Weekly Digest: Uncle Sam Seems Intent on Maxing Out His Credit Card

Plus India’s Leader Needs to Pick Better Passwords 

Welcome to your Sunday digest…my weekly breakdown of the things we’re thinking about and talking about in the Global Intelligence world. 

First up this week…Uncle Sam’s finances are a cause for major concern.  

According to the latest figures from the Treasury Department, the federal government ran a $191 billion deficit in November. That’s up from a $145 billion deficit in the same month in 2020. 

This increased deficit came despite the fact that Uncle Sam collected more in taxes this November compared to the previous year. Receipts were up 28% to $281 billion, as the economy reopened. 

The reason for the deficit surge is that spending rose by a greater amount—up 30% to $473 billion—as the Biden administration rolled out new tax relief and spending programs such as the expanded child tax credit. And more spending is coming down the pipeline…including the $1 trillion infrastructure bill. 

Now, I don’t want to delve into the merits of individual spending programs. Certainly, you’ll know if you read these columns, that I’m strongly in favor of America upgrading its frankly Third World infrastructure in areas like air transportation.  

That being said, I can’t help but feel deeply concerned by the increasingly caviler attitude to debt on both sides of the political aisle. 

True, the budget deficit for the 2021 fiscal year was down a touch from last year. (Federal budgets run from October to September, so the November figures above are actually part of fiscal year 2022.) 

In fiscal year 2020, the deficit was an all-time record $3.1 trillion. For 2021, it was at $2.8 trillion. 

But compare that to 2019—just $984 billion (and I say “just” relatively)—and you can see the dangerous path that the U.S. is on. 

One of my pet peeves is when politicians compare the national budget to a household budget. Things don’t work like that. The finances of a country and the finances of a household are vastly different…unless you have a giant money-printing press in your garage that can dole out trillions in legal currency. 

However, they’re not different enough that you can spend trillions of dollars beyond your means year after year after year.  

I know there are the new Modern Monetary Theorists running around these days with some cockamamie notion that debt is all but irrelevant when you’re a government with the power to tax and print. Their argument: Sovereign governments can print as much money as they need because they are the monopoly issuers of currency. 

Call me crazy, but debasing a currency through “printing as much as you need” to meet your spending demands has failed every single time a government has tried this approach throughout recorded history.  

MMT-types are just arrogant enough to believe that their modern economic degrees are smarter than monetary history itself.  

I’m taking the opposite side of that trade by owning gold and Swiss francs. (You’ll find my specific recommendations in this regard in the Global Intelligence Portfolio.) And I’m willing to bet any Modern Monetary Theorist one, crisp dollar bill that the U.S. sees a disruptive debt crisis before the end of the decade. 

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Next up…a new way to focus on work. 

As a news buff, my phone is constantly pinging me throughout the day.  

Honestly, it’s distracting as hell, especially as I make my money by writing, researching, and investing…things that generally require you to focus.  

Of course, I could simply turn off all my notifications. But I begrudgingly like the pop-ups because I always find something interesting in them for my job or my personal investment life.  

Thankfully, I can now have the best of both worlds thanks to the iPhone’s new Focus mode.  

This new feature, released with iOS 15, allows you to customize which apps and which specific contacts in your phone book can reach you when it’s turned on. (Android users can find something similar in their Digital Wellbeing settings.) 

So, for instance, mine is set up so that only my wife, my kids, and alerts from my crypto and brokerage services can get through during those moments when I need to focus on my work. 

This feature can be a pain to set up initially. But ultimately, it’s worth it. I recommend you give it a try.  

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Finally this week…India’s leader needs to pick better passwords. 

The Twitter account of Indian Prime Minister Narendra Modi was briefly hacked last week, with the hackers posting a tweet claiming that India was adopting bitcoin as legal tender and had purchased 500 bitcoins to distribute among all Indian citizens.  

The Indian government quickly clarified that the tweet was false and the account had been hacked. 

The Twitter hack comes as the Indian government considers regulating crypto…and possibly even banning it entirely, as I mentioned in a past edition of Field Notes. 

A few things with this:  

First, hacking the prime minister’s Twitter account to promote crypto could easily backfire. If a crypto-advocate is behind the attack, it was probably counterproductive.  

Second, this is the second time in two years that a Twitter account linked to Modi has been hacked.  

In 2020, the account of Modi’s relief fund was taken over. On that occasion, hackers sent out a tweet asking for donations, except the link in the tweet went to an account belonging to the hackers rather than the Indian government. 

Just a thought, but if you’re the head of government of a nuclear-armed country…a country that’s also known for its thriving tech industry…maybe, just maybe keep your Twitter account locked down. 

This time the hack resulted in little more than a crypto joke.  

Next time…well, let’s just say the last thing the world needs right now is hackers sending out a fake tweet announcing that India’s declared war on Pakistan. 

That brings us to the end of this week’s digest. Many thanks for being a subscriber. And if you have any feedback or questions, reach out through the contact form on the Global Intelligence website.