It's the long run, but we ain't all dead

Posted On: Friday - April 1st 2022 3:10PM MST
In Topics: 
  Music  Economics  US Feral Government  The Future  Taxes

I should probably set an alarm and present these US Feral Gov't budget pie charts yearly on April 14th. That's when I usually do them* - I like to push them into the middle of the pile - there's great power in numbers, they say. I'll have the .pdf version of the 1040 Instruction book in a tab, for the tax tables if nothing else. That's when I'll see the 2 pie charts. They are pretty revealing.

Well, it seems like we were on a pattern of showing every other year's charts until now, with the '15 ones discussed in Quick glance at the budget from US-Gov crack Green-eyeshade boys , the '15 and '17 ones together in Comparison of '15/17 US Government Budgets, and '19 pie charts in EXTRA, EXTRA, IRS tells all! (in .pdf 1040 Instructions).

Some post I just read made me think to look at the numbers today, so here are the revenue/outlay pie charts off of the IRS 2021 1040 Instructions, page, 109. They are for the fiscal year 2020:

The first thing I looked for was the interest that had been paid on the debt. The % number there on the "outlays" pie on the right is as a percentage of total outlays. Wait, 5% only! Last year's showed 8%! Well, I'm not excited as in, "hey, we'll be fine. It's getting better! Everything is fine! Don't panic!" It's more like, "wait, how is this possible?" Oh, it's possible. Here's the usual blurb with all the key numbers besides the total debt accumulated:
In fiscal year 2020 (which began on October 1, 2019, and ended on September 30, 2020), federal income was $3.421 trillion and outlays were $6.550 trillion, leaving a deficit of $3.129 trillion.
Last year's (it's kinda' blurry on our page linked-to above) has outlays of $4,448 Trillion. The US Gov't spent a lot of extra money in '20, as we all know, to, you know, suppress (any further) rioting due to its strangling of the whole economy during the Kung Flu PanicFest. In '19, that 8% was of $4.448 Trillion = $356 Billion**, while 5% interest of $6.550 Trillion = $327 Billion** in '20. OK, that's good right? They paid less interest. Yeah, but, per The Balance, the '19 debt to pay interest on was $22.72 Trillion, while in '20 it was $27.75 Trillion.

OK, but still, less net interest was paid. Yeah, but they must have had an even lower "net" rate. "Net" must include lots of fancy financial dealings, such as paying off some older Treasury Bonds at different rates, etc., probably very complicated. This net rate in '19 was 0.356/22.72 ($Trillions) = 1.6%***, while for '20 it was 1.2%*** Great! OK, this post was not meant to be one big good news / bad news joke, but finally, yeah but keeping rates in the cellar will not fight inflation.

Peak Stupidity has stated this a number of times, but the FED is caught between a rock and a hard place. The rates can't stay low as inflation goes to the moon. Yet, let them rise to a natural rate, much less Paul Volcker-style inflation-fighting interest rates of 1980 in the high teens, say just 7%, and what do you get? You're gonna need 0.07 x $28 Trillion (and that's today's debt, going up like a rocket) = $2 Trillion. Let's go to that paragraph and left-hand pie chart. Note that 1/2 the freaking pie, 48%, is borrowing. If you didn't keep borrowing, you'd have that $3.421 Billion in taxes collected from guys like me, but $2 Trillion in interest to pay off. At just normal rates, paying off the interest will take 58% of the taxes collected. There are people with 400 credit scores who do better than that. I'm no Certified Public Accountant, but that can't be good!

Why the title here? Well, Maynard Keynes was right, in a way... in the long run we ARE all dead. But, he said that 100 years ago. Yeah, Keynes is dead and if he meant his colleagues at the economic forums in Great Britain would all be dead, yeah, he was right. But, a century later, it IS The Long Run, and we're NOT dead! That's the problem... with that theory.

PS: It was in late 1923 that Maynard Keynes wrote that "In truth, the gold standard is already a barbarous relic..." I guess we are in for barbaric times then, or at least I and Ron Paul hope so.

* Then again, the IRS can't even hold onto my stuff, at least for the last 2 years though they were able to hold onto the money, so why even bother? Maybe next time I'll just send in a check for some rando amount.

** I could get much more precise if they'd included one decimal place on those interest percentages. As it is, that could be 5.49% vs. 7.51% in '19.

*** I rounded these off at the end to try to match the lack of precision of those % of outlay numbers with only 1 significant digit.

[UPDATED 04/02:]
Changed the title completely.
Then, of course, I had to add the Eagles.

Friday - April 1st 2022 5:41PM MST
PS: That is right, Mr. Hail Lots of it was just jokes or attempts at them that I couldn't resist, There was plenty of good conversation too. Mr. Sailer had gotten down to maybe one or two post on the Kung Flu per month, even before the Russia/Ukraine story replaced the whole show. It'd be great to see you back on there. I should tail it off, too - way too much time gets wasted.

A month or so after I started this blog, I noticed that one could log in without giving out any real info. My first comment was a link to ... guess where.
Friday - April 1st 2022 5:12PM MST

A word of number-related congratulations:

Reliable sources have it that Achmed E. Newman has rolled into the elite twenty-thousand-post, two-million-word club at the Unz Review.

Two million, achieved since the era when DeFacto President Kushner was taking charge of a presidential transition, late Dec 2016.
WHAT SAY YOU? : (PLEASE NOTE: You must type capital PS as the 1st TWO characters in your comment body - for spam avoidance - or the comment will be lost!)