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In March 2012, the U.S. Government ran a budget deficit $198B, the Treasury Department reported. This is up $10.0 billion or 5.3% from the $188.154 billion deficit in March 2011.

Click to enlarge.

The total budget deficit for the first six months of fiscal 2012 reached $778,988 billion.

Summary of two charts:



Deficit (amount borrowed) as a percentage of spending = 53.7%

The Bond market took the news in stride with mixed results:

AGGiShares Barclays Aggregate Bond110.13Up 0.013.54
BNDVanguard Total Bond Market ETF83.49Down 0.123.51
LAGSPDR Barclays Capital Aggregate Bond58.01Down 0.033.16
SCHZSchwab U.S. Aggregate Bond ETF51.65Up 0.01-
TIPiShares Barclays TIPS Bond118.79Up 0.192.48

Sometimes I think these deficit numbers are too large for people to comprehend, so I will divide them by 100 million to put them in perspective.

Lets say your kid graduated from college and their monthly pay check after taxes is $1,712 and their living expenses "worthy of someone of his education and status" total $3,694 a month. Would you tell the kid to:

  • Not worry. Keep charging everything on credit cards and let your grandkids pay the bills someday. (This is what we currently do in the U.S. with our national debt.)
  • Demand your boss give you a raise to match your education and status. (This is what people do when they say they want to raise taxes.)
  • Cut spending. (Nobody wants to do this. We're not Greece!)

I'd suggest the kid cut spending and work harder so the boss will give them a raise so they can someday afford what they want. Hopefully the U.S. government can reach a compromise that both cuts spending and raises revenue without killing the economic recovery.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I am long individual TIPS, as I think the US will continue to print money to kick the can down the road hoping to inflate away the problem.