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US deficit widens

US tax receipts as of June fell by 9.2%, and 7.3% on a YoY basis. In the meantime, spending went up by 15%. The budget deficit is widening at an alarming rate, which means it will have to be financed with expensive debt, since the fed wants to have rates higher for longer to make sure inflation doesn’t pick up from here. Interest expense is almost a Trillion dollars, and discretioanry spending such as the aid package to #ukraine is becoming non discretionary. This facts are weighting on the dollar, which may continue its weakening path as debt mounts. The solution needs to come from the productivity side (AI, infrastructure?) since rising taxes would probably slow down the economy and may have the opposite effect. The US balance sheet keeps deteriorating.

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