The debt limit was at $28.428 trillion since July 31, 2021. To avert a crisis, McConnell agreed to raise the debt limit by $480 billion, which was supposed to fund the government through December 3, 2021. Biden signed this on October 14.
How long do you think it would take the government to spend the $480 billion? Well, the Debt to the Penny limit hit $28.908 trillion on October 22. So it only took 8 days.
The federal government incurred a deficit of $59 billion in September 2021, CBO estimates— $65 billion less than the shortfall in September 2020. The federal budget deficit was $2.8 trillion [actually $2.770 trillion] in fiscal year 2021, the Congressional Budget Office estimates—$362 billion less than the deficit recorded in fiscal year 2020. Although outlays rose by an estimated $265 billion (or 4 percent), revenues rose more—by an estimated $627 billion (or 18 percent). https://www.cbo.gov/system/files/2021-10/57476-MBR.pdf
The outlays for FY 2021 were 6,817, which is 265 billion more than the 6,552 in 2020. Net Interest on the Public Debt was $413 billion in fy-2021, up 25 billion or 6.6%.
I started this blog many years ago because I was concerned that our financial system was not stable and would crash. I love a good doom and gloom forecast so let's start the countdown clock.
If you look through my archives, I have done this four times before. Once on a countdown to December 21,2012, which was significant on the Mayan calendar. There was also a fiscal cliff looming on January 1, 2013. Nothing happened on December 21, 2012, and the fiscal cliff was resolved through extraordinary measures and passage of a temporary debt limit suspension on February 4, 2013.
The second time I did a doom and gloom countdown was for September 11, 2015 based on a 7 year jubilee cycle since the 2008 crash, but nothing happened.
The third time was for September 11, 2018, which was basically the same event delayed, but also based on a 17 year double business cycle. Again nothing happened.
The fourth time was for September 30, 2019, based on the failure to reach a resolution on government spending and on the debt ceiling breach. But this was resolved on August 2, 2019 with a debt limit suspension until July 31, 2021 which leads us to our current crisis.
So my track record, thank God, is not too good. But on to the current crisis.
As of today, October 4, the system will likely crash on October 18, 2021, which is 14 days away. On that date, according to Treasury Secretary Janet Yellen, the government will run out of cash. President Biden is insistent that he can't do anything without Republican support, and he refuses to consider reconciliation as a way out. McConnell is insistent that the Democrats can act without Republican support.
What makes this event different is that the two sides are so entrenched. The Republicans are hardened in their approach. But the President thinks he can bully them into an agreement, which I think is unlikely. What will probably happen is that Yellen will find that she can extend that deadline, and then the Democrats will fold. But as of now, it looks like there is a 90% chance of a crash.
Update 10/8/21: The situation is resolved for now because McConnell and 10 other Republican Senators caved and agreed to a $480 billion increase in the debt ceiling, which will give the Treasury less than 2 months of breathing room. The doesn't resolve the situation however because the debt ceiling will hit again in December. But that is a long ways away, so who cares right? Continue profligate unnecessary spending comrades as the economy depends on it.
Here is my measure of money supply as of the end of the 2021 fiscal year. Usually I would wait a few more days, but the debt won't increase any more.
As of 9/30/2021:
M2 (as of 8/1/21): 20,797.0
Public Debt (as of 9/29/21): 22,270.5
Fed Held (as of 9/29/21) -5,431.1
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Total 37,636.4
One year ago, on 9/30/2020, this number was at 35,296.8, so this is up only 6.6% since then. Not bad at all. But just wait until the debt limit is lifted and the $5 trillion of stimulus passes.
