US Printed More Money In One Month Than In Two Centuries (#GotBitcoin?)
The Federal Reserve’s money printer has cranked up to ridiculous levels — but will it really lead to inflation? US Printed More Money In One Month Than In Two Centuries (#GotBitcoin?)
In a letter to investors released on July 29, Pantera Capital CEO Dan Morehead noted that the United States has printed a shocking amount of money to combat the pandemic-induced financial crisis.
“The United States printed more money in June than in the first two centuries after its founding,” Morehead wrote. “Last month the U.S. budget deficit — $864 billion — was larger than the total debt incurred from 1776 through the end of 1979.”
Morehead made it clear that Pantera Capital sees Bitcoin as the solution for the current crisis. He also contrasted the effects of money printing in recent months, to how the equivalent amount of currency had performed across centuries:
“With that first trillion [USD printed] we defeated British imperialists, bought Alaska and the Louisiana Purchase, defeated fascism, ended the Great Depression, built the Interstate Highway System, and went to the Moon.”
Morehead cited the resulting inflation as the main reason one should “get out of paper money and into Bitcoin.” According to the CEO, “there is no need for inflation-adjusted numbers [with Bitcoin] because there is no inflation/hyper-inflation.”
Going To Zero
Goldbug Peter Schiff is also concerned about the effects of money printing. He noted comments by the Chair of the Federal Reserve, Jerome Powell, who said this week that the Fed was using its “full range of tools” to respond to the pandemic: printing money, keeping interest rates close to zero, and making asset purchases steady at $120 billion per month.
“The U.S. is about to experience one of the greatest inflationary periods in world history,” Schiff said on Twitter. “Any credibility the Fed has left will be lost. Federal Reserve Notes soon won’t be worth a Continental.” (Continental paper money in the U.S. was at one time exchanged for treasury bonds at 1% of its face value.)
Inflated Prices As Well?
Despite widespread fears over inflation, many experts predict consumer prices will actually go into a period of deflation — and that’s exactly what’s happened in Australia this week where ABC News reported that consumer prices in the country actually dropped 1.9% in June. It’s a record for deflation since the Korean War.
However many pundits believe the inflation is actually hidden in asset prices, rather than consumer prices, and that money printing has underpinned the share market rally in the midst of the pandemic.
Pantera Capital Revealed Its Simple Investment Strategy For Riding Out The Pandemic:
“Stay long crypto until schools/daycare open. Until then the economy won’t function and money will be continuously printed.”
Trumponomics Pushes U.S. Budget Deficit To A Record $3.1 Trillion
New, eye-popping federal budget figures released Thursday show an enormous $3.1 trillion deficit in the just-completed fiscal year, a record swelled by coronavirus relief spending that pushed the tally of red ink to three times that of last year.
The Congressional Budget Office released the unofficial 2020 figures Thursday, saying the deficit equaled 15% of the U.S. economy, a huge gap that was the largest since the government undertook massive borrowing to finance the final year of World War II.
The government spent $6.6 trillion last year and borrowed 48 cents of every dollar it spent, CBO said. The numbers amount to a 47% increase in spending, led by $578 billion for the Paycheck Protection Program for smaller businesses, and a $443 billion increase in unemployment benefits over the past six months alone.
The massive figures were expected but still stunning, more than double the previous deficit record of $1.4 trillion that was registered during former President Barack Obama’s first year in office during the Great Recession in 2009.
Revenues also contributed to the bleak fiscal picture, falling $44 billion to $3.4 trillion, as income tax receipts dropped almost 16% as the jobless rate spiked. Corporate income taxes dropped by 21%, even as Social Security and Medicare payroll taxes climbed 5%.
Economists say the most significant measure of government deficits is to compare them to the gross domestic product. By that score, the flood of red ink in 2020 still blew past Obama’s 2009 record, in which the deficit almost hit 10% of GDP.
The CBO estimate is preliminary, based on daily Treasury reports, but is likely to match the official numbers due from Treasury and the White House budget office later this month.
The figures come as Washington has been debating another round of COVID-19 relief, spending that Federal Reserve Board Chairman Jay Powell says is needed to ease the chances of a double-dip recession and a higher jobless rate. But talks have broken down and fears are rising that more fiscal stimulus will have to wait until next year.
The COVID-related spike in the deficit obscures a smaller, steady rise in the deficit under President Donald Trump’s watch. Trump in 2017 engineered a large tax cut whose 10-year cost has been matched by pandemic relief efforts over the past six months alone.
In August, CBO issued a 10-year estimate predicting the deficit would decline to $1.8 trillion in the 2021 budget year that began Oct. 1 and would register $13 trillion over the coming decade. It would average 5% of GDP over that time, a level that many economists fear could lead to higher interest rates and a stagnating economy.
U.S. Budget Gap Rose 61% In First Quarter of Fiscal 2021
The deficit totaled $3.3 trillion in calendar year 2020, roughly 15.8% of GDP, the Treasury Department said.
The federal budget gap widened in the first three months of the fiscal year, as government spending continued to outpace revenues while the economy slowly recovers from the pandemic-induced downturn.
The U.S. Treasury Department said Wednesday the deficit from October through December totaled a record $573 billion, a 61% increase from the same period a year earlier. Federal outlays rose 18%, to $1.4 trillion, driven higher primarily by automatic safety-net spending such as jobless benefits, nutrition assistance and health care. Total receipts held steady, at $803 billion, the Treasury said.
For the 12 months that ended in December, the government ran a $3.3 trillion deficit, more than triple the shortfall a year earlier and roughly 15.8% of U.S. gross domestic product, the broadest measure of economic output.
Government spending surged last year as Congress authorized several measures to combat the coronavirus pandemic and cushion the U.S. economy from recession, and federal revenues declined as businesses closed and millions of Americans lost their jobs. The Labor Department said last week the U.S. lost 140,000 jobs last month, ending a seven-month streak of job creation as virus outbreaks across the country prompted a new round of business restrictions.
Lawmakers authorized another $908 billion economic relief package last month, but Treasury officials said the government didn’t begin distributing the money—including stimulus checks—until this month, and it isn’t reflected in the figures released Wednesday.
In the first three months of the fiscal year, which began Oct. 1, spending on nutrition assistance and other Agriculture Department programs rose 37%; Medicaid spending climbed 22%; Medicare rose 8%; and Labor Department outlays, which include jobless benefits, increased 16-fold, to $80 billion from $5 billion a year earlier.
Senior Treasury officials said Wednesday it is notable that federal revenues were flat from October through December, considering some employers opted to defer employment taxes during the second half of the year.
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