managed to hold deficits at less than disastrous numbers through fiscal 2021, thanks largely to the Fed-fashioned near-zero rates. The $6.35 trillion budget for 2023 is down just 7% from the apex reached two years ago.ĭespite the gigantic borrowings, the U.S. And though outlays have retreated a bit, they’re still on a plateau dwarfing the pre-pandemic levels. Second, federal spending-already far exceeding inflation in the 2012-19 period-exploded during the COVID outbreak and its aftermath, rising from $4.45 trillion in fiscal 2019 to $6.82 trillion in 2021, a jump of 53% or nearly $2.4 trillion in two years. From the start of 2010 to early 2022, the Fed Funds rate hovered above 1% for just two-and-half years, and spent ten years at near zero. Then, after a brief period of normalization, the Fed cut again to counter drag from the Trump tariffs, and went into full-on overdrive during the Pandemic. The easy money started as stimulus to shield the economy from the 2008-2009 hurricane. The first: A regime of super-slender interest rates engineered by the Fed.
Masturzo points out that two extraordinary practices made Americans a lot richer in the years following the Great Financial Crisis.
In the last decade, super-low rates and big government spending brought abundance.
