History is indeed on the march in April. Another invisible pothole has made itself known to the drive-wheels of the Social Justice juggernaut; the Gang of Class Presidents currently running the Fed Gub have crunched and re-crunched the numbers and found that April’s deficit is 82.7 billions.

I know the B word sound pretty quaint since we have been working in the T word for so long but still it is just for one month. And it is not a particularly long month, just thirty days so it is something of a puzzler. The linked piece informs that ordinarily the gub runs a respectable surplus for April and as we know, it scarcely ever does so at any other time. So what’s up with April? Doesn’t this ring a bell? Do you recall about four weeks ago that there was something you had been putting off that could be put off no more? Well, forty-seven percent of the nation cannot wait for fifty-three percent any longer. April is when income taxes are due, if due they are.

And this is why April has been the cruelest month for those who pay but this was always karmically balanced by the joys of those who got paid. In the vaults of the Treasury G-12 worker bees poured sacks of checks into processors and poured out straight cash. And yes they certainly are ladeling out that cash today in rivers but they have yesterday borrowed and promised oceans so you can see the dilemma.

As bad news goes, of course, this is terrible. The worst element is that the genii whose prescriptions we have been following and will continue to follow missed this amazing event by nearly a factor of three. Did you get that? “Projections” were for a $30b hole, nothing to sneeze at on any day and on an April day, something to gaze upon with horror but no, that foreseen horror didn’t materialize, one nearly three times more dire has. Hmmm. And these “projections” are only from February. I submit a simple rule of thumb: predictions get less and less accurate the farther into the future we care to peer. Reasonable, no? Yes. So when two month projections are off by a factor of 2.7 does this mean that four month projections are off by a factor of 5.4? Oh, you wish! It is obvious that whatever law of physics at play here operates on not multiples but orders of magnitude. The four month projections will be erroneous by a factor of 7.29. Six month projections by 19.683. Let us look no further for the sake of the pacemaker patients in the audience.

Are these assumptions so crazy? Demonstrably they are less so than those that decide our fiscal policies and in any case my methods will be put to the test in just two more months. As for the assumptions that rule the dollar, they have already been rubbished though no one of prominence seems to have noticed. What would these presumptuous assumptions be?

There are many, of course, but most of us did not attend Harvard or even Princeton; the voodoo of TurboTax puts us in awe so let us just address the primary colors of The Big Picture. This is it.

We have become accustomed to certain fiscal facts. Most importantly our fiscal decisionmakers always assume a nearly 4% total growth rate for GDP. Even now, even at the time of the stimuli, Team Obama baked this into all their monetary decisions and plans. A sub-4 rate of growth doubles the economy in a couple decades. And it should be remembered that this is an average. It already has figured in the “normal” blips and burps. One quarter may see growth at a 6% rate. Another may be flat. But when they predict a certain effect on the deficit out to, say 2020, as the Obies were wont to do on healthcare they are always anticipating that the nation is nearly four percent richer each and every year. This precious hope is what allows the gub to sell bonds indefinitely (though not infinitely) right around the rate of inflation.

Inflation? What dat? Of course we all know the most silent of thieves that goes by the name of Inflation. He steals from your wallet, your home and your bank accounts indifferently. The melting away of currency values has been known to all of economic history. It struck this country and the world mightily in the ’70s but now seems utterly quiescent. Maybe it is because we have tolerated a modest touch of inflation since it was finally pushed down in the ’80s. A rate of 4% is considered quite manageable, heck, there are even some upsides, since it allows salaries to be raised nominally 4% every year without the actual pay being increased. That is some genius play there! But again, for good or ill, 4% is presumed to be “normal”. It may rise a bit or fall a bit but the assumptions on which the projections are figured is that it stays at 4% long term. This is a bet nearly everyone is making.

There is a third pillar of “normal” and this is better known than the others. It is the unemployment rate. Some barkers have lately taken to talking about the “jobless rate” or the “underemployment rate” or any of a couple dozen figures kept on this subject by the gub. Some of these numbers are frighteningly high but there is no need for redirection. We all know that the reported rate today is 9.9%. That ain’t good but it is not double digits, right? Double-digit unemployment… now THAT’S a nasty headline. So with all-in efforts on every front, including the straight hiring of temp gub employees, the genii have avoided that. For now. But also baked into all these projections of what the gub will owe in a year, two years, ten years time, is an unemployment rate of about 6%. Every day we are not BELOW 6% by a good long chalk is one more day that income is down, which means that revenue is down. And since spending never sleeps it means that all those astronomical figures that stalk your dreams have gone galactic in scale. And they will increase again tomorrow.

And again the next day.

So even in April, as you send in your taxes, gub is unable to pay the simple day to day expenses from that pile. And that is today, what happens in October? or 2015? The only solace is that even gub, finally, is feeling the pinch. That isn’t much perhaps but it is a necessity and something of a guilty pleasure. There is some cause for a smile, if not a celebration. The genii have finally run out of other peoples’ money. True, that was yours but at least you have seen it coming. Imagine the shock. Imagine the dismay. Imagine what they must imagine doing, finally… perhaps getting a job.

 

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