US Treasury Tells Lawmakers It Needs $2 Trillion In Debt Capacity

Tyler Durden's picture

Reuters reports that the US Treasury has informed lawmakers it needs a $2 trillion debt limit increase to operate... until the end of 2012. Better stated, this is 112% of US GDP (which will soon be declining). This is precisely as Zero Hedge speculated. We hope PIMCO will be swayed soon enough to buy all this extra debt about to start coming down Geithner's conveyor chute. But yes, the Fed will most certainly not be needed to monetize this extra debt: Japan, Europe and Libya have it covered. That said, we don't know if Libyan rebels will have the capacity to monetize the $3 trillion in debt in 2013, $4 trillion in 2014, and so forth. The pattern is clear.

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CH1's picture

At some point you have to stop this insanity and realize all you are doing is to help support the beast that empowers criminals over the lives of honest people.

Sadly true... and well said. Thx.

Mudflap's picture

"Democracy is four wolves and a lamb voting on what to have for lunch."

- Ambrose Beirce

Almost Solvent's picture

So it appears we're down to the last 2 wolves, government & big corporations, arguing over who gets to eat last . . .

EscapeKey's picture

This thing is going to be lots of fun once yields start increasing. Then we'll see a parabolic rise in the deficit.

LoneCapitalist's picture

Lately Im thinking if yields havent gone up yet , why will they?  I think sooner or later, the fed buys 100% of our debt.

NotApplicable's picture

Because everybody with a credit card balance is walking around with a ticking time bomb in their pockets.

Remember the new bankruptcy/credit card law? Well, the CC issuers front-ran it and changed everyone's card to a variable rate tied to prime. You could've opted out, and kept your old fixed rate on the existing debt, but it would cancel the card, and thus its entire credit history.

So, most people kept the card, and have since forgotten about the variable rate, as it has yet to rise. But if rates explode, CC interest will explode along with it, absorbing all remaining free credit, unless you can still service the debt. Bankruptcies will ensue, and the CC companies will profit further as the debt is no longer written off, but instead is paid on in perpetuity on a discounted principal.

NotApplicable's picture

Oh, and once that all plays out, the mandate for QEX has been created, and then the Fed/IMF will ZIRP out the entire yield curve (that 100% purchase of debt you mention), nationalizing the financial industry in the process.

morph's picture

And it is all playing out as predicted. Japan debt GDP ratios coming up soon.

nah's picture

you know when a banker puppet sits in the treasury begging to spend money he doesnt have politics has no meaning... serious i cant wait for the tea party to cave in to 'prevent' WWIII lol

NOTW777's picture

LOL.  its a strong recovery - we only need 2 tril

NOTW777's picture

can we send timmy to the vacant home in abbottabad

SheepDog-One's picture

The 'efficient market' just took AAPL down 7% in seconds on what CNBC reported was a '100 share trade'...LMFAO!

sun tzu's picture

Why should it concern anyone except the buyer/seller of those 100 shares? Probably the same trader

jaffi's picture

Ahhhhhhhhhhh, shit!

HamyWanger's picture

We are the United States of America, Home of the Braves, Land of the Free. We have lots of natural and intellectual resources. 

Debt does not matter, because we will always find lenders.

disabledvet's picture

you mean "lenders."  as in "lenders of last resort."  sounds like the title of a good book, doesn't it?

RockyRacoon's picture

What does it matter?  The Fed is providing both sides of the trade.

unky's picture

regarding food resources i would say the U.S. is a lot better off than china with a 5 times greater population but plenty of deserts and mountain regions

Clorox Cowboy's picture

To paraphrase:  I wouldn't even buy Treasuries with your money, Hamy.

SoNH80's picture

Ah, the ol' "We can always monetize our own debt, denominated in our own currency, the good ol' U.S. Dollar" argument.  But, when oil hits $500/bbl. as a consequence, what good will that be??  The Confederates were honest enough to admit that their paper currency was B.S., when will Americans at large?  Soon enough.

glenlloyd's picture

Those who've built their house upon the 'debt (deficits) does not matter' axiom will live to regret it.

Zero Govt's picture

Hamy   ..."Debt does not matter, we will always find lenders"

Er, that's what Greece said ...that's what Ireland said... that's what Portugal said..

...makes 'perfect sense' in a deep recession to do the exact opposite of what all businesses and consumers are doing: ask for $2 Trillion extra limit on your credit card and keep spending like banshees

...you're on Planet Govt mate : welcome to total economic and social dysfunction

Non Passaran's picture

Hey Portugal just found a lender for $110b, no?

EasterBunny's picture

Speaking of Libyan rebels..... With the oil sales having resumed from Libya, as part of an agreement with the rebels; who is actually being paid for the oil? and in what capacity?

Gubbmint Cheese's picture

Tyler, can you please stop referring to it as a "debt ceiling" - its a debt target.

So the US hit its target early, and is now increasing its target by $2t..

See?

Bullish!

 

SheepDog-One's picture

Expert FED marksmanship, hitting debt target dead center.

Rick64's picture

And thats not easy because it keeps moving.

Hulk's picture

Debt target Bitchez! Hulk like!!!

Tinfoil Hat's picture

Not only can it be hit,  but ahead of schedule too!  Someone deserves a bonus!!

SheepDog-One's picture

$2 trillion? Pfffft, peanuts! Wake me when the FED says it needs $2 quadrillion just to service the interest. Ho hum. :D

Libertarian777's picture

will be interesting when we have to import cotton from China to print the wheelbarrows of FRNs. What do we pay them in for the cotton linen?

 

more cotten linen?

augie's picture

Fuck the cotton, the money is in wheel barrows. How else do you expect people to cart around all that cash?

 

that is totally the new saying:

"bulish for wheelbarrows."

101 years and counting's picture

you're both wrong.  no cotton linen needed.  just a shitload of 0's on a laptop.  that is a lot of memory!  INTC bullish!!!

 

 

lynnybee's picture

" DEBT CAPACITY "  ......... so that's what it's called !  Debt Capacity !    why don't they just say the truth ...... borrow more money from the bank that we will never be able to repay & allow the FED to suck up our blood in interest so they can live !

cxl9's picture

So what's the real game, then? They say they need $2.0T and then, after much pulling of hair and gnashing of teeth, compromise and settle for $1.5T? And then claim they cut the debt by a "whopping $500 billion!!!!"

 

HoofHearted's picture

I'll go long on that prediction. Anyone know how to get in on that action?

blindman's picture


.
http://www.youtube.com/watch?v=xj0pM5FoYbs&feature=mfu_in_order&list=UL
Dr. Steve Pieczenik: Bin Laden, The Oswald Like Patsy Died 10 Years Ago! 1/7
.
hear this!
what is the voice of the people? when will it be heard?
the psyop resurrection

topcallingtroll's picture

EXTEND IN ONLY 500 MILLION DOLLAR ALLOTMENTS.

EVERYTIME THE DEBT LIMIT IS REACHED ZERO OUT TEN PERCENT OF THE BUREAUCRACY AND ATTACH IT TO A DEBT LIMIT INCREASE. HAND IT TO OBAMA ONE HOUR BEFORE ARMAGEDDON.

(now i really am off on vacation to the original banana republic. Costa rica)

lieutenantjohnchard's picture

as mentioned the financing needs must go on. checks gotta go out to extend the welfare state so that jpm can make money off the food stamp program.

so tptb push back hard on silver and gold, run the stops, buy back their shorts and then take delivery on silver and gold.

does anybody really doubt that tptb would like nothing better than to own all the silver and gold, then the printing can go to infinity with minimal effect on them personally.

FreeNewEnergy's picture

Larry Kudlow actually said this once: "You can't borrow your way to prosperity."

Even a broken clock is right twice a day.

disabledvet's picture

well "he is on twice a day."  what if he's a "clock that works?"