 2013 the U.S. national debt was sitting at $16,738,183,526,697.32.  As I write this, the U.S. national debt is sitting at $17,742,108,970,073.37.  That means that the U.S. national debt has actually grown by more than a trillion dollars in less than 12 months.  We continue to wildly run up debt as if there is no tomorrow, and by doing so we are destroying the future of this nation.

How desperate must conditions be if the lies are getting this big and this easy to spot?

2 thoughts on “The Blatant Lie That The Deficit Is Declining”

  1. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty , do not understand economics. Got it?
    No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
    1. A growing economy requires a growing supply of dollars. (GDP=Federal Spending + Non-federal Spending + Net Exports)
    2. ALL DEFICIT SPENDING grows the supply of dollars.
    3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
    4. The limit to non-federal deficit spending is the ability to borrow.

    1. Economic growth is independent of the money supply.

      Economies can grow with stagnant, increasing or decreasing money supplies. Unexpected changes in money supply can be harmful. If economic actors are expecting a constant rate of increase, they factor that into their decisions. Should something different occur, then expectations are not met and adjustments (in prices, portfolio balances, etc.) are required.

      Generally when such a surprise occurs on the upside (i.e., money growth is faster than anticipated), economic activity increases. Despite the reported increase in growth, much of the change is the re-arrangement of economic decisions to adjust to the new reality.

      The fallacy in believing that this is economic growth or sustainable economic growth is akin to the old Keynesian myth that digging holes and then filling them back in was useful. If your method of accounting counts money transactions, then that appears to be the case. However, true economic growth only occurs when more goods and services (wanted by the economic actors) are produced.

      To believe that increasing the money supply produces economic growth is to believe that economic growth can be produced via deceit. Two assumptions, both of which are fundamentally wrong must hold, even if the deceit is effective:

      1. Economic actors always under-anticipate the rate of growth in money supply.
      2. “Mistakes” made as a result of point 1 can be corrected without inhibiting economic growth.

      If either of these are untrue, then money supply increases actually diminish real economic growth.

      Economic growth depends on real factors not monetary ones. The best monetary policy is one that provides as much certainty for the users of money as possible. Holding money supply constant is fine. Decreasing or increasing money supply a fixed percentage every years is also fine.

      Unfortunately, no one expects a constant or decreasing money supply. Economic actors have factored in only increases in money supply based on decades of Fed behavior. If reality were to diverge from expectations, major dislocations would occur.

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