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Bank Of International Settlements Sees US Debt/GDP At Over 400% By 2040

Tyler Durden's picture





 

It's one thing to hear fringe bloggers raving breathlessly against the collision course that the US economy is on. It is something else to see the Bank of International Settlements call for the baseline projection for US debt/GDP to hit over 400% by 2040. And this excludes the bankrupt GSEs, bankrupt Social Security, and the soon to be bankrupt Medicare. In a must read report, the BIS (of the central bankers' central bank) provides the much needed segue to the work of Reinhart and Rogoff, and in not so many words confirms that the entire developed world is now bankrupt on a discounted basis. With Debt/GDP ratios for virtually everyone expected to jump to over 400% in the bank's baseline scenario, it is no surprise why the Dow may well hit 1 quadrillion on nothing but Weimar and Zimbabwean ponzification, before it crashes instantaneously to zero. We exaggerate about the quadrillion, we do not exaggerate about the sovereign default. The current and previous administrations have doomed this country, just as all other administrations of the developed world have done the same, in order to bail out the banking system, in the greatest fatally flawed private-public risk transfer experiment ever attempted. Those who will walk out of it with virtually infinite wealth are about 0.1% of the US population (the same people who tell you now that all is well, and that their bonuses are fully justified). Those who won't, and will end up doing bad things to the aforementioned cohort, is everyone else. And the "everyone else" is getting angrier by the day, as they realize just how massive the wealth transfer scam truly is... if only they could tear themselves away from the iCrap, watching Tiger Woods' nonsensical Nike ads, or glower in schadenfreude as Simon Cowell rips another wanna be singer from head to toe.

Some key snippets from the BIS report:

Should we be concerned about high and sharply rising public debts? Several advanced economies have experienced higher levels of public debt than we see today. In the aftermath of World War II, for example, government debts in excess of 100% of GDP were common. And none of these led to default. In more recent times, Japan has been living with a public debt ratio of over 150% without any adverse effect on its cost. So it is possible that investors will continue to put strong faith in industrial countries’ ability to repay, and that worries about excessive public debts are exaggerated. Indeed, with only a few exceptions, during the crisis, nominal government bond yields have fallen and remained low. So far, at least, investors have continued to view government bonds as relatively safe.

But bond traders are notoriously short-sighted, assuming they can get out before the storm hits: their time horizons are days or weeks, not years or decades. We take a longer and less benign view of current developments, arguing that the aftermath of the financial crisis is poised to bring a simmering fiscal problem in industrial economies to boiling point. In the face of rapidly ageing populations, for many countries the path of pre-crisis future revenues was insufficient to finance promised expenditure.

There is no need to repeat just how horrendous the fiscal deficit picture is. Yet we will:

Overall fiscal balances have been deteriorating sharply – by 20–30 percentage points of GDP in just three years. And, unless action is taken almost immediately, there is little hope that these deficits will decline significantly in 2011. Even more worrying is the fact that most of the projected deficits are structural rather than cyclical in nature. So, in the absence of immediate corrective action, we can expect these deficits to persist even during the cyclical recovery.

Based on a very comprehensive data set, Reinhart and Rogoff (2009a) report that three years after a typical banking crisis the absolute level of public debt is on average about 86% higher than prior to the crisis. In those countries where the crisis was most severe, debt almost trebled. This time around, several countries are beyond this historical average: Ireland with increases in public debt of 98% between 2007 and 2009; and the United Kingdom with projected rises of 111% by 2011. Meanwhile, the United States and Spain – with projected increases of 75% and 78%, respectively, by 2011 – are not far behind.

We doubt that the current crisis will be typical in its impact on deficits and debt. The reason is that, in many countries, employment and growth are unlikely to return to their pre-crisis levels in the foreseeable future.8 As a result, unemployment and other benefits will need to be paid for several years, and high levels of public investment might also have to be maintained

It also bears repeating that recently the Bank of England estimated that the total loss in output as a result of the banking crisis could be large as $200 trillion. That's a lot of money.

Next, the BIS covers a favorite topic of ours, which continues to get virtually no coverage in the mainstream media - the increasingly problematic demographic shift, as all those deferred retirement obligations will finally need to start getting paid out.

More worryingly, the current expansionary fiscal policy has coincided with rising, and largely unfunded, age-related spending (pension and health care costs). Driven by the countries’ demographic profiles, the ratio of old-age population to working-age population is projected to rise sharply. Interestingly, this rise is concentrated in countries such as Japan, Spain, Italy and Greece, which are already laden with relatively high debts (Graph 2, left-hand panel). Added to the effects of population ageing is the problem posed by rising per capita health care costs.

This leads us to the obvious conclusion that any assessment of the government fiscal situation based on a short-term perspective is incomplete and at best misleading. A key question is to what extent such accrued liabilities should be reflected in debt estimates. Concerns about both fiscal sustainability and intergenerational equity demand that the accumulated net discounted value of all future revenues and expenditure commitments scheduled in current laws be added to the current debt stock. Currently, however, there is no unique source providing such estimates. And uncertainty about future policy, demography and productivity growth raises issues about how this information should be presented and used (see eg Auerbach (2008) for a discussion).

That said, existing studies report that the magnitude of the long-term fiscal imbalance – the present value of unfunded liabilities arising from ageing – is very large. Hauner et al (2007) estimate the change in the primary balance required to equate the net present discounted value of all future revenues and non-interest expenditures to the debt levels prevailing at the end of 2005 for seven major industrial countries (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States). The authors report that in order for these countries to pay off all their financial liabilities, they would require an average improvement in their budget balance excluding interest payments of 4.5% of GDP. For the United States and Japan, the estimate is 6.9% and 6.2%, respectively.

The persistent stickiness of low interest rates is another troubling point, and the BIS discusses this as well.

So far, the build-up of public debt in industrial countries has taken place against the backdrop of an exceedingly low interest rate environment. Despite low inflation, the real interest rate (in effective terms) at which governments are able to finance their deficits and roll over outstanding debt obligations has been falling since the late 1990s, reaching almost zero in some countries in the wake of the monetary policy response to the financial crisis (Graph 3, left-hand panel). However, as the graph reveals, the situation is changing quickly even without a change in monetary policy-controlled interest rates. Real borrowing rates rose through 2009, and are poised to continue increasing with the reversal of the current zero interest rate policy. Added to this is the fact that the crisis is likely to reduce the potential output growth rate for some time to come (Cecchetti and Zhu (2009)).

The right-hand panel of Graph 3 is indicative of the severity of the problems that governments face. It plots a measure of the difference between the real interest rate and real growth on the horizontal axis and the ratio of the primary surplus to total debt on the vertical axis. The higher the differential between the real interest rate and potential output growth, the larger the required structural primary surplus as a proportion of the previous-period debt level needed to maintain a stable debt/GDP ratio. Turning to the graph, for debt/GDP to remain stable, a country must be above the 45-degree line on the graph (which appears relatively flat due to the differences in the horizontal and vertical scale). The data show that the current fiscal policy is unsustainable in every country in the graph. Drastic improvements in the structural primary balance will be necessary to prevent debt ratios from exploding in future.

And if the last chart was not enough to stop you dead in your tracks, the next one is the piece de resistance.

Presented without commentary:

Well, one little comment - essentially at this point the entire world is bankrupt. Yet the bankers will keep on trending the market higher and higher on ever declining volumes, to perpetuate the illusion that things are getting better. If that means that GETCO will quote a market of 1,000,000 x 1,000,000,000 for 2 shares of SPY at some point in the future, we would not be surprised. It is merely an artifice for the financial kleptocrats to cash out from as high a point as possible as they try to sucker ever greater numbers of people into the parabolic phase of the ponzi. Yet the numbers don't lie. No matter what Obama does, no matter how he spins the CBO data, or how much healthcare reform is presented as revenue generating, the final outcome is now certain, and it involves the chain bankruptcies of every developed nation. And since the developed world is merely a cheap source of commodities and processed products for the developed world, the BRICs of the world will be next.

Previously, few dared to discuss the ponzi openly. With the BIS now getting into the fray, the issue of sovereign insolvency is now front and center. Of course, few will dare to forecast when the great unravelling will begin. And neither will we, suffice to say that as more and more people read disclosure such as the above, coming from the most legitimate of financial institutions, the more people will awake to the true cataclysm that has now enveloped Western society, which if the Roman empire was any indication, is in last days. Except unlike the Roman case study, the barbarians are not at the gate: they represent 90% of the population of America itself and are already inside the gate. And they are getting angrier with each passing day.

Full must read BIS report link.

 


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Fri, 04/09/2010 - 13:56 | Link to Comment AnonymousMonetarist
AnonymousMonetarist's picture

Thank God we'll all be billionaires by then!

Fri, 04/09/2010 - 17:30 | Link to Comment caconhma
caconhma's picture

BIS is so wrong. The USA will be there well before 2015 or we might have a name change.

Take care.

Sat, 04/10/2010 - 13:40 | Link to Comment Crab Cake
Crab Cake's picture

All hail Octavia!

Sat, 04/10/2010 - 01:50 | Link to Comment Bear
Bear's picture

Damn ... I'm still holding my Money Markets waiting for the Great Deflation

Fri, 04/09/2010 - 13:56 | Link to Comment arnoldsimage
arnoldsimage's picture

errrr... the united states will not be around in 30 years. sorry to burst your bubble.

Fri, 04/09/2010 - 16:51 | Link to Comment Divided States ...
Divided States of America's picture

Yup, Planet Earth may become a wasteland by then

Fri, 04/09/2010 - 17:31 | Link to Comment Call_me_Al
Call_me_Al's picture
War. War Never Changes.
Sat, 04/10/2010 - 12:41 | Link to Comment Missing_Link
Missing_Link's picture

WTB Pip-Boy 3000 PST

Fri, 04/09/2010 - 17:29 | Link to Comment crosey
crosey's picture

Arnold, who is your avatar?!

Sat, 04/10/2010 - 21:15 | Link to Comment Hephasteus
Hephasteus's picture

It'll be a round but it'll be ripped to shreds by a massive quake through the apalachians. Everything from chicago to the gulf will be a wreck.

Fri, 04/09/2010 - 13:57 | Link to Comment Mako
Mako's picture

It's over.

All you guys are complaining about the amount of debt taken on, well the only way the system survives is if someone takes on more and more at an exponential rate.  There is only one problem after about 60 years exponential growth is a bitch.  

It was a pyramid scheme from the beginning, I don't know why everyone is complaining now. 

Fri, 04/09/2010 - 18:36 | Link to Comment BS Inc.
BS Inc.'s picture

I complain because I can. Also, one hopes it will help build credibility post-collapse to have been a complainer rather than one of those who just went along with the idea that all was still well.

Fri, 04/09/2010 - 13:57 | Link to Comment Hephasteus
Hephasteus's picture

It's 2030? Because there's so much hidden crap if it's not at 190% right now I'll eat my hat.

Fri, 04/09/2010 - 16:44 | Link to Comment JW n FL
JW n FL's picture

http://www.ustreas.gov/tic/mfh.txt

 

Date Debt Held by the Public Intragovernmental Holdings Total Public Debt Outstanding

 

              

                                  

http://www.treasurydirect.gov/NP/NPGateway

 

12/29/2006 4,901,046,516,367.78 3,779,177,863,718.40                   8,680,224,380,086.18

 

 

01/02/2008 5,130,778,241,224.70 4,079,809,202,837.77                   9,210,587,444,062.47

 

 

01/02/2009

6,320,066,198,644.34 4,307,895,097,286.33                  10,627,961,295,930.67

 

 

12/31/2009 7,811,008,785,487.30 4,500,340,892,024.73                  12,311,349,677,512.03

 

 

Fri, 04/09/2010 - 20:12 | Link to Comment AssFire
AssFire's picture

Are we supposed to be impressed with the numbers?? I thought postings were to convey some meaning...wait here is a good one for you: 11/27/2006 13,827,635,252,840,3262,937,624,372,947,234,372 JW is a LOSER.

Sat, 04/10/2010 - 02:19 | Link to Comment Bear
Bear's picture

It's code! Didn't you see "Knowing" ... decode the numbers and you will know when The End will come.

Sat, 04/10/2010 - 04:19 | Link to Comment merehuman
merehuman's picture

i would rather come at the end.

Sat, 04/10/2010 - 20:43 | Link to Comment KevinB
KevinB's picture

And after more than 19 seconds!

 

Sat, 04/10/2010 - 02:19 | Link to Comment Bear
Bear's picture

 

Malaysia - 11 Billion ... We must give Treasuries away as foreign aid

 

Fri, 04/09/2010 - 13:58 | Link to Comment carbonmutant
carbonmutant's picture

Sounds like we need a "Bad Nation" that everybody can dump their bad paper on...

Fri, 04/09/2010 - 14:17 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

Lichtenstein, or however it is spelled.

Really, at some point isn't Jubilee the only answer?  However, I think it probably comes after the first three events on this list:

  1. Deflation
  2. Inflation
  3. War
  4. Jubilee
  5. Rapture
Fri, 04/09/2010 - 17:03 | Link to Comment Miles Kendig
Miles Kendig's picture

Then drop it like an old Vegas hotel and start over again.

Fri, 04/09/2010 - 17:13 | Link to Comment Mad Max
Mad Max's picture

All signs are pointing to the US as being the selected "bad nation."

Fri, 04/09/2010 - 17:35 | Link to Comment Crab Cake
Crab Cake's picture

I vote Germany.  Wait that's been done twice already.

How about China?

Fri, 04/09/2010 - 13:59 | Link to Comment SayTabserb
SayTabserb's picture

Excessively alarmist, caused by not reading Prof. Krugman's column this morning and drinking weak coffee. Prof. Special K assures us that government "penny pinching" is the real problem, a failure to take to heart the Keynesian solution to all things cyclical. All we need to do is to reverse the arrow of time to 1945, when the U.S. knew how to take control by becoming the world's factory and shipping goods all over the world to demolished countries. The crazy BIS is assuming this is NOT 1945, and that the U.S. economy is a hollowed-out shell based on borrowing and government bailouts. No wonder they got it so far wrong!

Fri, 04/09/2010 - 17:38 | Link to Comment Call_me_Al
Call_me_Al's picture

Prof. K-man also kinda sidestepped the issue of what it took to take that amount of debt in 1940s. I do not quite understand if he presumes that modern investors would gobble up modern 'non-war' bonds with good enough appetite to buy that much of gov. debt, esp. while they know from the same prof's musings what should happen to the money.

Sat, 04/10/2010 - 21:10 | Link to Comment deadparrot
deadparrot's picture

Ummm, yeah! It's easier to sell bonds to people when it is for a noble cause like fighting a just war. If some govt flunky shows up at my door to sell save the boomer bonds, I, like most people will spit in his face. Why do you think the govt is enacting all this legislation to grab offshore assets and stuff 401ks full of treasuries. Politicians may be the world's worst money managers, but they are experts when it comes to human nature.

Sat, 04/10/2010 - 11:02 | Link to Comment Wilderman
Wilderman's picture

I love special K's tinkerbell outlook.

We'll just skip from 1930 to 1945, avoiding all the bad stuff in between, and everything will be fine!

Now, everyone clap your hands, and say with me "I believe in fairies, I believe in fairies, I believe in fairies..."

Fri, 04/09/2010 - 14:00 | Link to Comment Rogerwilco
Rogerwilco's picture

How can this report be construed as troubling or negative news? A 400% debt to GDP ratio means the party will continue with bailouts for all. Japan writ large. A big positive for equities and commodities if you ask me (but nobody does).

Sat, 04/10/2010 - 08:32 | Link to Comment cossack55
cossack55's picture

Check graph 4 again.  According to the charts Japan wins with a high score of 600.  You guys really need to spend more time on the sports blogs.

Overandout

Sat, 04/10/2010 - 10:18 | Link to Comment Carl Marks
Carl Marks's picture

This so called debt is a good thing because the government can take over the economy under the commerce clause and everything will be fine.

Fri, 04/09/2010 - 14:00 | Link to Comment Crummy
Crummy's picture

Let me do some calculations here.... Let's see, zero divided by zero...

Fri, 04/09/2010 - 17:38 | Link to Comment Crab Cake
Crab Cake's picture

is undefined.

Fri, 04/09/2010 - 21:35 | Link to Comment Pure Evil
Pure Evil's picture

Only on a calculator, ..., as for the bung holes in D.C., well that's a rhetorical question.

Sat, 04/10/2010 - 14:58 | Link to Comment CombustibleAssets
CombustibleAssets's picture

NO, no, no it's not zero. It's negative and negative numbers are now a commodity... like gold.

Everybody is swapping and trading each others debt. It's the new economy. More debt means more money.

Sat, 04/10/2010 - 17:13 | Link to Comment RockyRacoon
RockyRacoon's picture

Hey, not to be an alarmist, but, your bag is on fire.

Sun, 04/11/2010 - 15:09 | Link to Comment CombustibleAssets
CombustibleAssets's picture

Hey, reading ZH always gets me hot under the collar.

Fri, 04/09/2010 - 14:00 | Link to Comment FrankIvy
FrankIvy's picture

2040?

I don't know.  Hard to believe the U.S. will exist in its current state by then.

Fri, 04/09/2010 - 17:53 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Or as "a" state by then.

Fri, 04/09/2010 - 21:47 | Link to Comment Pure Evil
Pure Evil's picture

That's the whole point.

If you believe any of the crap printed on Alex Jones' Prison Planet, the crem de la crem of the elite world known to the pitchfork crowd as the Bilderberger group has decided that the global recession should continue for at least one more year.

And, as pointed out on ZH for the last year the whole run up in the ponzi markets is just a ruse to sucker in the, well, ahem, the suckers, before the Vampire Squid, et al, jump in and devour the victims like a school of piranhas.

With the whole end game being the development of regional governments controlled through the Master Blasters in the UN. Who control barter town?

With three regional spheres of influence including the North American Union, the European Union, and some Pan-Asian Union consisting of Japan, China and southeast asia.

Looks more like Oceana, Eurasia, and Eastasia to me.

Sat, 04/10/2010 - 08:34 | Link to Comment cossack55
cossack55's picture

Say PE. Would you happen to know the price of an acre of land next to the now defunct Yucca Mountain facility?

Fri, 04/09/2010 - 14:01 | Link to Comment bugs_
bugs_'s picture

Exactly no way this party goes on to 2040.

 

Fri, 04/09/2010 - 20:59 | Link to Comment docj
docj's picture

Bingo.  We don't even make it through the decade.

Collapse/Jubilee/Default/World-War-IV comes well before 2040.

Sat, 04/10/2010 - 17:16 | Link to Comment RockyRacoon
RockyRacoon's picture

By 2012 we will have a new calendar anyhow.   Can't start a right and proper New World Order based on a stupid calendar based on whats-his-name's birth.  Gotta start all over.

Fri, 04/09/2010 - 14:05 | Link to Comment akak
akak's picture

When this whole false, debt-fueled and debt-filled economy AND monetary system finally collapses, somehow saying "I told you so!" to the innumerable sheep and corrupt establishment defenders will be small consolation.

I will, however, get a bit more satisfaction by then asking them:

"Got gold?"

Sat, 04/10/2010 - 11:04 | Link to Comment Vendetta
Vendetta's picture

ditto

Fri, 04/09/2010 - 14:03 | Link to Comment BlackBeard
BlackBeard's picture

hmmm... lots of hockeysticks....

Indeed, there are many gun owners here.

Fri, 04/09/2010 - 14:05 | Link to Comment AssFire
AssFire's picture

If you count the 5 trillion Fanny Mae (2008 figure) and add it to the 12.7T figure...

17.7 trillion/13.8trillion= 125%...(Greece is 108%)

Just by the acknowledged debts the game is over.

Fri, 04/09/2010 - 17:04 | Link to Comment JW n FL
JW n FL's picture

Reagan ran up a 125% + National debt number and we made it 30 years post that event... but yes, this time its all over! this time is different!

Fri, 04/09/2010 - 18:06 | Link to Comment AssFire
AssFire's picture

No, it wasn't that high under Reagan (try 60%)...It was almost that high (125%) in 1945 under Truman. Back when there was industry producing goods for the war effort. (vs now where money is created and distributed producing nothing.)

Fri, 04/09/2010 - 19:16 | Link to Comment JW n FL
JW n FL's picture

Ronald Wilson Reagan (February 6, 1911 – June 5, 2004) was the 40th President of the United States (1981–1989) and the 33rd Governor of California (1967–1975).

http://en.wikipedia.org/wiki/Ronald_Reagan

 

09/29/1989 2,857,430,960,187.32 09/30/1988 2,602,337,712,041.16 09/30/1987 2,350,276,890,953.00 09/30/1986 2,125,302,616,658.42 09/30/1985 * 1,823,103,000,000.00 09/30/1984 * 1,572,266,000,000.00 09/30/1983 * 1,377,210,000,000.00 09/30/1982 * 1,142,034,000,000.00 09/30/1981 * 997,855,000,000.00

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm

so..... 2,857,430,960,187.32 divided by 997,855,000,000.00 ='s? lets call it 1.8... so a 180%? or are these numbers to, too clear for you sweet heart?

try shutting the fuck up and reading some more... you are the one of the sheep... you are the problem, all hot air with no knowledge to go with.

Fri, 04/09/2010 - 20:06 | Link to Comment AssFire
AssFire's picture

Well the Democrat can't do anything but name call? That is how ya'll are trained attack and undermine. Try editing some of your posts, others here complain about you spewing your unintelligible pastes with multi line spacing. Here is the link, now grow up punk.

http://www.usgovernmentspending.com/federal_debt_chart.html

Fri, 04/09/2010 - 20:56 | Link to Comment docj
docj's picture

Chill, AF - he's not even talking about the same numbers as the rest of us.  So on top of all his other, uh, traits he's evidently lacking a bit in reading comp.

Join me in some (physical) popcorn?

Sat, 04/10/2010 - 01:05 | Link to Comment JW n FL
JW n FL's picture
by docj
on Fri, 04/09/2010 - 19:56
#294014

Chill, AF - he's not even talking about the same numbers as the rest of us.  So on top of all his other, uh, traits he's evidently lacking a bit in reading comp.

Join me in some (physical) popcorn?

 

************* I was responding to the below.*******************   by AssFire
on Fri, 04/09/2010 - 13:05
#293527

 

If you count the 5 trillion Fanny Mae (2008 figure) and add it to the 12.7T figure...

17.7 trillion/13.8trillion= 125%...(Greece is 108%)

Just by the acknowledged debts the game is over.

 

***************Hence my comments.*************

 

Some have tried to change the subject matter... but the numbers quoted verses what was offered are correct, in content and comprehension.....

Sat, 04/10/2010 - 13:15 | Link to Comment docj
docj's picture

The rest of the thread is talking about Debt/GDP - you're not.

They are therefore not in context (not content) and your comprehension still sucks.

Now please, shut up and go away.

Sat, 04/10/2010 - 16:23 | Link to Comment JW n FL
JW n FL's picture
by docj
on Sat, 04/10/2010 - 12:15
#294673

The rest of the thread is talking about Debt/GDP - you're not.

They are therefore not in context (not content) and your comprehension still sucks.

Now please, shut up and go away.

 

docj,

        Once again... below is a representation of Debt... what it is not is a representation of the GDP to the National Debt... Hence my response. I understand that you seem hell bent on spin as opposed to being honest, for some reason... maybe you can get a Job inside the beltway, given your luv of spin?

Best of luck with that, JW

 

by AssFire
on Fri, 04/09/2010 - 13:05
#293527

If you count the 5 trillion Fanny Mae (2008 figure) and add it to the 12.7T figure...

17.7 trillion/13.8trillion= 125%...(Greece is 108%)

Just by the acknowledged debts the game is over.

Sun, 04/11/2010 - 09:43 | Link to Comment docj
docj's picture

Actually, no - I'm not hell bent on anything more than sticking to the subject - which you have mis-categorized as "spin".  So I'll leave you alone with your Reagan-sucks fettish, and wish you Joy with that.

Go in peace.  Go with God.  But go.  Now.

Fri, 04/09/2010 - 20:55 | Link to Comment TomB
TomB's picture

Your data is incorrect.

Debt was around $2,86 billion in 1989

GDP was about $5,44 billion in 1989

Sat, 04/10/2010 - 01:04 | Link to Comment JW n FL
JW n FL's picture
by TomB
on Fri, 04/09/2010 - 19:55
#294010

Your data is incorrect.

Debt was around $2,86 billion in 1989

GDP was about $5,44 billion in 1989

************* I was responding to the below.******************* by AssFire
on Fri, 04/09/2010 - 13:05
#293527

 

If you count the 5 trillion Fanny Mae (2008 figure) and add it to the 12.7T figure...

17.7 trillion/13.8trillion= 125%...(Greece is 108%)

Just by the acknowledged debts the game is over.

 

***************Hence my comments.*************

 

Some have tried to change the subject matter... but the numbers quoted verses what was offered are correct, in content and comprehension.....

Sat, 04/10/2010 - 04:24 | Link to Comment merehuman
merehuman's picture

hey guys, please..quit moving the deck chairs.I am trying to hear the music and oh boy these players on the titanic are good!

Sat, 04/10/2010 - 04:24 | Link to Comment merehuman
merehuman's picture

hey guys, please..quit moving the deck chairs.I am trying to hear the music and oh boy these players on the titanic are good!

Sat, 04/10/2010 - 01:10 | Link to Comment AssFire
Sat, 04/10/2010 - 11:45 | Link to Comment Kayman
Kayman's picture

Reagan may well have increased the absolute debt to the tune of 125%, depending on the baseline starting point, but he certainly did not reach a 125% Debt to GDP ratio.

Your ability to pay off National Debt depends entirely on National Income. The exception being if you own a printing press, and you still retain credibility. 

And as pointed out here, the U.S. was a manufacturing nation, both in 1945 and during the Reagan years. Now the U.S. is, indeed, an nation of Governments, Government employees, and Welfare "Bankers" - peddling desperately to inflate paper assets to match the paper liabilities (present and future).

And, of course, we are distributors and retailers for the new (U.S. created and seed-financed) manufacturing nation- CHINA, under their vendor financing scheme.

And BIS -thanks for reading ZeroHedge. Perhaps you should acknowledge your sources.

Another ZH "fringe blogger"

 Kayman

 

Sat, 04/10/2010 - 12:49 | Link to Comment JW n FL
JW n FL's picture

I agree with the production numbers being farrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr stronger under President Reagan and as well his debt spending was mostly at home... as opposed to sending our money to the sand trap.

Fri, 04/09/2010 - 17:43 | Link to Comment Call_me_Al
Call_me_Al's picture

1. Soviet bloc collapse, new commodities/markets/consumers.

2. China.

3. Computers/internet.

Let me see... Do you predict anything positive for global trade/productivity on comparable scale?

Fri, 04/09/2010 - 19:40 | Link to Comment JW n FL
JW n FL's picture

Cheap credit... the begining of Bonding anything and everything?

***** "Since its development in the late 1980s, asset securitization has become the most desired option for building capital structure of many corporations." *****

http://www.directessays.com/viewpaper/105474.html

and then the conservative, Moral Conservatives who would save us from abortion but spend more money than a drunken wife with a Black card at the mall when you just go caught cheating...

http://www.lafn.org/gvdc/Natl_Debt_Chart.html

But to answer your question... inflating the stock market to look like it is GREAT! so that the dumb money will come back... is not a true gain it is a continuation of what was...

The energy infrastructure push... or green / alternative... tree hugger, hippie liberal stuff... naaaaaaa! watch this slick and get back to me... after you catch the fuck up a lil... http://www.youtube.com/watch?v=wYuLjGQQ-jg&feature=PlayList&p=C1B06538A32767DF&playnext_from=PL&index=132

and so that you can see a more mainstream approach... http://www.youtube.com/watch?v=JaF-fq2Zn7I&feature=PlayList&p=C1B06538A32767DF&playnext_from=PL&index=161

we know Bill is a commie loven tree hugger hippie...

 

Fri, 04/09/2010 - 20:17 | Link to Comment AssFire
AssFire's picture

Look dude, no one wants your suggested reading lists. All you do is cuss and paste. I hope your welfare/ unemployment checks bounce.

Fri, 04/09/2010 - 21:01 | Link to Comment The Patagonian
The Patagonian's picture

Well, gee, thanks

There goes my VA disability check - bouncy bounce

Hey, brother can you spare a dime?

No?

I can set up a firebase for food!

or even for two wooden nickels and three hots and a cot!

No?

Damn, one of these days I might just reach the breaking point and take all this good military training and accidently mistake all of these bankers and traders as the enemy - desparate times=desparate measures

Fri, 04/09/2010 - 21:05 | Link to Comment docj
docj's picture

...one of these days I might just reach the breaking point and take all this good military training and accidently mistake all of these bankers and traders as the enemy...

What makes you think that would be a "mistake"?

Fri, 04/09/2010 - 22:29 | Link to Comment JW n FL
JW n FL's picture
by AssFire
on Fri, 04/09/2010 - 17:06
#293714

 

No, it wasn't that high under Reagan (try 60%)...It was almost that high (125%) in 1945 under Truman. Back when there was industry producing goods for the war effort. (vs now where money is created and distributed producing nothing.)

 

You where proven wrong now you want to be a name caller...

 

Well bless your ignorant sheepish heart... BAAAAAAAAAAA!

 

Like I said earlier... read, get a clue and come back when you have somehting to offer other than hot air.

Sat, 04/10/2010 - 02:35 | Link to Comment Hephasteus
Hephasteus's picture

Poor reagan. He's going to have tecumseh's foot up his ass for his nuclear bullying.

Fri, 04/09/2010 - 22:30 | Link to Comment JW n FL
JW n FL's picture
by AssFire
on Fri, 04/09/2010 - 19:17
#293958

Look dude, no one wants your suggested reading lists. All you do is cuss and paste. I hope your welfare/ unemployment checks bounce.

by AssFire
on Fri, 04/09/2010 - 17:06
#293714

 

No, it wasn't that high under Reagan (try 60%)...It was almost that high (125%) in 1945 under Truman. Back when there was industry producing goods for the war effort. (vs now where money is created and distributed producing nothing.)

Sat, 04/10/2010 - 03:14 | Link to Comment Burnbright
Burnbright's picture

"Reagan ran up a 125% + National debt number and we made it 30 years post that event..."

http://en.wikipedia.org/wiki/File:USDebt.png

YOU are wrong, get it? Now stop crying.

Sat, 04/10/2010 - 11:54 | Link to Comment JW n FL
JW n FL's picture

by Burnbright
on Sat, 04/10/2010 - 02:14
#294335

 

"Reagan ran up a 125% + National debt number and we made it 30 years post that event..."

http://en.wikipedia.org/wiki/File:USDebt.png

YOU are wrong, get it? Now stop crying.

 

Burnbright,

                Sarcasm and use of colorful language off... although, its much more fun for me that way... but popular demand dictates some amount of decorum.

 

 

by JW n FL
on Fri, 04/09/2010 - 18:16
#293870

 

Ronald Wilson Reagan (February 6, 1911 – June 5, 2004) was the 40th President of the United States (1981–1989) and the 33rd Governor of California (1967–1975).

http://en.wikipedia.org/wiki/Ronald_Reagan

 

09/29/1989 2,857,430,960,187.32

09/30/1988 2,602,337,712,041.16

09/30/1987 2,350,276,890,953.00

09/30/1986 2,125,302,616,658.42

09/30/1985* 1,823,103,000,000.00

09/30/1984* 1,572,266,000,000.00

09/30/1983* 1,377,210,000,000.00

09/30/1982* 1,142,034,000,000.00

09/30/1981* 997,855,000,000.00

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm

so..... 2,857,430,960,187.32 divided by 997,855,000,000.00 ='s? lets call it 1.8... so a 180%?

I hope that you, Burnbright found the  sourced and sited information useful. Until I backed into these numbers I had no idea either... I was not born with the information, as well my personal fondness of President Reagan among our other (of my short era) Presidents is un-matched... As I was just a child when President Reagan held office, I may have romanticized President Reagan’s reign somewhat, so I will mention my least favorite moment verse the most positive moment… from my childhood memories of course which may allow for some chatter as the quality of the memories surely reflect my views then, or my true views.

 

My Favorite complaint with President Reagan, was when he cut benefits to our armed forces personal. My uncle was / is a Recondo (Ranger) ( http://en.wikipedia.org/wiki/Recondo) during the Vietnam era. My uncle was on patrol behind enemy lines recording and transmitting enemy troop movement when he was shot in the head. With that said a MASH unit saved his life and he came home somewhat less the man he initially entered into service as. But Reagan decided to many Vet’s where in fact milking the system and that gravy train of overly funded entitlements needed to end, thusly when I was 11 – 12 years old my uncle… unable to provide for himself moved in with me… after school I would hang out with him and keep him company, help him with any needs and watch him suffer painfully… The headaches where debilitating for him, his peripheral vision was gone so he was / is prone to walking into things or driving into things whichever came first. But Reagan cutting my Uncles benefits, for my Uncle who had been shot in the head because my Uncle was milking the over rich benefits offered to that point was at the very least comical.

 

My favorite memory or President Reagan was when “Libyan leader Muammar Gaddafi and his family rushed out of their residence in the Bab al Aziziya compound moments before the bombs dropped. Gaddafi escaped injury but his 15-month-old adopted daughter Hanna was killed, and two of his sons were injured.” ( http://en.wikipedia.org/wiki/Bombing_of_Libya ) I remember taking a great amount of pride in what our President had done, in my child like view he had pulled out all the stops and was chasing the bad guys like a President should.   http://www.youtube.com/watch?v=EFves5XqBJU&feature=related  This statement… I watched in whole, I am sorry I could not find the video in total for you, Burnbright.

 

So, my least and most favorite childhood memories of President Reagan.

 

But to be clear President Reagan did in fact increase the National Debt by over 180%.

 

I had to share this… I watched it and it was fantastic a time capsule http://www.youtube.com/watch?v=zdngN5gAVRs&feature=related .

Fri, 04/09/2010 - 14:04 | Link to Comment stardust669
stardust669's picture

*Gulp* O_o

Fri, 04/09/2010 - 14:06 | Link to Comment EllisWyattOTC
EllisWyattOTC's picture

First we will become effectively serfs for the states goal of "social justice", Next we will experience a series of global fiscal supernovas, sad thing is it can not happen anotherway. The only hope is that we can learn from our mistakes when everything is being rebuilt from scratch. We are all Hayekians now!

Sat, 04/10/2010 - 11:55 | Link to Comment Kayman
Kayman's picture

Barry looks too much like a student of Schumpeter and Karl for my taste.

Fri, 04/09/2010 - 14:06 | Link to Comment BlackBeard
BlackBeard's picture

They COULD begin to fix the problem by letting all the current bullshit collapse and then start over.  But, we're a little bit too far into this game of monopoly and nobody wants to give up their Park Place and Board Walk.

Fri, 04/09/2010 - 14:11 | Link to Comment Mako
Mako's picture

- The end has always been know, why because the underlying equation used has not changed.

- Exactly when is the only question

- Around 60-80 years or a generation, the equation must resolve to it's final conclusion.  The last time it cost 100 million this time it will be billions.

Fri, 04/09/2010 - 18:53 | Link to Comment mikla
mikla's picture

The last time it cost 100 million this time it will be billions.

Aren't we off a few zero's?

Fri, 04/09/2010 - 20:52 | Link to Comment Hulk
Hulk's picture

He is speaking of people dying

These exponential functions we are playing with on all fronts don't bode well for humanity,,,ever

Fri, 04/09/2010 - 21:46 | Link to Comment mikla
mikla's picture

Ooops, my bad.

Yes, not millions, but billions.  We're talking about the Baby Boomer generation, plus younger collateral damage.

Sat, 04/10/2010 - 16:13 | Link to Comment B9K9
B9K9's picture

Mako, I posted this on GW's blog post:

In other words, according to the most cynical view, the entire debt-money system is a scam ... and should be repudiated.

George, there's this little book called the Bible that chronicles about 5,000+ years of human history. There are countless admonishments against the practice of usury that ALWAYS lead to money-lenders taking possession of forfeited real property that was pledged as collateral.

I think many would be hard pressed to characterize this tome as "cynical". On the contrary, it speaks across thousands of years warning future generations to beware of crimes yet to be committed.

The credit money system at its core is a fraudulent construction. Compounding principle+interest can never be repaid. Basic exponential math dictates that interest expense will always outrun income.

There is not one instance recorded in history where lenders bemoan their fate resulting from usurious practices - the lamentations are always those of borrowers.

To not understand that the final outcome is a design feature is to believe in the "hoocoodanode" explanation. So why is the credit money system allowed in the first place?

***

George & ZH gang, I'm beginning to develop a thesis that economic cycles have nothing to do with fiscal, monetary or any other economic policy. Rather, these cycles are merely a function of the population as a whole becoming educated about what is in essence a fraudulent scam.

Once the people are in on the game, they pull back ie de-lever. It doesn't matter how low Ben keeps mortgage interest rates, or how much money the Fed shovels into equities, or how many times the state controlled media repeats the same green-shoots propaganda.

The people now know the truth, and there ain't nothing the power-elite can do about it except prepare for the crash. Of course, the top dogs have already cashed out @ the top, converted to gold & have shipped their physical bullion off to Zurich & Tel Aviv.

The only real questions remaining are two-fold: (a) will the power elite get to sieze underlying assets - oil reserves, farm lands, etc? and (b) will they be able to keep the money-credit system in place after the reset?

My belief is the answers to both are no; this time around is a real game changer.

Sun, 04/11/2010 - 04:16 | Link to Comment KevinB
KevinB's picture

George & ZH gang, I'm beginning to develop a thesis that economic cycles have nothing to do with fiscal, monetary or any other economic policy. Rather, these cycles are merely a function of the population as a whole becoming educated about what is in essence a fraudulent scam.

Well done, Grasshopper. Now you understand the underlying principle behind folk wisdom such as "rags to rags in three generations", and Kondratieff waves.

Technology changes, climate changes, politics changes, nations change, but human nature is immutable,timeless, and repetitive. As this game has played out before, so it will play out again. 

Sat, 04/10/2010 - 00:46 | Link to Comment DaveyJones
DaveyJones's picture

why do they guys with Park Place and Boardwalk have so many get out of jail free cards?

Sat, 04/10/2010 - 01:12 | Link to Comment Jim_Rockford
Jim_Rockford's picture

LOL, that would be an awesome bumper sticker .... or T-Shirt (and on the back: "Got Hedge?")

Sat, 04/10/2010 - 11:59 | Link to Comment Kayman
Kayman's picture

Because they can borrow from the bank at zero with out collateral. 

Fri, 04/09/2010 - 14:11 | Link to Comment Double down
Double down's picture

Holy Flurking Schnit!

Fri, 04/09/2010 - 17:12 | Link to Comment George the baby...
George the baby crusher's picture

Gesundheit!

Fri, 04/09/2010 - 14:11 | Link to Comment john_connor
john_connor's picture

With Debt/GDP ratios for virtually everyone expected to jump to over 400% in the bank's baseline scenario, it is no surprise why the Dow may well hit 1 quadrillion on nothing but Weimar and Zimbabwean ponzification, before it crashes instantaneously to zero.

Exactly. 

Fri, 04/09/2010 - 14:13 | Link to Comment A Man without Q...
A Man without Qualities's picture

If the BIS publishes this, then it's been agreed with the big boys.  I think it sets the stage for mass debt repudiation plus currency devaluations.  Got to be positive for hard assets, but is going to screw insurance, annuity owners etc.

It will turn the concept of low risk versus high risk on its head. 

Fri, 04/09/2010 - 16:31 | Link to Comment Attitude_Check
Attitude_Check's picture

+1

 

I agree.  There is no-way the BIS publishes this unless something like what you describe is about to occur.  We are now hitting the wall.  I expect all DM's will jointly repudiate all debt claims and issue new currency.  At least the joint DM debts will cancel.  SS promises, state pensions, etc (in $'s) are also canceled.  Any debt-based paper "wealth" will be destroyed.  It will be curious what happens ro $-denominated mortgages however.  I expect that a new debt in the new currency will be forced on all -- to jump-start the "new" banks.

 

Got Gold (offshore?)

Fri, 04/09/2010 - 17:58 | Link to Comment cougar_w
cougar_w's picture

Don't you mean "off shore on another planet"? Because I don't think the usual shores are going to be "off" enough if the BIS is close to correct here.

Sat, 04/10/2010 - 00:49 | Link to Comment DaveyJones
DaveyJones's picture

had the same thought. hope we're wrong

Fri, 04/09/2010 - 14:14 | Link to Comment filletandrelease
filletandrelease's picture

not to worry...33 states now out of money for unemployment benefits.

http://money.cnn.com/2010/04/08/news/economy/state_funds_jobless_benefit...

Fri, 04/09/2010 - 19:24 | Link to Comment Miss Expectations
Miss Expectations's picture

Great helpful hint at the end of the article:

Financing experts suggest that states build up their jobless benefit coffers during strong economic times so that they can draw from them during downturns.

Fri, 04/09/2010 - 14:18 | Link to Comment Assetman
Assetman's picture

Okay... so the Central Banks' Central Bank is saying that we are going full bore on the debt roller coaster to default.

Though it is assumed that we will sail through with little risk of default to 2040?

You would have though the BIS would have illustrated a "wall of default" somewhere on their graphics.  I can only gather they are playing the same game, and are on the same team as the Fed.

Fri, 04/09/2010 - 18:14 | Link to Comment cougar_w
cougar_w's picture

Yup.

Projecting to 2040 is meaningless. Somewhere between today's "OMG" and 2040's "we've been dead a long time" is "Opps I'm dead now". When will that singular day come? Nobody knows.

At some point one the the international playerz (and that player might not even be a recognized nation but merely a rich man acting as a nation) will bail out, pulling in all outstanding contracts and turning paper wealth into hard assets.

And the tide will then turn, in an instant. In a literal hour, or a minute.

Sleeping in the bowels of every primary dealer, every central bank, every clearing house, are computers calculating The Day and arming their financial missiles. They will agree on The Day without ever having exchanged notes or collaborated in any manner because the facts are available to all equally, the math is easy, and they all know their own and everyone else's exposure perfectly. The Day will come, the algos will move in the fog of absolute information asymmetry, on a day when it would seem nobody would sell and everyone would buy because the market never moves but up. A day like any other. A day like today. Sellers will find eager buyers and buyers will seek sellers. The scaffolding will fold up like a broken umbrella in a hurricane.

50 trillion dollars will move from so many Point A to Point B with no single party knowing the entire extent of the move until the dust is settled.

But by then it will be Game Over.

Pick any date in the future. But it won't be 2040. And it might be Monday next.

Fri, 04/09/2010 - 23:26 | Link to Comment nuinut
nuinut's picture

This particular post:

Gold, Oil and Money in the Free Market

made it clear to me recently just how fast and sudden that change could be, when the events of the 70s and 80s are viewed from this angle.

Monday would not be a total surprise.

Sat, 04/10/2010 - 17:33 | Link to Comment RockyRacoon
RockyRacoon's picture

To get a real feel for the situation you have to go back to the original posts of Another.

It's tough slogging but well worth the effort.   Much enlightenment will greet you in your journey!

http://www.usagold.com/goldtrail/archives/another1.html

Sun, 04/11/2010 - 03:29 | Link to Comment nuinut
nuinut's picture

Been there, done that, totally agree.

My point, though, was to direct others to a much more accessible account of the same info.

It has not escaped my notice, however, that a fairly good proportion of those reading ZH seem to prefer their scenarios complicated.

Either way one can't go wrong.

Fri, 04/09/2010 - 14:18 | Link to Comment poorold
poorold's picture

This article is completely missing the point.

 

The BIS can't think OUT OF THE BOX.

 

The FEDERAL RESERVE does NOT use double-entry bookkeeping and the sooner people realize it, the sooner we can all see where this is going.

 

So what if the IMF back the trucks up to the loading docks at the printing factory tonight and load it with dollars for delivery to Greece.

 

Problem solved.

 

We don't actually need the capital back.  Interest payments will suffice.  After all, we never had the capital to begin with.

 

 

So, we keep printing to support the deficits--which really means supporting the population that is not employed in the private sector.

 

I guess that's okay as long as inflation is kept in check.

 

After all, it's not debt that HAS to be repaid, because CLEARLY there is insufficient wealth to invest in all those treasury borrowings to support the deficit.

 

So, practically speaking, there is no debt to repay (thank you Federal Reserve--just remember YOU don't get to keep the REAL INTEREST payment on that FAKE CAPITAL you invested)

 

That being the case, the US probably can make good on its REAL INTEREST PAYMENTS.

 

So, if this is the path that gets followed, where does it lead?

Fri, 04/09/2010 - 14:18 | Link to Comment Comrade de Chaos
Comrade de Chaos's picture

I see a default or print us out scenario in 5 to 15 years, depending on our spending orgy.

Just invision a 2012 movie scene, the huge bell is making its sound, however instead of mass of water a chior of FED boys is proclaiming.. default, default, default.

Fri, 04/09/2010 - 17:14 | Link to Comment Hansel
Hansel's picture

Benron printed ~$1.6T last year.  The default or print us out scenario started last year.

Fri, 04/09/2010 - 18:19 | Link to Comment Postal
Postal's picture

I didn't realize His Squidness had that much ink...

Fri, 04/09/2010 - 14:18 | Link to Comment Segestan
Segestan's picture

Not only is it hard to believe American can continue to exist until 2040 intact , the demographics of america and even the west, will break the nation into factions, a nation bankrupt with no common bond.

Fri, 04/09/2010 - 16:15 | Link to Comment Bankster T Cubed
Bankster T Cubed's picture

2040 eh?   FUCK YOU BIS

we're there yesterday

Fri, 04/09/2010 - 16:36 | Link to Comment Marzen
Marzen's picture

"na na na na na na na na hey hey hey Good Bye! Sayofkingnara USA. It's been fun playing ya." Sincerely, Evelyn De Rothschild

Sat, 04/10/2010 - 11:28 | Link to Comment LeBalance
LeBalance's picture

+1 cord of truth plucked

Fri, 04/09/2010 - 16:51 | Link to Comment john316
john316's picture

Hello,

I am a newbie to economics and I have really enjoyed what I have learned from everyone here. My question is how countries pay each other and settle debt obligations and this would be the perfect opprotunity to ask this.

So let's say our debt is hypothetically 40 trillion by 2040.

1. Would the Fed have to print 40 trillion dollars and pay it off (in hard currency) since that is what China and Japan would require,

or

2. Could the Fed simply credit the accounts of our foreign debt holders electronically like they currently credit the accounts of memeber banks?

I have heard of how dollars are "recycled", which tells me that countries actually take Gold and physical cash to settle these matters and as such any printing by the Fed would be so vast that it would be immediately noticed and blow up the dollar.

Fri, 04/09/2010 - 17:46 | Link to Comment Call_me_Al
Call_me_Al's picture

Far biggest part of that debt is internal. So, it's NOT only or even mostly foreigners who will get paid off in junk money. Guess who will?

Fri, 04/09/2010 - 19:07 | Link to Comment gecko_x2
gecko_x2's picture

This is an excellent question, because that is exactly the problem.

Currently international trade is NOT being settled AT ALL.

Hugo Salinas Price explains it well in this crucial, must hear interview:

 

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2009/10/9_H...

Sat, 04/10/2010 - 03:44 | Link to Comment Burnbright
Burnbright's picture

As far as I understand it the FED may do the printing but they are not the ones that owe anything to anyone, the US government borrows money from the FED to pay its debts.

 

Fri, 04/09/2010 - 16:51 | Link to Comment poorold
poorold's picture

This analysis is patently false for one simple reason:

 

There isn't enough available investable capital to achieve those debt levels.

 

Based on yesterday's article on Zero Hedge, there isn't even enough available capital to support the US's borrowing requirements THIS YEAR.

 

When will people start thinking about the fact that double-entry bookkeeping isn't a requirement for a society to survive and thrive.

Fri, 04/09/2010 - 17:36 | Link to Comment WineSorbet
WineSorbet's picture

Do you really believe what you are purporting?  If you do, why doesn't the Fed just put an ATM in everyones' home that allows them to withdraw money everytime they are low in cash?  Lots of problems solved.

Fri, 04/09/2010 - 18:43 | Link to Comment BS Inc.
BS Inc.'s picture

Thanks for handling that. I was curious what exactly the practical ramifications of the original poster's ideas about double-entry bookkeeping were and your image captured it nicely.

Fri, 04/09/2010 - 19:27 | Link to Comment poorold
poorold's picture

I believe there is absolutely NO WAY the Federal Reserve or Treasury Officials would EVER let there be a hint a anything close to a failed auction.

 

It simply cannot come to pass.

This will have been decided long ago and measures already in place to ensure it won't happen.

 

I also believe there is insufficient demand/capital available to fund the current treasury auctions.

 

Period.

 

And the second piece of information that will not ever be visible (until it is) is exactly how much the Fed absorbs of the treasury auctions that would otherwise fail.

 

I don't believe the part about a successful and productive society being a result of this policy.

 

 

Sat, 04/10/2010 - 20:40 | Link to Comment dumpster
dumpster's picture

funny i thought every one had this machine in the basement .. it works...

mine has been in operation several weeks

order yours

USA Government pot of gold

Chris Dodd

protector Ethe

Box 12321

Washington D.C.  675908-90875

enclose i milion for transfer fees

  a) just say charge it.

 

the government  folks are looking out for the down and out

1) a chicken in every pot

2) a car in every garage

3) obama.. a atm machine in every basement

 

Fri, 04/09/2010 - 17:48 | Link to Comment Madcow
Madcow's picture

There isn't enough available investable capital to achieve those debt levels.

Mobilize Gold @ $20,000 / oz.   Problem solved.

Fri, 04/09/2010 - 16:52 | Link to Comment BoeingSpaceliner797
BoeingSpaceliner797's picture

Edit TD (last sentence, second-to-last paragraph):  "And since the developed world is merely a cheap source of commodities and processed products for the developed world, the BRICs of the world will be next."

Should this be undeveloped?

Fri, 04/09/2010 - 16:59 | Link to Comment JW n FL
JW n FL's picture

So... I guess the obvious.... less dramatic answer.... would be... if borrowing continues at the current pace?

 

But that lacks a certain amount of drama... not enough doom a gloom! or the sky is falling for people to take notice...

 

The end is near! ****Cough! "Bullshit!" Cough!****

 

Public senitment is the only thing that needs to change.... for the borrowing habits of pump and float to change.

 

I am not saying dont be prepared... I am saying that the dow is 11,000.... and that once the general public has been talked into the idea that things are better or getting better the dumb money / suckers / ignorant masses will come back to the markets...

 

All the money sitting... with all the tax credits available for job creation... will eventualy lead to the next bubble.

 

When China gets hit with thier real estate bubble... America will be the stable market of choice for the world... and back to the way it was we will go...

 

Except for the fact that any recovery... would cause a run on oil prices... which will stifle growth... hence the push for alternative power sources... to insure that safety of global trade.

 

We can print our way out of our own debt... we are the "purchaser of last resort" for our own treasuries...

 

Or... the end is near... sell everything... the public will get a clue.... becuase the public by and large is ready or capable of comprehending the truth and what it will take for them to make the shift from a fantasy credit world to a C.O.D. lifestyle...

 

 

Fri, 04/09/2010 - 17:59 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Just a thought. You might wish to reduce the space between your sentences to less than 4 inches so that we can read your post without developing carpal tunnel syndrome from working the mouse.

The actual activity is called "editing" and once attempted produces wonderful results, including giving everyone the impression you have actually attained an age greater than 5.

Fri, 04/09/2010 - 19:14 | Link to Comment seventree
seventree's picture

Unfortunately these habits are widespread. Maybe the ZH webmaster could script the reply box to ignore superfluous linefeeds. (Or is this Marla's job too?)

Fri, 04/09/2010 - 19:49 | Link to Comment JW n FL
JW n FL's picture

maybe unless you say something worth while... they could delete your bullshit... waaaaaaaaaaaaaaaaaaaa my pussy hurts type shit... like your comment... type space nazi's who offer nothing... NOTHING! but crying, bitcing and moaning... fan-fucking-tastic... you are a true blessing, a well spring of information... if not for facts you have presented.. I would be no better off... no better informed... now I know you would like to censor responses, regardless of content... based on type spacing.. well good for you.. I think that maybe, that type spacing is farrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr more important than content.. and your desire to have my content removed as opposed to debate what is offered... well that is a clear demonstration of your ability to be of use... far more than my pointing it out... that is to say actions.. or lack there of... verses baseless censorship over type spacing makes you one of the great minds of 2010... keep up the good work...

Fri, 04/09/2010 - 20:22 | Link to Comment AssFire
AssFire's picture

Someone must have have completed the qualifier question for JW, basic math skills not there. I hope he is banned, he certainly offers nothing to discussion.

Fri, 04/09/2010 - 22:53 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Unfortunately ZH is descending into the depths of hell, or at least the depths of the Yahoo boards. This site is starting to really accelerate downhill, particularly during the weekends.

Sat, 04/10/2010 - 04:13 | Link to Comment lizzy36
lizzy36's picture

CD, send tyler an email expressing your concerns. 

Sat, 04/10/2010 - 15:18 | Link to Comment Miles Kendig
Miles Kendig's picture

Agreed and joined.  Too many awesome voices are absenting themselves from this space, but what would you suggest Lizzy?  From my perspective this question for me represents a micro view of the conflicts between the macro condition of broad, unencumbered speech and the attempt to communicate on a micro level with what seems an encumbrance from the aforementioned macro state.  BTW, I have missed your voice Lizzy and trust all is life for you at present.  Peace pal. 

Sat, 04/10/2010 - 11:14 | Link to Comment Vendetta
Vendetta's picture

everything descends into the abyss these days.  Its 'cus we are all so happy at the state of the nation and the world.   I thought you knew that :)

Sat, 04/10/2010 - 11:34 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

Other boards have an "ignore user" functionality that is tits! Why assfire's post has caused me to use that adjective is obvious.

Sat, 04/10/2010 - 12:04 | Link to Comment JW n FL
JW n FL's picture
by hedgeless_horseman
on Sat, 04/10/2010 - 10:34
#294573

 

Other boards have an "ignore user" functionality that is tits! Why assfire's post has caused me to use that adjective is obvious.

 

 

hedgeless_horseman,
                                

                                   I was going to type something new for you... but? naaaaa. here read and use what fits...

 

by JW n FL
on Fri, 04/09/2010 - 18:49
#293925

 

maybe unless you say something worth while... they could delete your bullshit... waaaaaaaaaaaaaaaaaaaa my pussy hurts type shit... like your comment...who offer nothing... NOTHING! but crying, bitcing and moaning... fan-fucking-tastic... you are a true blessing, a well spring of information... if not for facts you have presented.. I would be no better off... no better informed... now I know you would like to censor responses, regardless of content... .. well good for you.. I think that maybe, that _______________ is farrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr more important than content.. and your desire to have my content removed as opposed to debate what is offered... well that is a clear demonstration of your ability to be of use... far more than my pointing it out... that is to say actions.. or lack there of... verses baseless censorship over _______________ makes you one of the great minds of 2010... keep up the good work...

 

Sat, 04/10/2010 - 12:53 | Link to Comment Hephasteus
Hephasteus's picture

The better the site gets at delivering the truth. The more attention it will draw from those who believe the truth is simply a perception. We are probably keeping 8 to 12 highly manipulative people busy at this point. They keep rotating in and out but lack anything that can work so it's failed time wasting bullcrap.

Fri, 04/09/2010 - 21:47 | Link to Comment tmosley
tmosley's picture

You're the one taking the time to communicate.  If you want ot be heard and understood, you should stop acting like a jackass, and make your comments readable.  This is (was?) a professional website, and is meant for professionals, and those who wish to learn.  You are not helping.  In fact, all you do with your conniption fits is to force people to take the opposite side of your argument, when they can figure out what you are saying.

http://en.wikipedia.org/wiki/Conniption_fit

Sat, 04/10/2010 - 15:33 | Link to Comment lucasjackson
lucasjackson's picture

It is "versus" not "verses" you idiot.  Now what the fuck were you saying about the economy now???

Fri, 04/09/2010 - 19:57 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Now see, there you go and prove beyond a shadow of a doubt to the ZH readership that you haven't reached the dear old age of 5 yet.

Fri, 04/09/2010 - 20:37 | Link to Comment AssFire
AssFire's picture

JW is a psycho-paster filled with hate, you can tell he feels wronged and unaccepted. His mom must have told him he was right when he was wrong..the NoDaddy complex it is called.

Sat, 04/10/2010 - 10:37 | Link to Comment berated
berated's picture

You'd save even more space if you ignored those you feel are trolls.  :-)   You know better, CD; don't feed 'em and they'll eventually tire and leave.

Fri, 04/09/2010 - 19:53 | Link to Comment Attitude_Check
Attitude_Check's picture

So if I understand your thesis, the answer is just to print more money (which Sovereigns most certainly can do) to pay off the debt.  Then be more prudent in the future -- calamity averted.

If we were an isolated economy, that MIGHT work to a point, it would result in massive inflation screwing the retired most of all, but it could be argued that would be tolerable.

Of course we are not an isolated economy, and if we "print to the moon" to pay our present debts, and just give everyone a check to "make them well" the $ will collapse on the FX and the price of oil goes to $1000/barrel then in addition to general inflation, the retiree's will freeze, and the economy goes into full-stop, and people starve because farmers can't farm without oil/gas, and produce can't be delivered to market.

You're right -- that would be a fabulous "solution"

Fri, 04/09/2010 - 22:24 | Link to Comment JW n FL
JW n FL's picture

I agree... mine was more sarcasm to stir the pot... but yes, of course printing just to maintain a lie is bad... how many times can we get caught with our collective hand in the cookie jar?

 

More over... how do we educate the sheepish masses to want to make changes that are for the true betterment of all? Considering the largest populace will be speaking foreign languages? Considering this has been the problem in the past... the ignorant, just happy to be here masses that simply don’t have a clue would have to stand up, take notice and then be heard... all of which seems far fetched... to be clear, I don’t like the facts... but they are none the less, the facts.

 

So how do we cut entitlement retirees monies? How do we cut the newest to the government tit's entitlements? How do we educate those without the simplest of skills? How can we fight the governments dumbing down of the broader populace thru the public school system?

 

How do we… educate and withdraw people from the public heroin funds that are so eagerly branded and pontificated about? How do we honestly make an argument for reductions… when the quality of life for the broad majority of Americans has been, year after year… slowly and methodically legislated away from them?

 

The print to print because we have been successful in the past… while government continues to legislate more and more money from the already poor middle to the already rich upper 1%...

 

 

Sat, 04/10/2010 - 10:42 | Link to Comment berated
berated's picture

These are excellent questions, JW. I often enjoy reading your posts when you omit the name-calling and sarcasm.

Fri, 04/09/2010 - 16:57 | Link to Comment SgtShaftoe
SgtShaftoe's picture

Most likely scenarios are inflationary and devaluation and more inflation.  We almost certainly will not default.  Anyone with a printing press will not default.  That's why Greece is in the problem they are. 

Prepare for capital controls, devaluation and inflation.  Nobody can afford to have real deflation, and HyperBen can kill a deflation with less than a thought.

2040 is optimistic...noticed they have a straight line, and that's just incorrect, we're already trapped in a power law curve.

Fri, 04/09/2010 - 18:24 | Link to Comment cougar_w
cougar_w's picture

Hee hee. Exponents greater than one are lethal. And yet the human brain is geared to see everything as linear.

The wall is always closer than you think.

Fri, 04/09/2010 - 18:52 | Link to Comment BS Inc.
BS Inc.'s picture

I haven't read the full report, but if the Morgan Stanley piece posted here recently is right, and 50% of the US' sovereign liabilities are inflation-linked, which seems about right to me on an intuitive level, then inflation is not going to work. If you inflate away half of your liabilities to zero, but the other half doubles in nominal terms anyway, you're right back where you started.

You either have to repudiate the real underlying provision of those liabilities, i.e. means-test entitlements so that there are fewer demands on the cash flows from those taxes or you have to have real economic growth supporting a greater real flow of funds into those entitlement trust funds.

Any repudiation would have to cut pretty deep, though, because there simply aren't enough rich people to deny Medicare services to. That means elderly voters will be livid.

This is yet another reason I'm not in the "inflation" camp, or, at least, not in the "hyperinflation" camp. Since "hyperinflation" solves exactly zero of the problems faced by Western sovereigns. I think in the old days hyperinflation could "work" because the nature of the liabilities paid off in inflated currency was that they were fixed. With today's inflation-linked liablities, that's not true, so there's hardly any practical benefit to a hyperinflation.

Plus, you have commodities like oil which will skyrocket in a hyperinflation, crashing the economy.

Sat, 04/10/2010 - 01:53 | Link to Comment Assetman
Assetman's picture

Actually this can work if you have a government willing and complicit in grossly understating what is considered "inflation".

With owner equivalent rents remaining a significant weight of the CPI-- which is linked to most inflation indexed liabilities-- we can have periods of significant commodity (and even medical) inflation, but tame CPI increases.

Of course, where the Fed will get handcuffed is in the oil complex.  A 30%-40% increase in oil/gasoline in a declining wage environment will have some nasty side effects.

I think I'm eventually on the same side of your arguments, except that a period of commodity hyperinflation is likely-- if the Fed decides to plow down the road of monetization.

Sat, 04/10/2010 - 09:38 | Link to Comment BS Inc.
BS Inc.'s picture

Actually this can work if you have a government willing and complicit in grossly understating what is considered "inflation".

See, I think that the Medicare issue will be the one that is insurmountable. The government may want to understate inflation in order to keep reimbursements lower than actual inflation, but doctors won't stand for it, which means Medicare patients will suffer, which means that people who vote will be pretty angry.

If a doctor knows his/her cost of treating Medicare patients is rising by 10%/year and the reimbursements are only rising at 5% because that's how high "inflation" is according to the government, something is going to give.

Of course, the crazy thing in that context is that the more popular "solution" will be to raise reimbursements, which will just mean, again, we're back at square one in terms of the real cost of the liabilities.

 

Fri, 04/09/2010 - 17:04 | Link to Comment Sudden Debt
Sudden Debt's picture

Don't worry about 2040!!

Global warming, Al Qaida en the meteor of 2012 will have killed most of us and in 2040 we will be in a new midevil time.

A little present for our grandchildren to remember us by :)

Fri, 04/09/2010 - 17:52 | Link to Comment Call_me_Al
Call_me_Al's picture

Somehow 'midevil' sounds much more truthful than silly medieval, tho i still think plain evil is even closer to truth.

Fri, 04/09/2010 - 17:05 | Link to Comment jvota
jvota's picture

"Concerns about both fiscal sustainability and intergenerational equity demand that the accumulated net discounted value of all future revenues and expenditure commitments scheduled in current laws be added to the current debt stock. Currently, however, there is no unique source providing such estimates."

Now that is a challenge if ever there was one! This is a job for Super ZH!

Fri, 04/09/2010 - 17:07 | Link to Comment Shameful
Shameful's picture

You know BIS it's really not much of a prediction to say that the USA is bankrupt before 2040.  What's next Kreskin, going to predict the sun is going to rise tomorrow?

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