Real Estate, Federal Spending, Deficits and $1 Trillion!

By | February 5, 2021

We’re A Title Insurance Company! Why Is This About Federal Spending?

Because All Roads Lead To The Economy, And A Healthy Economy Is Led By The Real Estate Market!

Economic strength or weakness is a key factor that helps to dictate the condition of the real estate market. Federal, state and local taxes along with the level of mortgage rates are also key components.

That said, the last federal balanced budget was in 2002, and in 2020 the budget deficit was $3.1 trillion! This tradition of deficits, a fed funds rate currently hovering at 0% and what some believe to be a percolating inflation problem, means that economic and budgetary storm clouds could be somewhere on the horizon.

And, at that point, the piper of deficit spending will need to be paid by the American people.

Of course running deficits has become a bipartisan endeavor, and today in Washington it has become extremely easy to throw the number $1 trillion around in relation to spending legislation as if it’s insignificant. But, for the rest of us, it is difficult to fathom just how large a number $1 trillion actually is.

The following opinion piece from Hallmark Abstract Service CEO Mike Haltman (one that violates every rule of never speaking about politics in a business setting), will end with a description of this massive number.

Overview: As working people we know the importance of managing finances, because in business we face the responsibility for bottom-line results along with the scrutiny that comes with those results.

In government the bottom-line apparently means nothing, with the only thing that truly matters for members of both political parties being the next election.

That, is no way to run a country!

$1,000,000,000,000, aka $1 trillion! Just how big is this number (example below)?

‘We the People’ currently face a ‘reported’ U.S. debt of $27.9 trillion, with actual debt of much, much more.

When interest rates rise (and one day they will), the current debt, the debt that will be run-up by the Biden administration and the debt of future administrations, will consume the federal budget and force taxes on ALL Americans to rise sharply. That’s just for starters as all government services will also likely be impacted in a very negative way!

And while some of the spending today and during the prior administration was and is necessary and critical due to the economic devastation caused by the pandemic, some is not! Some spending has nothing to do with pandemic relief and instead is narrowly targeted helping few (aka pork barrel spending).

Unfortunately, many politicians on both sides of the aisle don’t really care if there is blatant wasteful spending, because acquiring votes and pandering to voters immediately is more critical for them than the idea of having to pay when the bill ultimately comes due. By then the thinking likely goes, they will be long gone from office!

It’s a problem crying for a solution but, sadly, if finding that solution is left to politicians (and it is) then we are doomed.

How big is 1 trillion and thus, the reason for a picture of a dinosaur?

‘One trillion seconds is slightly over 31,688 years. That would have been around 29,679 B.C., which is roughly 24,000 years before the earliest civilizations began to take shape.’

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If you are buying residential or commercial real estate in New York State remember…

New York Title Insurance IS NOT All The Same!

Find out why that is here.

Hallmark Abstract Service LLC…You Buy, We Protect!

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