LARRY KUDLOW: Biden’s got four to six weeks before the Treasury essentially runs out of money


So, we’ve covered the legal problems of Joe and Hunter Biden. They’re up to their eyeballs in corruption if you ask me. We’ll keep an eye on it and see how it works out. But Joe Biden’s got another problem. I estimate he’s got four to six weeks before the Treasury essentially runs out of money. Revenues are down. Federal spending is way up an incredible $350 billion over last year. This year’s deficit could come in close to $2 trillion, believe it or not. Actually, you have to believe it, because Mr. Biden’s been running around the country telling people how much he’s cut the deficit. Woops! Didn’t quite work out. Just saying.   

Now, because revenues are short and spending is long, the Treasury’s cash position is going to be thin. That poses a big problem. The so-called Yellen ‘x-date’ may not be June 1, but, given the fact that the Treasury on paper may be nearly broke, the x-date may not be many weeks after June 1. I’m being honest here. I’ve combed through the numbers. I’ve looked at the work of others who are smarter than I am, and we’re all coming up with the same conclusion. June 1 could be the x-date. There’s only so much Janet Yellen can loot from the retirement funds of the civil service, post office, the railroads, the thrift savings plan, and the exchange stabilization fund. She could keep looting even more in return for IOU’s to pay them back — so-called ‘treasury non-marketables’ — but it gets dicier and dicier as the Biden deficit haul gets deeper and deeper. The other problem is: when you take a look at oil and other commodity price declines, it’s got recession written all over it.  


The good news is the commodity value of the dollar has recovered nicely in the past year, and that’s a very favorable omen for continuing decline of the inflation rate. This is why I now believe the Fed should pause their interest rate hikes. Meanwhile, the M-2 money supply is contracting, and the yield curve is historically negative and inverted. Comparatively, the upside down Treasury curve is even worse than it was in the 1980s. 

Real wages continue to sink, productivity continues to plunge, profits are very iffy, business investment is in a deep recession. People have jobs, but they’re not paying — after-tax and after-inflation. Grocery and gas prices are still a big issue. So, you’ve basically got corruption in the White House, chaos in the economy, and, by the way, corruption in the Federal Reserve system. 

Is it a coincidence that these banks going under happen to fall in the San Francisco Federal Reserve district, where the Fed Bank CEO Mary Daly thinks climate is more important than inflation, lives for diversity, equity, and inclusion, and more and more it looks like she refused to listen to her own examiners looking at these dead and dying banks – or they just didn’t do their job, or maybe they figured their CEO Mary Daly didn’t want them to do their job? 


There’s only one positive game in town, folks. Kevin McCarthy’s Limit, Save, Grow Act to increase the debt ceiling alongside budget reforms. That bill will do two things. First, it will grow the economy with lower spending, fewer regulations, no tax hikes, and reopening the oil and gas spigots. And, second, for all the same reasons, the bill will reduce inflation. More growth. Less inflation. A year ago I was saying, save America, kill the bill. But now I want to say: Save America, pass the McCarthy bill.  


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