Deficit is up 25% over last year, as I forecast. Will the "deficit is too small crowd" now change their position?

The deficit is up 25% over last year. Just reported.

I already knew this and anyone who subscribes to my MMT Trader report knew this because I see the deficit on a daily basis from my analysis of the Daily Treasury Statement.

So, this is no surprise to me. In fact, I have been forecasting this and alerting you, dear readers, about this trend from time to time.

My question, however, is to Mosler and the people who parrot him on the deficit. He (and the others) have been wrong for three years forecasting a recession based on the shrinking deficit whereas I have been consistently and correctly pointing out that it's all about flows.

I follow fiscal flows, each. No one else does that. Flows have been very, very, strong.

So the question is, will Mosler now get bullish? His whole entire premise has evaporated. He's been dead wrong. Will there be any consistency to his view? I doubt it.

Deficit is too small? Consumer spending rose most in six years.

Consumer spending rose 1 percent last month after a flat reading in March, the Commerce Department reported Tuesday. Incomes were up a solid 0.4 percent, matching the March gain. Wages and salaries, the most important component of incomes, gained 0.5 percent.

Where are the "deficit is too small" people? When will they admit that they are wrong? Do you keep on saying, for years, that there's going to be a recession? How is that useful?

We have had it correct the entire time with our analysis of flows. I use flows almost exclusively in my MMT Trader report.

It's all about flows. You don't even know what the deficit is going to be until the government spends first. You don't even know how much total taxes will be paid.

It's flows.

What if the deficit grows (as it is doing) and then the economy tanks? What will the "deficit is too small crowd" say then?

Don't laugh. This could happen.

The deficit is growing again and flows (thankfully) are still strong, however, I am seeing some things that may suggest rising risk for the economy even though the deficit is now rising for the first time in six years.

What will the "deficit is too small crowd" say?

I'm pretty sure they'll say, "it's still too small," wihch woiuld be a total admission of the fact that they don't know what the hell is going on and are completely confused, but still trying to look smart.

It should also be the final proof that we are right at looking at flows.

If you want to see what "risk" to the economy I am talking about (and remeber, who told you BEFORE ANYONE that the deifici is growing--ME, right here at Mike Norman Economics where you get info you don't get anywhere else), then get my report MMT Trader for a free 30-day trial. Sign up today.

*New issue coming out today in a few hours! Get it!

The deficit is now $73 billion larger than last year and growing.

The deficit for the fiscal year is now $535 billion. That is $73 billion above same time last year. (Figures compiled right from the Daily Treasury Statement.)

The deficit is rising, folks. What are all the "deficit is too small" people going to say when they find out? (Maybe send this to them, not that they will change their tune.)

You only get this info here and you know it.

Going around telling people the deficit is too small is a non starter

Going around telling everyone the deficit is too small is a non starter. If the goal is to offer up policy suggestions that will broadly improve economic conditions, that's admirable, but telling everyone that the deficit is too small is a really bad way to do it.

First of all, no matter how much you try to explain it, most people will cringe at the idea of needing bigger deficits. They're either ideologically or philosophically against such a thing, right or wrong. That's just the way it is. Good luck in trying to turn everybody around on this. I hope you live a very long life.

Secondly, there's no way you can target "THE DEFICIT." How do you do that? Even if you get people to understand this, the very next thing they're going to say is, "Okay, how do we do it?" At which point you will have to say, you raise spending or cut taxes, or both.

So it's really about raising spending and/or cutting taxes. Why, then, even bring up the deficit? The deficit is whatever it is.

Of the two proposals--raising spending or cutting taxes--the government usually only manipulates tax rates, up or down. Therefore, even if you cut rates, you still don't know how big the deficit will end up being. Nor do you know whether or not people will spend those tax savings or just hold onto them. So, we can't accurately predict demand from that and that's what it's all about, demand. Finally, the government's gotta spend first before most people even know what will be the amount of tax they owe. So spending's gotta come first.

We're really talking about spending. The good news is, it's a concept that most people understand. Even if they're inclined to be ideologically opposed to spending you can still sell them on it if you talk to  them about necessary things like infrastructure, health care, education, basic science and research, altnerative energy, transportation, etc. They get it. They can envision those things. You're not just saying, "we need bigger deficits," a totally nebulous and largely negative concept for most people.

This is one of the most important rules of selling: create a picture in the person's mind of the benefits; of this beautiful thing they're going to have.

Now go paint a picture of the benefit of a bigger deficit. Good luck with that.

This is why MMT goes nowhere. It's got terrible messaging and communication.