Oh what happened to fiscally conservative America?

US Federal Surplus or Deficit, 2002 to 2012, with spot price of gold

On the chart above I’ve presented the US Federal Budget Surplus or Deficit over the last two decades as the red line with the left axis showing millions of dollars. Observations are taken on September 30th of each year. As recently as February, 2002 the United States actually ran a net budget surplus. And from there things deteriorated, and sharply. Between 2002 and 2005 the United States increased their deficit by an average of 57% per year. However between 2005 and 2007 we saw the attempts to pay down the deficit, with an average reduction of 26% per year. Still, the deficit was rather substantial in 2007, running about 160K million. And then, of course, came the credit crunch. From 2007 to 2011 America increased their deficit by an average of 96% per year, effectively doubling the debt annually. In 2008 alone the deficit increased 185%, which was topped by an increase of 208% in 2009. The flat line towards the end of the series represents not fiscal conservatism, rather federally mandated spending limits.

Oh yeh, the bars at the bottom represent the spot price of gold. Of course correlation doesn’t equal causality so one can’t say gold rose due to the budget deficits but, then again, I’m not selling any gold. Rather the opposite, as cash flow permits.

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