I’ve been warning investors about the dire straits of the U.S. government’s finances. The Treasury just reported that it ran a deficit during April, which is tax month, for the first time in 26 years.
Last April, there was a surplus of nearly $160 billion. For this year, there was a deficit of over $20 billion. For all of this fiscal year, the deficit is projected to hit $1.75 trillion which is nearly four times the $454.8 billion deficit of fiscal 2008. Those numbers are staggering!
What’s even worse is that the spending from the big stimulus package hasn’t kicked in yet. To finance these massive deficits, the Treasury will have to expand its bond auctions. That means interest rates will go higher and the dollar will inevitably fall.