Biden Announces $7.3 Trillion Budget As Deficit Spirals Out Of Control
Theya is an app for simplified Bitcoin self-custody. With its 2-of-3 multisig custody solution, you can enjoy maximum security for your Bitcoin and the peace of mind that comes with it.
Your Keys, Your Bitcoin.
Download Theya on the App Store and secure your bitcoin with ease.
The White House unveiled a $7.3 trillion fiscal budget for the 2025 fiscal year, lasting from October 1st, 2024 to September 30th, 2025. In the document, he details massive spending toward services, tax breaks, credits for the middle class, and a slew of additional spending geared toward buying votes as we head into November.
Examples of the spending include homeowners getting monthly tax credits to offset high mortgage rates (which works against the Fed's desire to tighten financial conditions), parents receiving direct cash subsidies for childcare, price controls on prescription drugs, and forgiving student loan debt.
Each of these would stimulate the economy which already has above-target price inflation, making a bad problem even worse, much to the chagrin of the mindless voters who think that price inflation is caused by greedy corporations and not government spending.
This $7.3 trillion 2025 budget is 12.3% higher than the $6.5 trillion we're slated to spend this year, which is also the same amount of spending we made in 2020 at the height of pandemic-era stimulus.
Why on Earth are we spending like we're in a crisis when we are not in a crisis? To shamelessly buy votes from people whose sole consideration is how much money will be spent on them, with no intellectual energy spent wondering where the money comes from for these social programs and the 2nd or 3rd order effects said spending has. Unfortunately, abstract thinking like extrapolation is something not present in the average American voter—they'll witness the downstream effects of their voting and blame capitalism rather than the central planners.
This shameless attempt at buying voters through crisis-level spending is particularly reckless given how bad the United States' budget deficit is. As receipts like tax receipts and other government revenue continue to disappoint in the face of outlays like interest payments, social security, and Medicare:
Of course, the outlined plan to fund this is through higher taxes on the wealthy and corporations—this, however, is merely language geared towards buying votes from those resentful towards the rich and productive class. In reality, this will be funded in large part by massively increasing the amount of US Treasury debt being issued at auctions—eventually, as the market grows oversaturated, forcing the Fed to step in as the stopgap for the US Treasury to fund itself.
Said differently: with lofty spending goals in the face of waning tax receipts, increased debt issuance will take on an increased role in funding the U.S. government in FY 2025. As debt issuance eventually outstrips demand for Treasuries, yields will surge to attract buyers, and the Federal Reserve will likely step in to stop them from getting too high and pushing interest expense on government debt any higher. As it is, we can barely afford for it to rise much more from here, currently doubling from 3 years ago to $1.026 trillion per year, today:
An incoming rule change will force banks to buy limitless US Treasuries as issuance surges. This is in an attempt to boost financial market liquidity, which also stands to put further upward pressure on asset prices, actively working against the Fed's desire to tighten financial conditions. This is also in direct violation of the desire of US commercial banks as a whole, who have been unloading Treasuries as a % of their total assets for 80 years now, representing just over 6% of commercial banks' total assets today:
Banks have dumped $152 billion of US government debt this year, having been net sellers for just over two years. The US Treasury isn't too happy about that, and this potential rule change is in the cards to force banks to buy in perpetuity. With $7.3 trillion in spending planned for next year, somebody's got to fund it, and the government would ideally like it to be both the market, banks, and the Fed in some capacity rather than too much central bank-buying. It is trying to limit the amount that it uses its sovereign debt ouroboros strategy:
With a divided Congress, none of this spending stands a chance of becoming law. That hasn't stopped people the world over from recognizing the endgame of fiscal profligacy at the expense of the currency's value.
Hell, fiscal profligacy is literally the outlined plan from the US Treasury, wherein they intend to drive public debt as a % of GDP above 200% in the next decade or so. Austerity doesn't win elections, and it is not in the cards. As such, people are embracing it, and leveraging bitcoin. Absolute scarcity is the apex hedge against fiscal profligacy. Having crossed $72,000 earlier today, the mad dash for absolute scarcity clearly has legs underneath it. More than a fad.
Against a worthless denominator, the best chance you've got at preserving your economic energy comes in the form of an absolutely scarce numerator.
Take it easy,
Joe Consorti
Theya is an app for simplified Bitcoin self-custody. With its 2-of-3 multisig custody solution, you can enjoy maximum security for your Bitcoin and the peace of mind that comes with it.
Your Keys, Your Bitcoin.
Download Theya on the App Store and secure your bitcoin with ease.