Wednesday, May 02, 2018 by JD Heyes
President Obama inherited a financial mess, as the Great Recession was just getting underway. And while Obama doesn’t get any sympathy points for it — he knew what he was getting into when he decided to run — he shouldn’t get much of the blame for the factors that led to the near-collapse of the U.S. economy in 2007-08.
What Obama gets bad marks for is adopting policies and implementing big government ‘solutions’ that prevented his economy from ever reaching three percent growth in a single quarter, which is nearly unprecedented.
What a difference a president who believes in a free-market, less-government, lower-taxes approach to running an economy makes. President Donald J. Trump’s economy has already reached three-plus percent growth in three of five quarters. Many sectors are up, including housing, financials, and — best of all — employment.
But with that said, there are nevertheless ominous warning signs percolating just under the service that indicates a financial catastrophe is on its way if our spendthrift Congress doesn’t stop burning through money the country doesn’t have.
As reported by Zero Hedge, the U.S. Treasury Department announced that in the first quarter of 2018, which ended March 31, the government borrowed $488 billion, or $47 billion more than anticipated three months earlier.
Economic analysts had been warning for months that the U.S. was set to borrow an unprecedented amount of money for a non-recessionary period, and they were correct.
The first-quarter figure was the largest quarterly amount of debt sold by the U.S. Treasury since a record $569 billion was borrowed in the fourth quarter of 2008, at the height of the Great Recession “when the financial system nearly collapsed, and Treasury had no choice but to raise a gargantuan amount of money during the biggest financial crisis in modern U.S. history,” Zero Hedge noted.
But what’s even more ominous is that Treasury is borrowing this large amount of money absent a financial crisis; as noted earlier, the U.S. economy appears to be strong and growing.
Which begs the question: If we’re borrowing this much when times are good, what are we going to have to borrow if and when times are bad again — as they surely will be since economic cycles of highs and lows happen all the time?
You can probably guess the answer in a general sense — a lot.
The U.S. ended the first quarter with some $209 billion in cash on hand, but budgeted expenditures topped $210 billion. (Related: Mike Adams interviews financial expert Peter Schiff: The falling dollar, cryptocurrencies and why gold will skyrocket.)
The problem with all this borrowing is that it comes on top of a rising national debt. We love Trump, but he came into office promising to cut the debt in half in four years before eliminating it altogether by the time his second term was up.
The debt rose $600 billion during the first six months of the current fiscal year (which began on Oct. 1, 2017). U.S. spending increases have grown at three times the pace of revenue growth during the same timeframe. At the current pace, the U.S. will run a budget deficit of a staggering $1.2 trillion for all of 2018; that is far and away above the $804 billion projected budget deficit for the year.
Treasury officials said that thanks to tax changes already being imposed, they should “underpin near-term consumption and investment” so that the “stage is set for a pick-up in growth over the near term.”
That better be the case because the first-quarter GDP was only 2.3 percent; if the economy doesn’t grow more than that, it would mean borrowing would likely continue at record heights, which will only hasten the collapse.
Is there a financial collapse coming? Read DebtCollapse.news to stay informed.
J.D. Heyes is a senior writer for NaturalNews.com and NewsTarget.com, as well as editor of The National Sentinel.