Total Federal spending for fiscal 2023 stands at over $6 trillion with a projected deficit of $2 trillion by the nonpartisan Committee for a Responsible Federal Budget (CRFB). This marks a reversal from last year’s drop, increasing concerns over deficits, inflation, and spending. The proposed budget for FY24 is $6.9 trillion, fanning the flames of the debate over allocations and deficit levels. The 19% inflation experienced since January 2020 is permanent. There are no deflationary plans to bring back price levels to what they were in 2020.
Our best hope, therefore, is only to slow the amount that inflation continues to increase in the future. At the long-term average inflation rate of 3% since the formation of the CPI index in 1919, a dollar depreciates to 74 cents in a decade, and to 22 cents in 50 years.
The dollar has lost over 96% of its value since the Federal Reserve was founded in 1913. Investors are encouraged to strategize for long-term preservation and growth amidst the prevailing economic inflation scenario.
1. Budget Overview:
2. Economic Projections & Deficit Impact:
3. Inflation Outlook:
Milton Friedman said the only reason for inflation is the government printing of money. He referred to inflation as “taxation without representation.”
“There is one and only one basic cause of inflation: too high a rate of growth in the quantity of money—too much money chasing the available supply of goods and services. These days, that cause is produced in Washington, proximately, by the Federal Reserve System, which determines what happens to the quantity of money; ultimately, by the political and other pressures impinging on the System, of which the most important are the pressures to create money in order to pay for exploding Federal spending and in order to promote the goal of “full employment.” All other alleged causes of inflation—trade union intransigence, greedy business corporations, spend-thrift consumers, bad crops, harsh winters, OPEC cartels and so on—are either consequences of inflation, or excuses by Washington, or sources of temporary blips of inflation.” – Milton Friedman
4. Investor Considerations:
In 2002, Equitas Capital Advisors, LLC was established as a unique company that blends the resources of a large global corporation with the flexibility of a small boutique firm. The registered service mark of Equitas Capital Advisors is Engineering Financial Solutions®and the purpose of Equitas is to design, build, and deliver investment solutions to meet the goals and objectives of our investors. Equitas Capital Advisors, LLC located in New Orleans, has over 260 years of combined investment management consulting experience providing professional investment management services to investors such as foundations, endowments, insurance companies, oil companies, universities, corporate retirement plans, and high net worth family offices.
Disclosures and Disclaimers:
Above information is for illustrative purposes only and has been obtained from reliable sources but no guarantee is made with regard to accuracy or completeness. It is not an offer to sell or solicitation to buy any security. The specific securities used are for illustrative purposes only and not a recommendation or solicitation to purchase or sell any individual security.
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Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author on the date of publication and are subject to change. This publication does not involve the rendering of personalized investment advice.
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