The headline was joyous: US budget surplus highest in five years in June. This appeared on the BBC’s website.
Good news! The economic recovery is real. Happy days are here again.
So, I read the story. Halfway through, I came upon this.
Despite that strong month, the Congressional Budget Office forecasts the annual deficit will be $670bn (£443bn) when the budget year ends on Sept. 30.
The rising deficit means the US government is once again expected to hit its debt ceiling – the point at which it must borrow more money to pay for ongoing obligations – in the autumn.
This is like a patient who is told that his cancer is in remission, but this has not done anything to help his Alzheimer’s. He has a short memory.
The voters have short memories.
When QE3 stops, the recovery will stop. But if QE3 doesn’t stop, then the dollar is terminal. Take your pick.
What’s that choice again? I forget.