Thursday, August 1, 2024

US Financial Mismanagement 8-1-24

Money Supply M2 in the United States averaged 5306.08 USD Billion from 1959 until 2024, reaching an all-time high of 21722.30 USD Billion in April of 2022 and a record low of 286.60 USD Billion in January of 1959. source: Federal Reserve. The Federal Funds Rate is 5.33% in 2024. The Mortgage Interest rate is 6.78%. The Fed Funds Rate should be 1%, so that the Mortgage Interest rate could be lowered to 3%. 

The U.S. federal funds effective rate was drastically lowered between February and April 2020. It dropped from 1.58 percent in February that year, down to 0.65 percent in March, and further down to 0.05 percent in April. The Mortgage Interest rate was 2.9%

$21722.30 Billion is $21.72230 Trillion. The Federal Reserve printed more money to cover $3.1T in additional federal spending and inflation hit 9%. Trump increased the oil supply and gasoline went under $2/gal. Biden decreased the supply of oil and energy prices increased to $3.95/gal. in 2022.  Current price in 2024 is $3.60/gal.

US consumer credit card balance is $1.115 trillion. US government annual national debt interest payment is $868 billion. US student loan debt balance is $1.620 trillion. Democrat sponsored Climate Change spending added $3.1 trillion to the National Debt. US government overspending from 1970 to 2022 decreased the value of the US dollar by 200%.

The US National Debt is $35 trillion.

Year     National Debt

1970     $370.92B

1975     $533.19B

1980     $907.70B

1985     $1.823T

1990     $3.23T

1995     $4.97T

2000     $5.67T

2010     $13.5T

2015     $18.2T

2020     $26.9T

2023     $33.1T

2024     $35.0T

https://fiscaldata.treasury.gov/datasets/historical-debt-outstanding/historical-debt-outstanding

A good annual family income in 1960 was $10,000. You could own a house and pay your bills.

Year     Income     %Increase

1965     $10,000

1970     $20,000    100%

1980     $40,000    100%

1990     $60,000   

2000     $80,000    100%

2010     $100,000

2020     $120,000

The average home price was $50,000. You could own a house and pay your bills.

Year   Price

1970   $50,000

1980   $100,000

1990   $200,000

2000   $300,000

2010   $400,000

2020   $500,000

New car prices doubled in 1974 from $4000 to $8000. In 2024, new car prices average $47,433. The average price for a used car is $24,700.

Gross Domestic Savings by Country

Country   1970          2022         Increase    Owned by

US         $233.79B   $4.66T       $4.3215T   Investors

Japan    $33.85B     $127.77B   $93.92B     Citizens

China    $33.43B     $8.33T       $7.9957T    PRC

https://data.worldbank.org/indicator/NY.GDS.TOTL.ZS?locations=JP

Currency devaluation in the US and excessive taxation in Europe created the unaffordable cost of living we are currently experiencing. Japanese retirees are living on their Government Treasury Bill investments. US off-shoring of manufacturing made China wealthy.

This round of inflation is currently embedded in the US. Increasing the oil and natural gas supply will allow gasoline prices to return to $2/gal and will reduce fertilizer prices and food prices and prevent the rise of electric bills. It will also raise US exports and reduce the Trade Deficit.

Mortgage rates will go down from 6.78% to 3.45% if the Fed Funds Rate goes from 5.33% to 2%. The difference between the current mortgage rate at 6.78% and the fed funds rate at 5.33% is 1.45%.

Home prices would go down if supply increased. A 2000 sq ft starter home could sell for $200,000, but would be in the exurbs and rural suburbs. 

Reducing rental costs would require consumer demand to shrink and that would require continued apartment and starter home construction.

Although living costs will be reduced by lowering energy prices, families who rent with a household income less than $60,000 will continue to struggle to become home owners. Returning manufacturing to rural counties and lowering taxes will be required to help this group.

Norb Leahy, Dunwoody GA Tea Party Leader

 

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