11 Months In, Federal Budget Is $2.7 Trillion Deficit!

September 15, 2021

* Currencies & metals inch higher VS the dollar

* Spin Doctors attempt to tell us inflation is going away… 

Good day… And Wonderful Wednesday to you! I almost didn’t answer the bell this morning…  Man, am I draggin’ the line this morning! Crazy game last night, for my beloved Cardinals, who won and that’s all that matters at this time of year! When there are games like last night, I can’t turn it off and go to bed… So, I was up late last night, so forgive me if misstate something this morning, I have an excuse!  The sun was in my eye, I tripped on a rock, the other guy called for it first… you know that kind of excuse that a young ball player gives for not catching the ball…  Steely Dan greets me this morning with their song: Aja…  Aja, when all my dime dancing is through, I run to you….

Ok… what a crock! The headlines yesterday were all about how inflation had “slowed” in August from July…  So, my initial reaction to those headlines was, “What a Crock!”  The bean counters that deal with all the hedonic adjustments of the Consumer Price Index (CPI) said that inflation had dropped from 5.4% in July to 5.3% in August… They are so wrong, they’re almost right…  But they are wrong, and they know it, but they can’t say it, because they work for the Gov’t.  And the Gov’t doesn’t want you to know what the real inflation rate is, for if you knew, you would rush out and start buying things before their prices got out of hand, and that would beget more inflation, and before we knew it, well… it would be ugly…

But… if we did know what the real inflation rate was, and we do know from John Williams’ Shadow Stats website, the markets would know and would be hammering on the Cartel to hike rates to slow the inflation… Now, wouldn’t you rather have a Central Bank that fought inflation than one that ignores it?  I’m just saying…

The currencies didn’t rally yesterday as the spin doctors did a great job of selling the population snake oil… I’m talking about the media response to the fake inflation number…  Oh, I can hear all those that said that it wasn’t inflation we were seeing, and if it was it wouldn’t last, crowing to the full moon… But, as I always say, one report doesn’t make a trend… And just because the BLS comes up with an inflation report that’s hedonically adjusted, and it’s lower than the previous month, doesn’t mean it’s all clear on the inflation front.

But… the currencies didn’t exactly get sold by the bushelful like they were in the overnight markets of Sunday to Monday.  The BBDXY started yesterday at 1,145.84, and ended the day at 1,146.29… That’s some small change folks…  Gold however did rally on the day, gaining $11.10, to close the day at $!,805.60, and Silver gained 13-cents to close at $23.94…  

In the overnight Markets last night… there has been a little dollar selling, with the currencies inching higher VS the dollar, and the metals are basically flat in the early trading today, with Gold adding just $1.60, and Silver flat as a pancake (Head East)…  The BBDXY which closed yesterday at 1,146.20, is trading this morning at 1,144.04, So the general feeling this morning is sell dollars… We’ll see how long that lasts… 

So… what’s on the agenda today?  The U.S. Federal Budget was printed on Monday, and it showed that with just one more month in the fiscal year, that the Budget deficit is $2.7 Trillion dollars…  Last year at this same time with a month to go, the Budget Deficit was $3 Trillion…  So, while better than last year, it’s really a mess folks… $2.7 Trillion to be added to the current debt…   Extending this to the start of the covid pandemic in March 2020, the U.S. government deficit for the past 17 months is a stunning $5.1 trillion!!!   There’s no two ways about it folks… We as a country are turning into a Banana Republic…  Oh, I know that’s pretty harsh, but I recall my days doing presentations with my former Boss and long time friend, Frank Trotter, who would describe the U.S. finances a those of a Banana Republic… I wonder what he would think of them now?

The headline story on the Federal Budget print on MarketWatch was touting the prospects of lower Budget Deficits with the implementation of higher Corporate taxes….  I laughed out loud when I rea that… What on earth on these people thinking?  For either the Corporations will find loopholes and ways to not pay more taxes, or… Congress will see new tax receipts and think that they need to be spent…  You can mark my words on that one folks…

And then seeing that they didn’t get the bang for their buck, they’ll go back to the drawing board, and you know who will be next in line to make up their tax receipts don’t you?  You and me… It’s coming folks, if not already upon us, hidden in the new tax plan the House came up with…

The U.S. Data Cupboard today will have a couple of real economic data prints for us… Industrial Production and Capacity Utilization both for August… These two aren’t normally market movers but… They are important to keep track of… Capacity Utilization is one of the few data prints that is forward looking…  And I’ve explained this before, but will again just for good measure…  Capital expenditures are key to a strong economy, without them, the economy just muddles along, which is what we saw going on for the last decade… 

To recap…  The stupid CPI dominated the media and markets yesterday, and the media couldn’t help from celebrating big time because the annualized inflation rate fell to 5.3% from 5.4%…  You would have thought that the drop was 5 full percentage points or something the way they carried on… As Chuck always says one report doesn’t make a trend…  All I know is that everything is more expensive these days…   The currencies didn’t move much yesterday, but Gold rallied, and in the overnight markets

For What It’s Worth…  I read a long article yesterday that I’ll give you the link for, and it’s very well written, with great thoughts, and viewpoints. The article is written by Matthew , of Matterhorn Investments, a Swiss firm, that is headed by Egon Von Greyerz, of whom I’ve featured in the FWIW section before… This article talks about how investing and the economy and Fed Policy is not real…  So, if you don’t have the time to read it all save the link and go back to it when you do have time… The article can be found here: Nothing is Real: A Visual Journey Through Market Absurdity – Matterhorn – GoldSwitzerland

Or, here’s your snippet: “From where I sit in terms of both history and economics (at least until these subjects are equally “canceled” from the modern curriculum), falling GDP as indicated above effects all our lives far more than falling statues or controversial children’s books.


But as we’ve written so many times, the powers-that-be are clever little foxes, and even crashing GDP and skyrocketing debt, which are objectively time-proven cancers for society, can be a boon for their false narrative of governmental or central bank “guidance,” which is nothing more than increasing social control hiding behind a Covid mask.

Debt to GDP: The New Distortion

After all, one way to address the appalling 135% debt to GDP ratio in the U.S.  is to simply reduce the productivity component rather than debt component of the ratio, akin to telling a man with only one arm that his shirts will fit better if we remove the remaining arm.

A “bad” debt to GDP figure is just veiled anchoring for more QE “stimulus” and more ludicrous fiscal spending of money which governments don’t in fact have but which a mouse-click at the Eccles Building can produce in seconds.


In simple speak, this latest GDP “bad news” looks like an open as well as carefully planned piece of “good news” for a QE-addicted, fully Fed-supported and ultimately rigged to fail stock bubble.

The Pointless Taper Debate

As for Fed tapering, even the hawks at that same Atlanta Fed can’t keep their message or ethics straight for more than a week.

Nothing at all shocking or new there…

Another Fed Two-Step

Back in August (8/27), for example, Atlanta Fed President, Raphael Bostic, bravely declared: “Let’s start the taper and let’s do it quickly.”

But fast forward just a few days to September 2, and that same Fed President, like so many other fork-tongued masters of doublespeak within the FOMC, back peddled with fabulous elan, declaring instead that “we’re going to let the economy continue to run until we see signs of inflation.”

The amount of “duplicitous dumb” within this single sentence defies both belief and this report’s word count, but for simplicity’s sake, and despite “signs of inflation” literally everywhere, Bostic’s latest semantic two-step translates to this: Don’t expect a “taper” of the free money spigot anytime soon.

Besides, and as we wrote last week, even if a “taper” in Fed QE were to occur, such hawkish optics won’t stop the Fed from dumping ever-more dovish liquidity into the system via clever little tricks up the sleeves of its Reverse Repo Program.

In short, the Standing Repo Facility (or SRF) is just QE by another clever acronym, so please: Don’t let the headlines or double-speak from above fool you.

Taper or no taper, the dollar in your wallet is about to drown under even more currency-killing liquidity from on high.

In short, nothing is real.”

Chuck again… nothing else to add here, just make sure you get the time to read the article in its entirety…

Market Prices 9/15/2021: American Style: A$ .7323,  kiwi .7094,  C$ .7879, euro 1.1829, sterling 1.3824, Swiss $1.0907, European Style: rand 14.3080, krone 8.5791, SEK 8.5720,  forint 294.79,  zloty 3.8440,  koruna 21.3980, RUB 72.78, yen 110.13, sing 1.3431, HKD 7.7823, INR 73.36, China 6.4423, peso 19.87, BRL 5.2240, BBDXY 1,144.04,  Dollar Index 92.44,  Oil $71.48, 10-year 1.26%, Silver $23.94, Platinum $945.00, Palladium $2,096.00, Copper $4.32, and Gold… $1.807.20

That’s it for today… What a game last night in NY…. My beloved Cardinals had to come from behind, then took the lead, only to give it up, and go extra innings where they finally broke through and won the game, and now are all alone in the second wild card position for the playoffs this morning… Got to keep winning….  I had a run in with a squirrel late last week, that I’m still hobbling around in pain from… To make a long story short: I tried to get a squirrel out of my gas grill only to find it had nested there and had two baby squirrels… When I opened the lid, the squirrel jumped out at me, I backed up and tripped and fell… Thankfully the squirrel ran away leaving the babies, but I fell on my right side, and the patio is quite hard! OUGH!  The mom squirrel eventually came back and got her babies out of the grill…  Now I have to watch the grill for any signs of nesting coming back… UGH!  Ok… I was up late last night with the game, and so I’m tired, so let’s get this out the door! The Byrds takes us to the finish line today with their song: Eight Miles High…  3 of the original members of the Byrds went on to become rock legends… David Crosby, Chris Hillman, Jim McGuinn… I hope you have a Wonderful Wednesday and please Be Good To Yourself!

Chuck Butler