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US Debt-to-Deficit Difference Hits Fresh Record, As Treasury Continues To Issue 50% More Debt Than Needed To Fund Deficit
Today, the US Treasury department disclosed that its August deficit was a slightly better than expected $90.5 billion, compared to $103.6 billion in the year prior. What received less fanfare was that the comparable increase in debt in the month of August 2010 was $212 billion, compared to $143.6 billion a year earlier. In other words, more than twice the the deficit had to be issued in the month of August. In an angry post, Karl Denninger highlighted this earlier. Of course, this is not a new development. As we highlighted in May, the US Treasury department continues to issue debt well in excess of the monthly deficit. When we conducted our analysis initially, the average debt issued over any given period's deficit was $34 billion (beginning in October 2006). To be sure, this number has increased to an average of over $35 billion when taking into account the last few months' data. In other words, over the past 47 months, or almost 4 full fiscal years, the US has accumulated a $3.3 trillion deficit, while over the same period, total Federal debt increased by $4.9 trillion, from $8.6 trillion to $13.4 trillion.
What many pundits have yet to realize is that on average the US issues exactly 50% more debt than it needs to merely fund its deficit: whether the difference goes to fund intertemporaral differences in short-term debt maturities is irrelevant: the point is that the $10 trillion in deficits over the next 10 years, will most surely result in at least $15 trillion of new debt. We say at least, because if interest rates pick up, the US will have to issue more and more debt just to fund interest payments. Incidentally, this month 8% of all tax revenues went to fund interest expense: this is an increase from the roughly 5% spent on interest outlays in early 2010. Already the trend of interest funding is one of increase, and rates are still near record all-time lows. Just wait until the 10 Year is back at 5-6%.
The variation between the monthly deficit and the actual debt funding can be seen on the chart below: while the increase in the blue line is to be expected (and feared - as it shows the government has lost all control over government spending), it is the much faster rate of increase in the red line which is what politicians (and Chinese investors) should be much more concerned about.
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It may turn out to be a fun week.
Where is the difference? I feel like I am being Madoffed.
http://www.youtube.com/watch?v=7GSXbgfKFWg
Really, who cares what the particular difference might or might not be? What does it have to do with global, interest bearing loan growth? Just because the $USD happens to be the particular gearing unit for securitization purposes today doesn't mean it has to be the primary unit of account going forward.
Again, the name of the game played by the power-elite is global securitization. It matters not a whit from whence it originates, whether individually or collectively in China, India, the US, Europe and/or the rest of the world. It only matters that it increases in relative scale (to accommodate accrued interest obligations).
So, like a multi-stage booster rocket, the $USD helped the power-elite achieve a certain elevation, but now it's time to discard the used up & spent force known as the USA. From the power-elite's perspective, US citizens are similar to what Sherman thought about native American Indians:
The more Indians we can kill this year the fewer we will need to kill the next, because the more I see of the Indians the more convinced I become that they must either all be killed or be maintained as a species of pauper. Their attempts at civilization is ridiculous... Gen. William Tecumseh Sherman
So too Americans - the power-elite think we are ridiculous. We were used, abused and are now being discarded. In this light, what the fuck does it matter that some primitives (um, that would be us) are arguing over the true number of wampum? Like it even matters to those who view us with disdain and secured their real assets awhile ago.
Fact: "QE Lite" Treasury purchases will be more than the original $300B bought under QE.
Up to 100% of this is new money, depending on your assumption about the difference between the face value of the maturing agencies vs. realized value.
Speaking of disdain, you lost all credibility with me when you said:
'Imagine a corrupt, dirt poor shit hole of a country, only 1/2 the size in population and with an avg IQ of around 85-90, successfully infiltrating and taking down the wealthiest states in the USA.'
http://www.zerohedge.com/article/guest-post-nutshell-our-economy-really-insane-asylum-run-lunatics
I'm not sure where you got your Intelligence Quotient statistics, but you, in essence, are calling Mexican Nationals 'dull', which is the correct term for someone with an IQ between 85 and 90. Of course your whole statement was grossly inaccurate as most of the illegal immigrants now come from Honduras, El Salvador, Nicaragua, etc.
http://en.wikipedia.org/wiki/IQ_and_the_Wealth_of_Nations
Rank/ Country /IQ estimate: 47 Mexico 87 56 Puerto Rico 84 63 Guatemala 79Just so there isn't any confusion, let me get this straight, you're making two assertions:
I have to be honest with you, I don't even know where to start. If you're going to basically immolate whatever credibility you might have had on this board, go right ahead.
As for me, I bet on what I know, and I know both 1 & 2 are false. How this plays out in investment & lifestyle choices manifests itself in:
It's a free country, and you're perfectly free to express your love of the common man in many different ways. However, here's a friendly bit of advice: don't act out what you've been taught - save it for race baiting on an interweb forum like your comment above.
This poor guy (a friend & class-mate of my wife from about 2nd grade through HS) was a true believer and is now dead:
http://en.wikipedia.org/wiki/Jonathan_Levin
Wow, IQ scores...a bigger academic circle jerk than nobel prizes.
Spot-on. We could be long-lost brothers lol.
Tribers have an irrational fascination with melanin.
African stock turns areas into little Africa. When the buffer of others disappears, you get an outbreak of Africa, including roadside corpses, lack of freshwater, disease, mayhem.
Mexicans and central americans are systematically turning the areas they dominate into copies of where they came from.
Culture does not come from fairies; culture is an expression of the average, aggregate attributes of a population. Stupid is as stupid DOES. It's really as simple as that.
There is no way to reform dolphin culture to be like man's. Innate attributes matter. Smart begets smart and reinforces it.
Stupid is as stupid DOES.
QED
Without disputing any of the above-mentioned data, please compare the debt to GDP ratio of Mexico to that of their more advanced northern neighbor. Mexico, whose major problem at the moment is managing the supply chain of the insatiable apetite for drugs for aforementioned neighbor.
We will have a ringside seat when the world has a cognitive spasm and the yield curve goes ballistic when suddenly the probability of actually being repaid in dollars that actually have purchasing power dissapears in the moonshot of exponentialness.
Whoaaa. How smart are we, again?
Excellent post.
Agreed--assuming you mean the original ZH post! This is a huge issue. I would speculate that this is another example of Mr Geithner's previously-mentioned front-end financing (he learned those tricks at the IMF). He has already publicly stated that he wants to "take advantage" of these super low rates--what does that sound like?
On Friday, Strategas Research's Jason Trennert had an op-ed in the WSJ about the danger of Mr Geithner's short-term financing. According to Mr Trennert, Treasury is looking at $5.2 TRILLION in principal payments (that is, short-term debt reaching maturation) over the next 36 months alone. This is in addition to the approximate $1.149 Billion/day Treasury is currently paying in interest payments. It equates to $144 Billion a month--could thisbe what Treasury is financing with its 50% over deficit debt sales? I think so....
http://banksterreport.blogspot.com/2010/09/where-are-we-gonna-get-52-trillion-in.html
Here's a link to the Treasury's monthly statement for August 2010:
http://www.fms.treas.gov/mts/mts0810.pdf
The difference is in all the off balance sheet "stuff". Social Security, TARP, Fannie & Freddie, the FDIC, FHA, and on and on. The federal government uses accounting tricks that folks at Enron actually went to prison for employing.
Agreed, but it's the *monthly debt servicing* for those. (The total liabilities are still kept off-books.)
Is it possible they are not counting the interest on debt in the deficit. Since they are not counting the unfunded future obligations in the total debt who would put it past them to not count debt service in current operating expenses.
Remember this is not real accounting they are doing here.
+1
And, they *used* to spend Social Security deposits the day they came in, and now they must issue Treasury bonds to cover those negative cash-flows (SS went negative last year).
Not a surprise that all the Government departments come in over budget every month, though. They have no incentive to keep to a budget, in the odd case of the "olden days" when the Federal Government decided to pass a budget.
I studied the August Fed balance sheet earlier, and about $70 billion of the $122 billion excess borrowing went straight into the 'Federal Reserve Account' which was down to about $3 billion the month prior. Karl failed to account for this.
That said, this long-term 'leakage' is beyond troubling. Where the hell is the outrage?
Where the hell is the outrage?
http://www.youtube.com/watch?v=pXyzuVk7SoI
"Already long ago, from when we sold our vote to no man, the People have abdicated our duties; for the People who once upon a time handed out military command, high civil office, legions — everything, now restrains itself and anxiously hopes for just two things: bread and circuses" - Juvenal
You can jump up and down and howl at the top of your lungs. If things turn out the way they're trending so far, then by the time the general public realizes whats going on, it will be way too late.
Most peple seem content watching Oprah or Deperate Housewives to even care.
Conrad, lots of people here share outrage over how we are being ground into the dirt by .gov and the banksters.
We can keep making noise, that may help a little. Buying gold will help too. Voting Tea Party MAY help a little.
Correction: Obviously it was the UST balance sheet, not the Fed balance sheet
Lies, fraud and fucked up accounting. What a scam!
Ah no. That is called todays business/political model.
It's mind over matter. If Ben and Timmy don't mind, it don't matter.
This is what happens when your collapse from debt is greater than 3 Solar masses.
Eventually, not even light will escape.
Yeah but the Black Hole Wars proved the information is retained as it is spit out the other side of the drain.
Black Hole Wars
Did they guy with the funny voice win?
And ben bernake fiddles as he crosses the event horizon...
Tyler,
A few weeks ago you said you would compile a bunch of user submitted questions on this type of debt scam. I think you mentioned you were going to send a letter to the Treasury Secretary or something to get answers. One question was what does the extra debt issuance go to. I'd love to get a definitive answer to this question.
If this extra debt is to pay for maturing Treasury debt then what are the cusips for those bonds. Do all the numbers match up? Where the hell is this extra debt going to?
DM,
That was me who compiled the questions, the final version can be found here:
http://acrossthestreetnet.wordpress.com/2010/08/22/a-letter-to-tim-geithner-cause-this-is-no-ordinary-bubble/
There was a little drama regarding delivery, chronicled here:
http://acrossthestreetnet.wordpress.com/2010/08/27/update-turbo-doesnt-pick-up-his-mail/
No reply yet....just the sound of me sharpening my metaphorical hatchet.
As suspicious as I am, I'm not sure that excess issuance isn't the effect of rolling over maturing debt.
Can anyone confirm/deny this? I don't know where to find info on maturing Treasuries.
I find it amazing we even have to try to figure out where the cash is coming from or going . The FED won't open their books, and we have no idea of how much gold (real money) is backing our debt...
The "excess issuance" is being used to redeem all those counterfeit Treasuries that were issued over the past decade or so.
https://www.cusip.com/cusip/index.htm
Maybe TD has someone who owes him a favor
4. Why aren’t CGS identifiers and associated data elements available for free? +–CGS has made, and continues to make, significant investments in developing and updating its databases and delivering its proprietary data in formats and frequencies valued in the marketplace. Collection, analysis and compilation of that data require extensive labor and effort by CGS. License fees cover the expense of maintaining the CGS data and provide incentives to innovate and upgrade the data products that CGS offers.
The value of CGS’s data is not only the CUSIP identifier itself but also the linked descriptive data that enables the financial marketplace to uniquely identify a particular security. Users can therefore rely on the provenance of data originating from CGS which helps them run their operations with reliability.
The American Bankers Association is the owner of all intellectual property rights to the CUSIP system, including all intellectual property rights in CGS’s various commercial databases
I love Magic!
I'm sick of being shown the proof of fraud and not seeing any consequences.
When will the market reflect reality?
Maybe never. They can't control the economy, or reality, but the market is a lot smaller. Life in Zimbabwe or Weimar Germany was hell, but the markets skyrocketed. My advice, learn to grow pototaoes.
to make V O D K A , no, tough guy.
My oh my ......... that twinkle in your eye gives me a tingle in my thigh ;) hahahhaha
Tyler, very interesting as as ~10% of tax revenue being used to srevice interest on debt is historically that line the sand representing they're going to lose control of the situation.
PS 5-6% ?!?!? How about just 4%?! Can't even afford that!
Futures on the Chicago Board Options Exchange Volatility Index are pricing in a three-month gain of 33 percent and contracts based on swings in Europe and emerging-market equities have risen to near records, data compiled by Bloomberg show.
http://www.bloomberg.com/news/2010-09-13/equity-bears-unprecedented-as-v...
Saw that too. Its worrying for bears.
That reflects a gain of only 6 in the VIX. Not earth shattering.
jim willie has written about this for a long time..and Karl Denninger is an idiot and a rip off artist ..he is the moron that first came out and said ...you cant eat gold....
But, you CAN eat gold:
http://www.amazon.com/Gold-Gourmet-karat-Edible-Dust/dp/B000ET9U08
Just because you CAN, doesn't mean you SHOULD!
And don't forget Goldschlager.....you can drink it. Although in the past when I have, I don't remember....
can anyone explain why there is a discrepency in the monthly deficit and the monthly increase in debt? And why is the gap growing over time? If it is just "monthly interest expense" going up, why wouldn't this appear in the monthly deficit? I guess I am asking what is the mechanics/logistics as to what the Treasury is doing with the extra money? Inn the same period mentioned above, if the fiscal deficit is only $3.3 trillion but the debt increased by $4.9, where does the $1.6 trillion go?
Perplexing is it not?
http://www.globalresearch.ca/index.php?context=va&aid=17610
When that quote is taken out of context, it implies that half the spending is not accounted for. The total spending is spread over many departments, not just defense. It's the same trick the local school board uses to hide administrative costs, by booking administrators salaries under teaching staff. All the costs are accounted for, they just aren't bucketed appropriately. This doesn't answer the question as to why the debt is growing faster than the deficit.
Just twice is much better than expected.
Could the difference between the monthly deficit and the monthly increase in debt be related to funding those many "off budget" expenses, like the wars in Iraq and Afghanistan? In any case, so much for transparency!
Or the money could be going to Chicago. Fundamentally changing America is costly. The overhead on hope and change is staggering.
Chicago has a way of finding money and then making it disappear. The pentagon has less corruption then this crew from Daley land.
I'm sure there is a perfectly simple explanation for this, I'm just not sure it will be legal.
If this doesn't scare the living bejesus out of you, nothing will. And people think there's a realistic way out, which doesn't involve either defaulting or printing?
Meanwhile in the UK, the public sector threatens significant strike action, to prevent cuts in spending. APPARENTLY, having the public sector account for 53% of GDP is entirely sustainable, according to union leaders.
Where is the money going?
Same ol' place it alaways has...
I think the difference ends up in Turbo Tims swiss tax withholding account.
always wondered why they were investigating the off-shore accounts in such detail. By golly, you've got it: a) repatriate all of that money while b) finding all of the really good places to hide the proceeds.
- Ned
Careful. If they know you're on to them....
cha
First, ignore the intragovernmental debt, which has nothing to do with the deficit. Look only at growth in debt owed to the public.
Then, add to the deficit the change in the government's financial assets (like that $200 million in the Treasury supplemental account, student loans and other federal lending programs, TARP, Treasury purchases of MBS, etc)
Should be equal.
It will unlikely to last for 10 years, 5 or 7 maybe ... starting from 2007, making it 2012-2014. Dot com lasted 5 years, housing bubble - 7, now the USTs are in the bubble territory with the same refrain: 'interest rates never go up' (analogue to "real estate prices never go down" for housing or "dividends don't matter" for high-tech stocks). Two to four more years to go.
I concur...
I don't quite know what you folks are talking about.
The short Treasuries trade that "every single human being must make" has been ballyhooed since February, and the Treasury bubble has been chanted every day all year.
You guys are just flat out not consistent. There is either a Fed/Treasury conspiracy or there is not.
If there is such a thing, then Ben will not let the cost of Treasury borrowing explode. Period. He'll do what he must to prevent it, and there is nothing anyone can do to stop him.
Now if you don't think there is a Fed/Treasury conspiracy, then the rates are where the market wants them to be, based on poor prospects of growth.
There are no nuances here. There is going to be vibrant growth from the economy or there is not. If you are looking for "treasury bubble pop" then you are looking for a booming economy.
Inflation?
We have a winner +1e100
At some point you have to take away the credit card... like November.
It is more serious than that. At some point you need to start putting people in jail.
pitchforks first
pitchforks first
This needs to be after or else you will go to jail first.
actually, my thinking is that it will be self-immolation. Imagine "zone-manhattan"
https://www.zonemanhattan.com/
doesn't deliver.
So there will be great introduction into the realm of reality.
I think that the apple orchards around New Paultz will become valuable, if they survive green firewood for a winter.
- Ned
Maybe zone manhattan can deliver 5 lb. pails of rice and beans with a little pan fried Nutria in armored humvees? Those gold eagles will have to be spent somewhere.
Beans, bullets and a warm dry place to sleep. Nothing else will matter.
I wonder where the interest payments on the SSTF bonds fit into this?
To the extent they're not spent, they show up as growth in the intragovernmental debt, and as growth in the total debt, but do not show up in the deficit.
To the extent they're spent, they show up in the deficit.
The consolidated deficit plus net acquisition of financial assets equals the growth in debt owed to the public. Intragovernmental debt is irrelevant to the consolidated deficit.
Congress never passed a budget for the new fiscal year that begins 10/1, so how the fuk do can you guess as to what is on budget versus off?- the fukking thing is backfitted as the accountants are scrambling to Ken Lay this thing...gawd help us.
Could the money be going over seas (in the form of loans) to prop up the EU banks?
"...will have to issue more and more debt just to fund interest payments"
Out here in the real world we call that pay-day lending.
Possible undeclared Fed liabilities covered by debt outside the Federal deficit:
-Liquidity swap arrangements with foreign central banks holding US debt and/or backstopping large private banks with large US debt holdings.
-Short term credit facilities funding ongoing emergency programs
-Funding for FHA/Fannie/Freddie not covered under Federal budget
-Funding for Forex market interventions
-Funding for market operations such as QE and possible sub rosa support for bonds.
Let's face it. Bond vigilantes are dead. Not a peep. Wanna know why? Fed knows it's mission critical to maintain yields at record low or else servicing the debt would quickly devolve into a vicious cycle. If you doubt this, take a look at the action in markets today: bonds rose mysteriously against their own trend on a strong day for stocks and commodities.
Tyler's numbers come to $1.6T. That is a lot of dough. Where is it? It is not in the things you mention above. Some of it yes, but a fraction.
Guys, I've already answered this. The discrepancy is:
Part of the growth in total debt is growth in intragovernmental debt, which is irrelevant to the consolidated deficit.
Part of the growth in debt owed to the public funds net acquisition of financial assets (eg Treasury's $200 million cash deposit in the supplemental account at the Fed, student loans and other federal lending, Tarp, others)
The rest is the consolidated deficit.
The Fannie and Freddie twins are a two headed siamese monster that will haunt the US for years to come. They are holding on to billions of dollars worth of mortgages that will be defaulted on.
10% would be 500 billion.
After reading Michael Lewis' piece on Greece in Vanity Fair plain old cheating and manipulating the numbers seems to be every day business for a government. Guess the US is just understating its true defecit. Would they do that in an election year you think?
A fiscal deficit is different than debt issued with various different maturities which can include debt roll over etc. I thought we already went over this before.
You would expect some evidence of reversion over a 4 year period, yet there is none.
This is pretty interesting. Was just reading Michael Lewis article for Vanity fair on Greece. In it he points out that one of the first signs of the government cooking the books was that they had issued 50% more debt than what would haven been implied by the reported deficit! This was pointed out by bond analysts soon after they had enetered the EURO
It still took Markets half a decade to figure out the scam. Gives you an indication of how long it will take for the US to hit the wall.
And the issuance all goes to price of gold and exchange rates. It's all cooked and it will all crumble. When people say america will go down but europe will be spared or even say western hemisphere will go down but eastern hemisphere will come out on top don't understand.
It's all going down. This is all money squirreled away to states and corporations. School just started and the budgets won't run and twice as much money is going out in hidden transactions as is being reported.
Comex is in default for 2 delivery months and it's all coming apart at the seams. 3rd strike is an out which is october.
@ Hephasteus,
Quite right if we go down, everyone goes down. I think we can extend that to if Europe goes down, we all go down as well. China will not escape, not even Peru...
Timing? In 2007 I thought this would have occurred and been over with by 2010.
This is pretty interesting. Was just reading Michael Lewis article for Vanity fair on Greece....
In years past, most of the extra debt issued represented the amount 'borrowed' from Social Security and Medicare taxes.
The U.S. doesn't issue debt to fund the deficit. Deficit spending occurs through the printing press. Debt issuance is nothing more than a money sponge. Why are they issuing so many money sponges in a deflationary environment?
I doubt the government is worried.
Because at the slightest whiff of a "dislocation, convulsion, default, etc." within the global credit system, all the machines are by default programmed to buy U.S. Treasuries.
It's a self-reinforcing feedback loop that cannot be stopped.
I don't know who that is, but she's got what it takes to be with me!
What is the function of this chart?
You're looking at the chart?
There's a chart?
If you look like your avatar, you can dream on.
I think I saw this photo while reading the Michael Lewis article for Vanity fair on Greece.
It was pretty interesting....
US Debt-to-Deficit Difference Hits Fresh Record, As Treasury Continues To Issue 50% More Debt Than Needed To Fund Deficit
You forgot about the cost of this Pentagon Power Point Presentation...
http://www.wired.com/images_blogs/dangerroom/2010/09/atl_wall_chart.jpg
How did you get the plan of my wife's shopping trip to the mall?
Obviously the deficit numbers are bogus.
We are also bailing out or proping up a lot of other internal and external ponzi schemes (states and nation states).
Obviously, they're saving up for a rainy day
I wish I could come up with something witty to say, but to be perfectly honest, I think our government is just a bunch a lying fuckholes and we should get rid of the lot of them.
...agree. I too am desperately seeking a superlative to replace the old " totally fucked " term.
Speaking of that...I have no idea who to vote for in the MA mid-term elections tomorrow. The only politician I like to listen to is Ron Paul.
I quite liked this from AnonymousMonetarist on another thread:
(Was referring to "Smells Fargo", but the same applies more generally...)
http://www.zerohedge.com/article/67-phoenix-homes-are-underwater#comment...
The only way out is growth - rapid growth. Worth taking some risk to get rapid growth. Idea:
- Burn the tax code. hated universally.
- declare a 2 year tax holiday - no taxes - while we figure out a totally new tax ssystem. i would bet this would create a huge spurt of economic activity. More than all the timid little pussyfooting around - look timid little pussyfooting around is NOT why America became a big , successful economy.
- Take 2 years - and lots of debate - to come up with a truly simple tax system. 10% tax on income. no tax on interest icome or capital gains.
- then sit back and watch the fireworks.
- Dores anyone have any balls anymore? or are we just going to get whittled away a bit at a time with teeny-weeny "solutions'?
I think they should give Bernie Made off a pres. pardon, and allow him out and brain storm with Bernake on developing the Ponzi scheme further.
primefool, I almost everything you say except the income tax. That would maintain a nosey and possibly corrupt IRS.
Dupe post, sorry.
Hey, this is the 3rd time in a row I see the Hillary and her shi'ite eating grin ad about a global gun ban.
Yeah, just try taking the guns from us 80,000,000 strong...
Okay, for the last time on this, forget the intragovernmental debt! Intragovernmental debt nets to zero in consolidated accounting, it has nothing whatsoever to do with the deficit.
The deficit is related to the debt owed to the public.
Still, growth in the debt owed to the public is bigger than the deficit because the deficit does not include net acquisition of financial assets.
The biggies in this department are: student loans and other federal lending programs, Tarp, Treasury purchases of MBSs, and the $200 mill of cash that Treasury put into the supplemental account at the Fed.
I can't find a nice, clean accounting of this anywhere, but you can find the changes in financial assets through end of FY 2009 in various tables within the humongous annual Financial Report of the US government: http://www.fms.treas.gov/fr/index.html
There's also some not very detailed info in Table 6 of MTS: http://www.fms.treas.gov/mts/mts0810.pdf
We don't disagree that the items can be isolated. The point is that this continues to occur. Also freel free to tell tens of millions of people entering retirement age that SSN decision are deficit independent: pretty soon those intergovernment holdings which you prefer to ignore will have to be funded directly, once the scam is exposed esentially putting not only intergovt accounting on the books, but that of the GSE's as well. Which, by the way, if we add to the equation as we should, literally explodes this inequality. Another point is that if all the items that have to be treated as if they were on the books where they belong, the differential would have been about 100%. And that's the run rate for the future: a 50%-100% premium over deficit that has to be funded. Period.
I think we're in agreement on the severity of the debt crisis and how aging demographics make it worse fast. But honestly and truly, the intragovernmental debt really is irrelevant. It's a phony, meaningless savings.
The only obligation the government has that matters is its obligation to pay Social Security benefits. Politically, that can't be touched, at least not until there's a serious fiscal crisis.
To the extent Social Security and other off-budget programs outspend their dedicated revenues, the balance must be picked up by the general budget. Whether that happens through a general budget repayment of intragovernmental debt or simply as a transfer payment from the general budget is completely immaterial. The government could annul all intragovernmental debt tomorrow and it wouldn't matter one whit to anybody, except to people who are emotionally attached to the propaganda that the intragovernmental debt actually means something. It doesn't.
Although the obligation to pay benefits can't be touched soon, it is only in law. Congress has the right to reduce benefits, suspend them, even renege on them completely. There is no constitutional right of payees to get back what they put in.
http://keynesianfailure.wordpress.com/2010/08/10/lies-and-the-lying-liars-who-tell-them-a-fair-and-balanced-look-at-this-years-medicare-and-social-security-trust-fund-reports/
Was just n o t reading Michael Lewis article for Vanity fair on Greece
He writes well. Why would you not read his article ?
i prefer to be a contrarian.
Thats not being a contrarian, thats rather not reading. I prefer to gather all information I can. Making a decision on the basis of all available info is surely better than closing your mind ?
well, that is you, and i am me. get lost dismal.
America has really only two BIG economic problems:
1. The tax code
2. the wars - global policeman - 200(or so) military bases etc ( For WHAT?)
If anyone is really interested in fixing America these two problems MUST be addressed.
200? Probably in the U.S. alone...
Pentagon has admitted to over 700 overseas, which allegedly didn't account
for the hundreds in Iraq and Afghanistan..
The only reason we get to blog away here and say just about anything without fear of the door getting kicked in, is because of our military.
There really are evil people who hate your fucking guts and want you die for (they )(he) think:
(1) You have the wrong book about god
(2) You did respect his right to rape your daughter with impunity
(3) He thinks his children getting to eat more food than yours is more important than your children staying alive.
It is our military capability that stops idiots like Hugo Chavez from digging up the graves of our founding fathers as distraction while his leftist buddies loot of the country.
It is the only reason that Imafuckinghitlerlovingjewhatingmuslimjob, leader of Iran, will not be allowed to spread his 12 Imam prophecy without lots of glass getting made in the ME.
Sure, but, our military budget is larger than every other nation on the earth's combined.
Could we not trim it by a third or so and still be able to kick everyone's ass? Then we might have a couple hundred billion to, I don't know, improve education so we could be globally competitive again. I know, a totally communist idea.
Really, at this point the military is simply a jobs program, and the real reason that there's no political will to trim the budget is because of all the jobs that would be lost. Not to mention all the weapons manufacturers who would lose contracts as well.
Most idiotic crap ever..
It's not good to snort prozac with your whiskey runner ...
OK OK - I know - WHAT?!! Two years of ZERO taxes? Noooo- what will happen to the deficits - Blah Blah Blah.
Look - we are done . If we dont get rapid growth - simple arithmetic says - we are done . Hyperinflation, defaults and stagnation and poverty are the future. Want that?
+1
Ah, ok, I had to read that a few times, but that makes sense.
Let me attempt to translate (correct me as appropriate):
The US Federal Deficit merely indicates what the Federal Government spends in excess of its receipts (e.g., taxes). To fund those deficits, the US Treasury issues bonds. (Also implied is that the US Treasury will *also* issue bonds in *excess* of the deficit to fund dividends for previously issued bonds, and to issue bonds to "roll" now-expiring bonds.)
However, "trust funds" like Social Security and other ongoing liabilities (like Maiden Lane, and even Fannie & Freddie) are kept "off-books". These are *not* part of the Federal budget (because they are "off-books"), so their liabilities are similarly *not* counted in the Federal deficit.
The difference between the "blue" line and the "red" line is the difference between "on-books" liability servicing (the blue line, the deficit), and "on-and-off-books" liability servicing (the red line, what the US Treasury issues for bonds). In a very scary manner, this means the red line (what's really issued) reflects what's *really needed* -- it includes the real cash-flow liabilities (from both what's "on-books" and what's "off-books").
That means the blue line is irrelevant: What's *really needed* is the red line. We can talk about the blue line (e.g., we can talk about the "deficit"), but the US Treasury better be able to issue red-line levels of new bonds going forward, or the US Federal Government defaults (or somehow convinces a bunch of Social Security recipients they didn't really need those checks).
The increasing spread between the red and blue line reflects the increasing "net-loser" status of US Federal liabilities. For example, a few short years ago Social Security generated a cash-flow surplus (which the government spent). Now, Social Security generates a cash-flow loss (increasing the separation between the blue and red line). Similarly, other liabilities like Maiden Lane, Fannie & Freddie, GM, FDIC, etc. are generating increasing cash-flow losses (increasing the separation between the red and blue line).
Makes total sense.
The obvious conclusion is that these lines will diverge at an exponential rate. While the blue line (deficit borrowing) may increase exponentially as interest rates normalize (i.e., the US Treasury will need to pay higher interest rates to service past debt), the *separation* between the blue and red line will similarly SEPARATE EXPONENTIALLY as Social Security attempts to call upon its "lock box" that doesn't exist, as Maiden Lane liabilities are serviced and someday marked to market, and as Fannie & Freddie show increasing cash-flow losses (which they will).
In effect, the blue/red line increasing separation is the debt-servicing mechanism by which "off-books" accounting is slowly brought "on-books" as its growing liabilities (which we shall not mention and which are still "off-books") are serviced (which the red line demands).
This is kinda cool when you think about it. Nations only fall because of cash-flow problems, because nations are so good at hiding stuff "off-books". The divergence between the blue line ("on-books" deficits) and the red line (*actual* spending liabilities) merely reflect the difference between "on-book" and "off-book" accounting fraud. However, being debt service payments, separation between the blue-and-red lines *cannot* be hidden.
Even for Sovereigns, cash-flow problems are inevitable, because you can NEVER hide your monthly debt payments. Sucks to be Iceland. I mean Ireland. I mean Greece. I mean Dubai. (That should be the whole list there, I think -- I just read today that we're in a recovery, that a double-dip won't happen, and the market is up).
Good work Mikla.
Norwalk, CT, March 16, 2006—According to a white paper released today by the Governmental Accounting Standards Board (GASB), individuals and organizations who are interested in the financial performance of state and local governments have substantially different information needs than those who follow the financial performance of for-profit entities.
These different and more diverse needs result from basic environmental differences between governments and businesses. According to the paper, the primary purpose of governments is to enhance or maintain the well-being of citizens by providing services in accordance with public policy goals. In contrast, for-profit business enterprises focus primarily on wealth creation, interacting principally with those segments of society that fulfill their mission of generating a financial return on investment for shareholders.
The white paper cites several other crucial differences that generate user demand for unique information:
“These significant differences, coupled with the sizable role that state and local governments play in the U.S. economy, are the primary reasons why separate accounting and financial reporting standards for governments are neccessary,” said Robert E. Denham, chairman of the Financial Accounting Foundation Board of Trustees. “The information such standards foster protects the interests of citizens and other key stakeholders by enhancing their ability to hold governments accountable and make better political, social, and economic decisions.”
It looks like Treasury/Fed took advantage of the "flight to safety" during the fall 2008 stock crash/gold bash by issuing an extra 819 billion FeRNs of treasury securities more than needed for their exorbitant spending in just Sept & Oct 2008.
Why not issue and debt at suck low yields? Those secret account, bribes, kickbacks, islands in the sun, and high class call girls )and boys) don't pay for themselves. Its totally normal for the gov to loot the people and traditionally it intensifies as the end draws near. Loot while the looting is good.
2006 is the base year. i'd like to see more before drawing any conclusions, though what is there is not pretty.
Ok, so does anyone else besides me think that the government is just lying about the deficit? Maybe not just strangely issuing more debt than necessary, but actually just funding current accounts while revenues drop like a rock?
However, Chi-town has nothing on Lousiana! Talk about a fiscal black hole...
Those newly elected congressmen
wont take their seats until after Jan 1.
The congress that is currently in office "will"
appropriate the budget for next year.
At the current issuance rate,
the debt will be:
$15.1 Trillion at this time next year
there is nothing that can be done about it
Plan accordingly
yep-and needs senate approval.
Will someone please call the PPT and inform them to wake up and "fix" the futures because they are currently red....
+2
“fight club exists only when fight club begins and when it ends.”
Tyler Durden
Thanks for all that you do. I only say what I believe. "Best on the Net." None Better.
More fuel being thrown on a fire barely under control.
http://www.youtube.com/watch?v=A_sY2rjxq6M
Let's face it.. we're being experimented on. Bernanke and Timmah are making this up as they go.
Ben: Let's drive the rate down just a little further to do the rollovers at the lower rate.
Tim: Shit, no, bring it back up! Bring it back up!
Tyler, this should be a front-page scandal in every newspaper and magazine in the country. What is wrong with us? This is going to destroy us or enslave us!
Probably is using the excess in the stock market.
Tyler, your math skills are approaching LL's driving skills. Hire a chauffeur!
11 months year to date, this is a non issue.
http://www.treasurydirect.gov/NP/NPGateway
And the August monthly Treasury report.
Public Intergovernment
09/30/2009 7,551,861,558,736.77 4,357,967,444,774
08/31/2010 8,927,061,238,060.48 4,522,591,298,974
Deficit 1,259,597
Borrowing from the Public FYTD 1,376,697,xxx
Japan will be spending 100% of its government revenues on interest if rates there go to 7%. They are locked into low rates or default now.
What if the Treasury is taking this extra 50% to fund the Working Group on Financial Markets operations. Maybe this is why every time there is a Fed POMO the markets IMMEDIATELY shoot up.
Quote:
intertemporaral
Unquote
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