Government Borrowing Is Going Gangbusters

December 19, 2024

By Robert Wiedemer

The government’s new fiscal year kicked off October 1 and its borrowing is breaking all records. In the first two months of the fiscal year, government borrowing was $624 billion. That’s an enormous amount and we’ve never seen anything like it before.

And remember, we don’t pay ANY of the loans back. We pay all our principal payments by borrowing more. Our debt is almost $37 trillion and will soon hit $40 trillion. The interest on that debt is getting so big that we need to borrow money to pay the interest as well.

Now if that isn’t the definition of a bad loan, I don’t know what is? But I digress.

My point in this article is that there’s a lot of government stimulus going on out there and it will help the economy to grow and corporate profits to grow even higher. That will continue to help the stock market grow, especially now that it is in a much more positive mood after Donald Trump’s election.

Although I know Mr. Trump and many people in Congress want to cut the deficit, that interest in cutting the deficit, and attempts to do so, have come and gone before. None were successful.

The President-elect may have appointed a new cost cutting team called DOGE, but they can only make suggestions. The decisions will be made by Congress and I lose no sleep at night worrying that Congress will dramatically cut its spending.

It’s hard to cut because the programs that spend most of the money also have the biggest political support. Small programs may be cut, but they’re irrelevant to the deficit. In addition, the revenue side is unlikely to improve greatly since the tax cuts made earlier are here to stay and more may be coming.

Bottom Line: This is one of the biggest factors affecting the economy and stock market and it is showing nothing but positive growth. All for the better now (and all for the worse later).