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CRASH INDICATORS: Deficits and Debt do Matter By Lynette Zang
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ITM Trading, INC.
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Published 4 years ago
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Link to the Slides and Sources: https://www.itmtrading.com/blog/crash-indicators-deficits-debt-matter/

For the first four months of the current fiscal year, the US Federal Budget deficit exploded up 77% from the same period last year, reflecting the impact of tax breaks and greater government spending. Deficit spending is currently running at 4% of GDP, which is 38% higher than the long-term average deficit spending. But it does not reflect the cost of running deficits. For that, you must look to debt to GDP, which is currently running 105.4% and consists primarily of compounding interest.
In fact, according to the Congressional Budget Office (CBO) March 2019 report, moving forward, they expect annual deficit spending to increase by an average of 51% YOY and that does not include interest payments. Put into perspective, that would be like you spending more than you make and funding it with credit cards, as compounding interest on those credit card balances continues to grow.
Globally, while central banks have been taking on more local debt, many have been divesting themselves of US Treasuries. At the same time, many central bank gold holdings are now at levels last seen when we were still on the gold standard. What does that tell you? In my opinion, enough risk has been transferred. Central banks are getting ready, are you?

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By ITM Trading's Lynette Zang

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