Excellent Snapshot Our Unfolding Fiscal Breaking Point

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  • Fri, May 15, 2009 - 05:46pm

    #1

    Nichoman

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    Excellent Snapshot Our Unfolding Fiscal Breaking Point

For those interested in the rapidity of our rapidly growing outflow versus inflow imbalance…offer graph and comments from Jesse’s Cafe Americain…

http://jessescrossroadscafe.blogspot.com/2009/05/fiscal-meltdown-will-test-bond-and.html

Nichoman

 

Fiscal Meltdown Will Test the Bond and the Dollar to the Breaking Point

 

Don’t blame the Democrats alone for this. Instead blame a political system that is corrupted by Wall Street and lobbyist money, and a mainstream media dominated by four corporations feeding a stream of managed news and perception spin to gullible US households.

The day of reckoning is nearly at hand, in which the currency crisis in the US will shake the financial foundations of the global economy.

"Outlays are rising at 17% YOY the fastest nominal pace since late 1981. With receipts falling 14.6% YOY their fastest drop in at least 40 years the gap between their growth rates is also the widest in the record.

All these rates are accelerating and are threatening to push the deficit to more than 50% of receipts and – at $1.1 trillion and rising – to more than 10% of private GDP."

Thanks to Sean Corrigan at Diapason Trading for this chart.

  • Fri, May 15, 2009 - 11:47pm

    #2
    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: Excellent Snapshot Our Unfolding Fiscal Breaking Point

this seems to be a graphical definition of insolvency. great chart!

  • Sat, May 16, 2009 - 12:06am

    #3
    Peak Prosperity Admin

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    Re: Excellent Snapshot Our Unfolding Fiscal Breaking Point

I am missing what the blue line represents.  Can someone help?

  • Sat, May 16, 2009 - 12:40am

    #4
    Peak Prosperity Admin

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    Re: Excellent Snapshot Our Unfolding Fiscal Breaking Point

 hucklejohn, the blue line is the difference between receipts and outlays.

  • Sat, May 16, 2009 - 01:17am

    #5
    Peak Prosperity Admin

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    Re: Excellent Snapshot Our Unfolding Fiscal Breaking Point

[quote=hucklejohn]

I am missing what the blue line represents.  Can someone help?

[/quote]

The blue line is the percent over/underfunded (right hand values on the chart with red percent underfunded…black numbers overfunded).

Two key things…

1.)  It’s accelerating downward…or the rate of underfunding is getting worse with each month (rate of the rate).

2.)  Extrapolation indicates using past 6 months and projecting forward…we could be approaching an underfundment of over 70 percent of Federal Budget by end of this year.

Now…if use some of the data from "The Economics Of Inflation – A Study Of Currency Depreciation In Post War Germany" by Constantino Breshciani-Turroni.   One could make the comparison from charts in this book of underfundment at this increasing rate of acceleration…with European monetary policy from 1914-1923 and into the late 1920s (more than just the Weimar Republic Of Germany).  Could see accelerating inflation…hyperinflation within 12 months possibly within 6 months.  

This is just my very rough comparison/extrapolation…probably no surprise of 6-12 month timeline…but are all other variables the same (i.e. resource depletion, exchange rates, etc.) in these two cases.   Probably not.

 

Nichoman 

  • Sun, May 17, 2009 - 05:00pm

    #6
    Peak Prosperity Admin

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    Re: Excellent Snapshot Our Unfolding Fiscal Breaking Point

"Outlays are rising at 17% YOY the fastest nominal pace since late 1981. With receipts falling 14.6% YOY their fastest drop in at least 40 years the gap between their growth rates is also the widest in the record.

Yoi!  This looks bad.  The economy is being hit from both sides of the equation.

Larry

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