Members of CrushTheStreet.com know that the United States government is spending money like a drunken sailor. Today’s announcement for more QE was definitely not a surprise although intuitively, we are surprised that the markets don’t get nauseous at the thought of more money printing and fiscal irresponsibility. The trend of course is that the market likes money printing and QE which leads us to believe that QE is here to stay until the Fed absolutely runs out of ammo.
Very shocking read posted on Zero Hedge today, showed that for the first 2 months of 2013, the Federal Budget is already in a $300 billion dollar deficit.
Full post here…
U.S. Rakes Up Nearly $300 Billion Deficit In First Two Months Of Fiscal 2013
To paraphrase Tim Geinter: “Risk of the Fed ever ending its monetization? No risk of that.” Why? Because as the FMS just reported, the February budget deficit was $172 billion, up $52 billion from a month ago, and $35 billion from a year ago. In brief: in the first two months of Fiscal 2013, the US accumulated a $292 billion budget deficit (compared to $236 billion a year ago), a number which is simply scary when annualized. What does this mean? That as long as the Treasury runs $1+ trillion budget deficit, the Fed will never, ever be allowed to stop monetizing, especially with China and the other legacy foreign borrowers just saying nein. Which in turn means that it will now be in the Fed’s favor to paint the economy with uglier colors (recall that the Fed now needs unemployment deterioration to have infinite free monetization reign). Does this mean that going over the Cliff is now an absolute certainty.