Budget Deficit Hits Record $3 Trillion As US Spends 100% More Than It Collects YTD

Those who have been following the record surge in US public debt (excluding the roughly $100 trillion in off-balance sheet obligations), which exploded by $3 trillion in the three months following the covid shutdowns and which hit an all time high $26.7 this week, will be all too aware that the US budget deficit this year – and every year after – will be staggering.

Sure enough, in the latest just released deficit report, the Treasury announced that in August the US burned through another $200BN, which was a sharp increase from the $62.9 billion deficit in July when  government receipts soared thanks to the July 15 tax date even as spending remained in the stratosphere. That said, the number was an “improvement” from the record $862 billion deficit recorded in June.

Specifically according to the Treasury, in August, government outlays were $423.3 billion, roughly the same as the $428 billion the US spent last July, and an improvement from the record June outlays of $1.1 trillion…

… while receipts slumped from the July record of $563.5 billion – which was a one-time surge thanks to the July 15 tax filing deadline – to just $223.2 billion (the question of why anyone still pays taxes in a time of helicopter money, when the Fed simply purchases whatever debt the Treasury issues, remains).

The chart below shows the July 2020 breakdown between various receipts and outlays.

What all this means, is that on a YTD basis, with 1 month left to go in fiscal 2020, the US has spent $6.054 trillion and collected just $3.048 trillion, which means outlays are a record 100% higher than receipts, which also includes the $8.7BN received last month and $72.2BN YTD in deposits of earnings by the Fed.

And since outlays equal receipts plus the deficit, it will come as no surprise to anyone that in the first 11 months of fiscal year, the US budget deficit is a record $3 trillion (compared to “just” $866.8 billion in 2019), higher than at any other time in US history and unfortunately due to “helicopter money” it is unlikely that the exploding deficit will ever shrink again until the monetary system is overhauled… or collapses.

At some point the market will realize that this insanity is simply unsustainable. And, in fact, looking at the soaring price of gold recent temporary downdraft notwithstanding, that realization may not take too long.