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The Shocking Growth In America’s National Deficit

November 25, 2020

The Shocking Growth In America’s National Deficit

Government Spending Gone Wild!

To say the national deficit is out of control may be an understatement. Our surging deficit is a sign of “spending has gone wild.”  The important point is that covid-19 has again given us a reason to divert our eyes away from the over the top spending taking place. It appears everyone in Washington has come together and simply agreed on, “I will support your spending if you support mine!” The fact remains that while both the Republicans and the Democrats mumble about being dissatisfied over the deficit, pork packed bills continued to be signed into law.  

Calling these spending packages “bipartisan” helps spread the blame around and masks just how dysfunctional Washington has become. Sadly, it allows all the players involved to take their victory laps and claim democracy works. When criticism does arise, those we have sent to Washington fall back on the stand that it was all done in order to avert problems down the road that would further damage the economy.

A person would have to be delusional to think this explosion in national deficits is not occurring across the world. It is a reality no matter how much effort is made to mask the truth.  It is logical that if Biden does step into the Presidential office and nominate financial uber-dove and former Federal Reserve Chair, Janet Yellen, as the next Treasury Secretary the deficit growth will explode. Those of us appalled by how the Trump Mnuchin team has handled spending should be prepared for further disappointment. It has even been suggested and rumored that Yellen would leap into buying stocks if they were to decline as little as 20%.

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US National Debt Spiked by $1.5 trillion in 6 Weeks, to $25 trillion. Fed Monetized 90%

May 7, 2020

US National Debt Spiked by $1.5 trillion in 6 Weeks, to $25 trillion. Fed Monetized 90%

I’d never imagined I’d ever see this sort of spike, though in recent years I added an upward arrow with “Debt out the wazoo” to my charts, not realizing just how factually accurate this technical term would become.

The US gross national debt – the total of all Treasury securities outstanding – jumped by $1.05 trillion with a T in the four weeks since April 7 and by $1.54 trillion in the six weeks since March 23, to $25.06 trillion, the Treasury department reported today.

Those trillions are whizzing by so fast it’s hard to even seen them. WOOSH… What was that? Oh, just another trillion. The flat spots in the chart are the periods when the debt bounced into the debt ceiling. Yeah, those were the days!

I’ve been lamenting and lambasting the stupendous growth of the US national debt since 2011, the beginning of my illustrious career as a gnat in the big world of financial media. And through all these years, I’d never imagined that I’d ever see this sort of spike in the US debt, though in recent years I’ve been adding an upward arrow and the green label “Debt out the wazoo” to these charts, not realizing just how factually accurate this technical term would become.

The US debt was even surging at an accelerating rate during the “Best Economy Ever,” when there should have been a surplus and a reduction in the debt, so that the government can go into debt during bad times.

I wrote back then, for example on February 19, when the debt had spiked by $1.3 trillion over the past 12 months to $23.3 trillion: “But these are the good times. And we don’t even want to know what this will look like during the next economic downturn.”

…click on the above link to read the rest of the article…

Disaster Awaits: National Debt Will Be 6 Times The Size Of The Economy

October 29, 2018

Disaster Awaits: National Debt Will Be 6 Times The Size Of The Economy

Even without changes to the current spending policy, the government’s spending is on an unsustainable path. By the time a child born in 2018 reaches retirement age, the United States national debt will be six times the size of the economy according to an analysis released this week.

Without making any changes to current policy (in other words, even without the glut of new entitlement spending proposed by some of Bernie Sanders’ acolytes) that’s the trajectory for the national debt over the rest of the 21st century, according to the Congressional Budget Office (CBO), as reported by Reason. It’s an outlook that the Committee for a Responsible Federal Budget (CRFB), in an analysis released this week, calls “frightening and almost certainly unsustainable.”

Under current law—which assumes, among other things, that last year’s tax cuts will expire in 2025 and not be extended—the national debt will double from 78 percent of gross domestic product (GDP) this year to 160 percent of GDP by 2050. It would hit 360 percent of GDP, and still be climbing, by the end of the CBO’s 75-year projection window in 2093. In the so-called “alternative fiscal scenario,” which assumes current policies (such those tax cuts) are kept in place, the debt would hit 225 percent of GDP by 2050 and more than 600 percent of GDP by 2093. -Reason

The CBO’s 75-year budget forecast (its longest of long-term projections) makes it clear that the current budgetary course must change dramatically.  The United States simply cannot afford the size of government it has now, let alone the size of government demanded by socialists.  The spending must be cut, there’s no other way around it.

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Who Bought the $1.6 Trillion of New US National Debt Over the Past 12 Months?

October 17, 2018

Who Bought the $1.6 Trillion of New US National Debt Over the Past 12 Months?

As a flood of US debt washes over the globe, someone has to buy.

So far in this fiscal year, which just started on October 1, the US gross national debt – the total debt issued by the US government – has jumped by $138 billion in just 11 business days, fueled by a stupendous spending binge and big-fat tax cuts, to a breath-taking $21.654 trillion, after having jumped $1.27 trillion in fiscal 2018. And these are the good times!

So who owns and buys all this debt? This is a critical question going forward, because the flood of new debt inundating the market is spectacular, and someone better buy it. Today we got another batch of answers from the US Treasury Department’s TIC data on this increasingly edgy topic.

In August, foreign private-sector investors (banks, hedge funds, individuals, etc. outside the US) and “foreign official” investors (central banks, governments, etc.) owned $6.287 trillion of marketable Treasury securities. This was up $37.6 billion from August last year but was about flat going back to the beginning of 2016.

Over the same 12-month period through August 31, 2018, the US gross national debt jumped by $1.614 trillion. So who bought it?

The biggest foreign holders didn’t buy; they shed.

China’s holdings of Treasury securities have been inching down ever so gingerly with its holdings at the end of August at $1.165 trillion, down $37 billion from a year earlier.

Japan’s holdings fell by $72 billion year-over-year to $1.03 trillion and are now down by $210 billion from the peak at the end of 2014:

China and Japan are still by far the largest foreign creditors of the US. But their role is diminishing, based on two factors: the ballooning US debt, and their declining holdings of this debt.

…click on the above link to read the rest of the article…

Who Bought the $1.47 Trillion of New US National Debt over the Past 12 Months?

September 19, 2018

Who Bought the $1.47 Trillion of New US National Debt over the Past 12 Months?

China, Japan, other foreign investors, the Fed, US government funds? Nope.

Foreign private-sector investors and “foreign official” investors – central banks, governments, etc. – whittled down their holdings of US Treasury Securities by $21 billion at the end of  July, compared to a year ago, to $6.25 trillion, according to the Treasury Department’s TIC data released Tuesday afternoon.

Over the same period, the US gross national debt – fueled by a stupendous spending binge and big-fat tax cuts – soared, despite a booming economy, by a brain-wilting $1.468 trillion, in just 12 months.

So, with foreigners having shed $21 billion over the 12-month period, who bought this $1.468 trillion in new US Treasury debt?

Here’s who didn’t buy:

China’s holdings of marketable Treasury securities have remained roughly stable despite the arm-wresting match over trade, with its holdings at the end of July, at $1.17 trillion, up $4.7 billion from a year earlier.

Japan’s holdings fell by $78 billion year-over-year to $1.035 trillion, continuing the trend since the peak at the end of 2014 ($1.24 trillion):

Russia, always a smallish holder of Treasuries compared to China and Japan, has liquidated 90% of its holdings, bringing them from $153 billion in May 2013 to just $14.9 billion in July:

China and Japan have long played an outsized role as creditor to the US government. But their importance has been declining for years due to the growing pile of the US debt, and the simultaneous decline of their holdings. This caused their combined holdings (green line) to drop from nearly 13% of total US government debt at the end of 2015 to 10.4% in July, with Japan’s holdings (blue line) accounting for 4.9%, and China’s (red line) for 5.5%:

…click on the above link to read the rest of the article…

US National Debt Hits $21 Trillion

March 17, 2018

US National Debt Hits $21 Trillion

For 8 years, we took every opportunity to point out that under Barack Obama’s administration, US debt was rising at a alarmingly rapid rate, having nearly doubled, surging by $9.3 trillion  during Obama’s 8 years. It now appears that the trajectory of US debt under the Trump administration will be no different, and in fact based on Trump’s ambitious fiscal spending visions, may rise even faster than it did under Obama.

We note this because as of close of Friday, the US Treasury reported that total US debt has risen above $21 trillion for the first time; or $21,031,067,004,766.25 to be precise.

Putting this in context, total US debt has now risen by over $1 trillion in Trump’s first year… and the real spending hasn’t even begun yet.

What is amusing is that Trump – who has a tweet for every occasion – and who no longer even pretends to care about the unsustainability of US spending was extremely proud as recently as a year ago by how little debt has increased during his term.

Donald J. Trump
✔@realDonaldTrump

The media has not reported that the National Debt in my first month went down by $12 billion vs a $200 billion increase in Obama first mo.

We doubt today’s milestone will be celebrated on Trump’s twitter account.

And while some can argue – especially adherents of the socialist Magic Money Tree, or MMT, theory – that there is no reason why the exponential debt increase can’t continue indefinitely…

… one can counter with the following chart from Goldman, which shows that if one assumes a blended interest rate of roughly 3.5% as the Fed does, and keeps America’s debt/GDP ratio constant, in a few years the US will be in what Goldman dubbed “uncharted territory” and warned that “the continued growth of public debt raises eventual sustainability questions if left unchecked.”

…click on the above link to read the rest of the article…

Peter Schiff: ‘We Will Live Through Another Great Depression Which Will Be MUCH MUCH WORSE’

March 2, 2018

Peter Schiff: ‘We Will Live Through Another Great Depression Which Will Be MUCH MUCH WORSE’

Financial guru Peter Schiff, who accurately predicted the recession of 2008, says the problems we face now are even bigger. We will live through another Great Depression if Schiff is correct. And one of the main concerns is something very few dare to even mention or show a concern about: the national debt.

Schiff’s podcast from a few days ago highlights a very important problem with not only the economy as we know it but the mainstream media as well. Unable to take their attention off gun control regulations for even a moment to focus on a much bigger concern, the national debt, the mainstream media is effectively trying to hide what’s coming down the pipe. The lack of coverage seems to be spurring a lackadaisical attitude about the almost $21 trillion debt.

Let’s start at the beginning. Schiff begins his podcast talking about a book his father wrote; one of the only books to have been banned by the United States government. Yes, the US government banned a book titled “The Federal Mafia: How It Illegally Imposes And Unlawfully Collects Income Taxes” by Irwin Schiff in the “land of the free.”

“The bad news is, we are going to live through another Great Depression and it’s going to be very different. This will be in many ways, much much worse, than what people had to endure during the Great Depression,” Schiff says. “This is going to be a dollar crisis.”

“These hot inflation numbers that we’ve been getting are going to get a lot hotter…all this inflation that has been in the financial markets, in the stock markets, in the bond market, in the real estate market, everybody loved inflation when it was making you rich…the problem is going to be when it makes you poor.

…click on the above link to read the rest of the article…

Budget Woes Sign of a Dysfunctional Empire

February 13, 2018

Budget Woes Sign of a Dysfunctional Empire

The bloated military budget is justified on the assumption that the United States can and should police the entire world, but this approach is fundamentally unsustainable, warns Jonathan Marshall.

President Donald Trump’s latest $4.4 trillion budget proposal calls for boosting military spending by nearly $200 billion over the next two years, and would balloon the national debt by more than $7 trillion over the next decade. Pundits proclaim it “dead on arrival.”

The Pentagon, headquarters of the U.S. Defense Department, as viewed with the Potomac River and Washington, D.C., in the background. (Defense Department photo)

But the likely alternative, based on the recent congressional budget accord, will be an equally irresponsible combination of sky-high military spending and even more borrowing – signs of a dysfunctional empire unable to manage its decline intelligently.

The U.S. national debt now exceeds $20 trillion, or $170,000 per taxpayer. When the number was smaller two years ago, under President Obama, Senate Majority Leader Mitch McConnell called it “dangerous and unacceptable.” Yet, following last December’s massive corporate and personal tax cut, and the subsequent agreement on new spending targets, Congress now envisions adding $15 trillion to the federal government’s debt over the next decade.

No serious analyst predicts any immediate disaster, but fast-rising levels of public debt, combined with extremely low levels of private savings, could set the United States up for another financial crisis. If interest rates climb, high levels of debt can rapidly drive up federal spending on interest. If another recession strikes, slashing federal revenues, the burden of debt can also soar.

While many domestic programs are slated to grow, a major contributor to the U.S. debt burden will be soaring military spending. The recent budget accord calls for feeding the military about $80 billion more this year, and an additional $16 billion more the next. The increase alone exceeds Russia’s entire military budget ($69 billion in 2016, the most recent year for which comparative data are available).

…click on the above link to read the rest of the article…

Four Rate Hikes in 2018 as US National Debt Will Spike

February 13, 2018

Four Rate Hikes in 2018 as US National Debt Will Spike

Chorus gets louder. But no one will be ready for those mortgage rates.

It didn’t take long for rate-hike expectations to be jostled further by last week’s “monster” two-year budget bill that Congress passed with its usual gyrations, including a government mini-shutdown, and that Trump signed into law on Friday. The bill increases spending caps by $300 billion over the next two years. It includes an additional $165 billion for the Pentagon and $131 billion for non-defense programs.

The bill comes after the tax cuts slashed expected revenues by $1.5 trillion of the next ten years. So pretty soon this is starting to add up.

Going forward, the US gross national debt will likely balloon at a rate of over $1 trillion a year, every year, even during the best of times. It’s $20.5 trillion currently [update 3 hours later, after debt ceiling suspended: $20.7 trillion]. It will likely be over $21.5 trillion a year from now – and this when the US economy is expected to boom. Any downturn will cause the debt to spike.

And what will the Fed do?

Four rate hikes this year – that’s what Credit Suisse’s US economists said in a research note on Monday. Previously, they’d expected three rate hikes for 2018.

“The FOMC has already boosted their growth outlook for 2018 in light of the tax bill passed in December and we anticipate another upward revision to their growth forecast at the March meeting,” the economists wrote in the research note, according to Reuters.

“With the economy near (or above) full employment, prudent risk management suggests the Fed ought to accelerate their tightening in response to a large positive demand shock,” they said.

…click on the above link to read the rest of the article…

US national debt accelerating at over a trillion/year in our asset-hole ‘debt supply’ system; demanding monetary reform & public banking yet?

February 1, 2016

US national debt accelerating at over a trillion/year in our asset-hole ‘debt supply’ system; demanding monetary reform & public banking yet?

The US federal government debt is now $19 trillion, having risen over a trillion each year of the Obama administration.

This article will examine US economic status, and obvious solutions promoted by many of America’s brightest minds since Benjamin Franklin wrote a pamphlet how colonial Pennsylvania operated its government without taxes, and which we could easily do today.

Let’s examine just some of the facts of the current US economy that demonstrates it’s criminal status:

For Americans still zombiefied to “believe” in America, please embrace the reality that 40% of US children live at least one year of their lives in under-measured poverty, while oligarchs most responsible literally laugh in grandiose glee of the poverty they euphemise as “income inequality.” Please absorb this 1-minute reality check:

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