Here is a snip from the latest Monthly Treasury Statement which includes the total Outlays for the previous FY:
So we can see here that Treasury has last FY's total "Outlays"at $3.5T.
While if we look at the Daily Treasury Statement for last FY and examine net Withdrawals from the Treasury account at the Fed here:
If we subtract the total amount of these withdrawals due to UST redemptions of $6.885T from the total withdrawal figure for the FY of $11.071T we are left with about $4.2T of net withdrawals from the US Treasury account.
So the difference between this cash basis amount of 'withdrawals' from the US Treasury account and the accrual basis amount of "outlays" is running at about $700B annual rate, or about 20% of accrual basis "outlays".
So this divergence between the cash basis number in the DTS vs the accrual basis number of the MTS, each of which is supposed to be representative of what the federal government is "spending", is pretty substantial here for last FY at 20%.
4 comments:
sorry, but what is the significance of this? that they have 700B that hasn't yet been received? thereby expanding the deficit to a number that isn't representative of its actual size?
No Dave I am trying to point out the present magnitude of the difference between the 2 main govt reports on "spending" ie the DTS and the MTS which each use their own accounting basis in their reporting...
so if we use the one to gauge "how much is the govt spending?" vs the other, right now the divergence between the two methods is pretty substantial...
And no, I don't follow the deficit AT ALL...
I don't really understand why one would follow the deficit as some sort of leading indicator of positive economic activity as it is non-govt savings which actually works against the availability of USD settlement balances being generally available for settlements of non-govt sector economic activity...
I would rather just follow what the govt is actually spending to gauge what the govt is spending...
rsp,
The fiscal deficit is an accounting residual of spending minus taxation. Since it occurs after the fact and is non-discretionary owing to cyclically variable spending and taxation, it cannot be a cause, that is, addressed through the budget.
The deficit can be used along with economic performance, and employment in particular, as an indicator of insufficient provision of non-government saving desire in net financial assets in aggregate ($NFA). This is an indication that at least one sector needs to spend more, but it is only government that can increase $NFA through its deficit spending.
The preferred means of addressing this is through functional finance and the MMT JG, using crafted automatic stabilization and tax policy and letting the JG handle residual UE through a buffer stock of employed.
Matt, I follow your general argument but I don't get this statement: "It (the deficit) is non-govt savings which actually works against the availability of USD settlement balances being generally available for settlements of non-govt sector economic activity." How do non-govt savings work against balances being available for settlement? because they are in savings accounts? This strikes me as counter-intuitive and the argument also seems to be counter to Mosler, who (unless I am reading him wrong) has recently said he believes the deficit is too small to maintain current activity. Even if shrinking deficits have no effect on GDP in any given period, eventually the lack of deficits will put stress on non-govt and reverse, will they not? Your argument seems to indicate you have some insight into when that occurs? Please enlighten.
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