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U.S. National Debt Surges $1 Trillion In Just 12 Months … Gold Falls Again !
The U.S. financial position continues to deteriorate badly and in the last 12 months has increased by over $1 trillion dollars.
Nick Laird of Sharelynx has just reproduced his fascinating and timely chart showing the US debt limit, the actual US debt and the gold price all in one chart. From 2000 until around the first quarter of 2013, there was a very strong and close correlation between the growth of the US national debt and the rise in the US dollar gold price.
After Q1 2013 this correlation broke down according to the chart, wherein the US national debt continued to skyrocket and the US dollar gold price fell significantly. The end of Q1 2013 coincides with the smash down of the gold price in April 2013, which actually created a huge increase in demand for physical gold all across the world.
Looking at the huge divergence in the graph after mid 2013 between the continued growth in the US national debt and the drop and subsequent tight trading range for gold between $1200 and $1400, one can only conclude that gold is somehow being prevented from its previous job of accurately reflecting an explosive US national debt picture.
Source: Brillig.com
An update on the future trend of US monetary policy is in the offing today as the US Federal Reserve’s latest two day Federal Open Market Committee (FOMC) meeting concludes in Washington DC.
As usual, global financial markets will scrutinise the Committee’s press conference statement for any shift in Fed thinking on when the US central bank will begin to raise short term interest rates.
With the Fed’s QE3 asset purchase scheme coming to an end, markets are speculating on whether the Fed will, at this time, alter its recent interest rate guidance language that states that its federal funds rate would be maintained as is for a ‘considerable time’. Any tweaking of this phraseology will create more price volatility in the US dollar and so would also create volatility in bond, stock and commodity markets, including precious metals markets.
Markets are expecting some comment on the existing guidance but are also concerned that changing the guidance at this time may complicate the parallel track of winding down the QE program.
The voting members of the FOMC comprise the Fed’s five board of governors, the president of the NY Fed, and presidents of four other Fed Reserve banks who are selected on a rotating basis from the panel of the eleven other regional Fed banks. Although there are technically seven seats on the Fed board of governors, only five board seats are currently occupied.
This means that there are currently ten voting members on the FOMC - Yellen, Brainard, Fischer, Powell and Tarullo from the board of governors, Bill Dudley from the New York Fed, and Plosser (Philadelphia), Mester (Cleveland), Fisher (Dallas) and Kocherlakota (Minneapolis) representing the regional Fed banks.
As regards interest rate aggressiveness, Plosser, Mester and Fisher are considered the more hawkish by Wall Street watchers.
The ‘considerable time’ guidance that is currently subjecting the financial markets to pained deliberations was communicated to the financial markets in an FOMC press release on July 30, when the FOMC, in a 9-1 majority decision voted to release a statement that where they thought it
“likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.”
The one dissenting vote in July came from Plosser of the Philadelphia Fed who thought that the ‘considerable time’ language was “time dependent and does not reflect the considerable economic progress that has been made toward the Committee's goals.”
Yesterday Jon Hilsenrath, the Wall Street Journal’s chief economics correspondent, weighed in on the ‘considerable time’ speculations. Hilsenrath is perceived as being very close to the Federal Reserve powerbrokers in terms of access and information flow, so his opinion is taken seriously.
Hilsenrath said yesterday that he thinks that the FOMC will probably ‘qualify’ their ‘considerable time’ phrase in some shape or form, but that since the Fed wants to communicate additional information on the timeframe of the QE bond buying operations, that the Committee may think it’s too complicated for the financial markets to process all of this information at one time.
Given that the global financial markets are some of the most sophisticated processors of information in the world, Hilsenrath’s official view looks a little naïve. Since Hilsenrath is not naïve and appears to regularly know what the FOMC is thinking, this suggests that the Fed is most likely stalling for time in raising interest rates since it believes that the US economy is really weaker than it wants to admit.
The US national debt continues to spiral out of control, seemingly without any plan to ever reign it in.
Compared to this time last year, the national debt has grown by over $1 trillion. At the end of September 2013, the cumulative debt stood at $16.74 trillion. Now it is over $17.76 trillion.
Astoundingly, more than $7 trillion of additional US national debt will have been accumulated over the 8 year duration of Obama’s two presidencies, which is more than the accumulated US national debt of all previous US presidencies combined.
This is not to mention the more than $200 trillion of US government unfunded liabilities such as pensions.
When the total US government debt of over $17.76 trillion is added to all U.S. business and personal debt, it approaches an astronomical $60 trillion. This is more than 25 times the total outstanding debt that existed when the U.S. severed the link to the gold standard in August 1971.
Since that time the Federal Reserve has encouraged and facilitated this huge growth of outstanding debt and in various crises, when it would have been more prudent to deflate asset bubbles, the Fed has continually supported these bubbles while encouraging new ones.
The primary focus on the wording from the FOMC smells of an element of rearranging the chairs on the Titanic.
Fiscal lunacy is alive and well in Washington with ramifications for the dollar and for investors and savers globally.
by Ronan Manly , Edited by Mark O’Byrne
Download GoldCore Insight: Currency Wars: Bye, Bye Petrodollar - Buy, Buy Gold
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Does anyone have a figure of how much it costs to service the Debt?
According to the CBO, federal interest payments will be $415 billion in 2014 and are projected to rise to $1.1 trillion by 2023.
In other words the annual debt service costs us nothing over and above some ink for the presses and the overhead involved in creating digital entries in the Big balance sheet.
Debt just hit 1,777,777,777,777
Not so lucky.
Someone on Facebook posted a picture of two dimes, with the cute caption, "Subvert the dominant pair of dimes."
Well, I tried. I fought the dimes, but the dimes won. :o(
That is, I tried to fight the fake (fiat) money regime with the real (metal) money that was formed in the center of exploding stars, not digital ones and zeros conjured from thin air. I was one of the now thoroughly crushed and mostly extinct Silver 'Tards
We were much worse and more subversive -- *far* more of a threat to the Powers That Be -- than the relatively respectable GoldBugs. They could mostly be bought-off and co-opted.
*We* actually thought we could tear the whole playhouse down, like blinded Samson in the temple of the Philistines. But the only ones crushed were we, fightin' things we could not see, and all the Philistines came up smilin' and smelling like a rose.
In the end the fake money won, the false triumphed over the real, and I lost both. I mean when the smoke cleared I had no more real OR fake money to pay the bills with. So, you know,
o/`Take my love, take my land/Take me where I cannot stand ... o/`
"May have been the losing side. Still not convinced it was the wrong one." ("Bushwhacked," 2002)
But, unless you too want to end up broke and sober and living outside (instead of well-drunk and sweetlyly-embraced indoors), and dying penniless and insane -- like me and the formerly four-footed, now-SOL rabbit -- *don't* buy any silver.
But evil things, in robes of sorrow, Assailed the monarch’s high estate; (Ah, let us mourn!—for never morrow Shall dawn upon him, desolate!) And round about his home the glory That blushed and bloomed Is but a dim-remembered story Of the old time entombed. And travellers, now, within that valley, Through the red-litten windows see Vast forms that move fantastically To a discordant melody; While, like a ghastly rapid river, Through the pale door A hideous throng rush out forever, And laugh—but smile no more. -- Edgar Allan Poe, "The Haunted Palace" (1839)
That was supposed to be "sweetly," NOT "sweetlyly" up there. Unfortunately it seems I am not allowed to edit my own post, once it has been replied to, even if the reply was from me. I can't type, you see, and when I tried to change the word from "warmly" to "sweetly," I botched it somehow. Then, due to failing eyesight, I did not see the error until after I had already replied.
It really sucks, being unable to type in a world where one's intelliegence is measured largely by one's typing skill. It makes me look about twenty times dumber than I am. Oh, I'm plenty dumb (just look what I invested all my money in!), but not so dumb I can't spell "sweetly." I can spell it. I just can't type it.
H.R. 24 passed.
- Introduced:
- Jan 3, 2013
- Status:
- Passed House on Sep 17, 2014
- Prognosis
- 14% chance of being enacted
H.R. 24: Federal Reserve Transparency Act of 2013Wrote this a few days ago which can shed the light on gold and the dollar.
The Dollar Has Not Crashed Like Gold Bulls Thought It Would http://bit.ly/dollarcrash
Currencies priced in each other are an illusion of strength.
Ok, who's gonna be the first to say: "GOLD, BITCHES!!!!"?
the 3rd ex wife
(C37) is the most irrelevant chart that is commonly produced on ZH (it appears 2.4 times per week SD= .05).
I wish it would stop.
A commonly used currency used to settle accounts when that currency was actually just gold...is NOT the same as a fiat reserve.
This experiment is 43 years old. It is unique and this chart implies that we are just in another iteration of a process that is hundreds of years old. It is not. In the past we dealt with currencies limited by gold. The problem today is not that gold does not limit the printing of paper...it is that NOTHING limits the process....other than the willingness of others to accept it.
Our current history will not end like the others with gradual loss of hegemony. It will end suddenly when the currency fails to be accepted. This is likely to be dramatic.
Fiat currency will work...until it doesn't.
In the vast scheme of things, the cosmotic sense, $56,000 seems a paltry sum.
I'd be more concerned if the number were triple that.
And that dovetails nicely with the figger mentioned a while back that it will take $12 trillion newly minted FRNs to offset all the derivatives.
So we have a long way to go b 4 our hair turns grey over the national debt.
We need to change our focus from the debt and deficit to something we can do something about, such as having an Oreo packet of cookies, and taking a nice nap.
The final result is the conversion of the USD in a Mickey Mouse currency (forgive me Mickey Mouse) maybe Zimbabwe Dollar would be the better termk.
But, but, household net worth rose $1.39 trillion in Q2 - so it's win / win, right? lol.
[housing prices and markets may fall but debt will remain]
How accurate is a chart which fails to show gold hitting 1180? The chart does not accurately depict a sub 1200 price- when gold struck 1180. Therefore the divergence is greater.
The PPT and the Treasury can suppress the price of gold all they want to- in fact- that is their job. http://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets
Reagans gift to free markets. Lol
If those who seek to manage the price of gold have unlimited funds behind them then there is no limit to 'how long' this can go on.
The POG is really just another derivative of the UD$ and as long as the system continues to support the dollar the POG won't present a serious challenge to the dollar.
Physical gold is both the victim and the beneficiary of this process.
Between 1971 and 1980 a similar build up in potential was released and gold went up 24+ X.
This will happen again. The central banks know this and are moving gold around in preparation....do the same.
Like I fucking care, not paying, never was, never will.
Default Bitchez.............
Indeed any percentage interest on $18 trillion is ....too much. And that in addition to printing $1 tillion each year to keep the place alive.
No possible way rates go up or you get very quickly to an asymptote ... dollar printing quickly needs to approach infinity to keep things as is.
No possible way out of this at all....debt to GDP over 100% ..... real govt debt.....lol
There is no way out...
If they stop printing........
Declare USD gold backed...gold revalues to $5,000/oz or something..... but still the printing has to stop.
The only way for US to get back is to go bankrupt and abandon global hegemony..... it cant afford it.
Gold at 5000 oil is 416 barrel 20 wage becomes 82 hour
Everyone burnt on bond failure wants 35% to lend
There all fixed.. be careful what you wish for
Yellen's advice is for those in private sector to become rich while the government in public sector becomes insolvent. Makes sense only if private sector is creating growth and able to repay outstanding debt, or existing wealth and assets are drawn down {decapitalization}. It seems the latter is the case in US, while China is creating wealth in a global economy favoring multinationls but not US economy. Essentially US financing world's economy through banks, Wall St and multinationals without commensurate benefit to entire US ecomomy. Moronic Keynesian Economics based on false Empire Perpetuation. Will not end well
Does anybody know what defines a loanshark?
It's not the rates that are superhigh.
A loanshark loans you money without the intend to actually receive the money back.
A loanshark loans people money and forces them to make the interest payments JUST TO KEEP UP.
That means, you pay the very high interest but also to keep his investment in you stable so his revenuestream doesn't go down.
And this is how the bonds are working. Sure the rates are low but the amount is high and the fed who issues the bonds just prints the primairy money for free in the first place.
And even 0.1% on 1 trillion dollar which is created out of thin air is a shitload of money.
And the fed knows the debt will never go down. They actually don't want it to go down. Because it's their revenue stream.
And a loanshark has 2 options for this not willing to pay.
First they break you legs and if you're really difficult, they'll kill ya.
"And the fed knows the debt will never go down. They actually don't want it to go down. Because it's their revenue stream."
Which will keep working until they lose control of interest yields/inflation, and the population. We've been fighting stag-deflation. Then when they really do lose control up or down on that spectrum it flows to either depressionary deflation (which we may have had during 2008 - 2011 - can't prove it because the stats are mostly rigged), or into mega or hyperinflation if they overcorrect with massive QE eventually...
It looks like we're reaching WW2 levels of debt. Who could have guessed that declaring war on your own citizens would be so expensive?
Print more assignats
those are so 1796...mandats are much better....and backed by church property...no we already did that ...they are backed by the very soul of France...so use them with confidence.
Have to look up the Dutch translation for "debt limit" in the dictionary.
It looks like it means something different than what i thought.
Just 1% of 17.7 trillion is 177 billion (177,000,000,000) dollars annually JUST IN ADDITIONAL INTEREST!! NIRP is our future, too. This is why we cannot have normal market interest rates.
Watching this play out over the last several years is like watching a hurricane approach knowing the "authorities" are doing everything they can to intensify it rather than hunker down and prepare.
Keep preppin' people, when this mother blows no hiding place will be untouched.
Gold is going to burn thru the 1100's and silver is going to plunge thru the 17 handle like a knife through butter. Don't know exactly why and it makes no sense. And oil is going to lock step down too.
Buy and hold, this will be the last chance.
manipulation, oh sorry.
MANIPULATION OF ALL MARKETS
had to turn it up a bit.................
The bullion banks need to get net long, that's why. They sucker in all the specs on the dwon momentum, and just when the specs declare victory to them self, they will knock'em out cold. Kind of like the 11-top but in reverse at the bottom. I completely agree, if you want (more) phyzz, load up now. It might be a buy of a lifetime. 14-17$ silver could come and go VERY quickly. Interesting times, best of luck to all.
This is all getting really interesting. Just called my dealer to see what PM's I could pick up today. His answer; nothing. He's completely sold out. No coins, no bars, no silver, gold, plat. Said it could take 4-6 weeks for delivery if I ordered now. Stil waiting on my last order from 3 weeks ago.
The Federal Reserve has failed to take serious efforts in pushing the government to take the necessary reforms needed to move the economy forward. Policy makers aided by the media thrive at presenting simplistic answers that solve both economic and society’s problems with little or no effort required from the masses. This includes massive government spending.
What started as a program to support and prop up the economy has morphed into the main driver of economic data. Between the low interest rates that has propelled investors into high risk assets in search of a positive return on their money, and money being pumped into the system, the markets have become distorted and disconnected from the economy. The idea that investors will continue to pour money into the sky high equity market is flawed. More on this subject in the article below.
http://brucewilds.blogspot.com/2014/06/exit-strategy-from-qe-remains-elu...
The FED, the USG, Crony Corps (MID), and the FSA are all parasites feeding on the host victim - the hard working taxpayer.
The FED has not only not taken away the Punchbowl, it has put an automatic filling device and spiked the punch with mind altering drugs.
So basically the USA has so much debt, that if they went back to 2007 interest rate levels the country would default?
Regardless of what you call it the "Federal Reserve Nightmare" or the "Yellen conundrum", the box Ben Bernanke made when he painted both himself and the Federal Reserve in a corner remains. Bernanke has by passing the chairmanship to Yellen escaped from the QE trap but left the rest of us fully in its grasp. We are fucked!
Yes, correct. But BTFATH and don't worry, the Fed has your back.......
I trust the FED - in the FED I trust. They're such good men and women - doing God's work and all. You know Yellen looks like someone's grandma, and Bernanke like a kindly old whittler or something..........................
"At the end of 2013, the US debt held by the Federal Reserve reached a new record high (12,5% of GDP) since the recorded data from 1940. [...] Also, at the end of 2013, the US debt exceeded 100% of GDP (100.6%) for the first time since 1947 (107.6%)."
http://failedevolution.blogspot.gr/2014/06/us-debt-held-by-federal-reser...
Also, at the end of 2013, the US debt exceeded 100% of GDP (100.6%)
That pretty much says it all.
Takes profits and income to pay off debt, not GDP. So the reality is much worse.
+100.
While I understand the metric of debt-to-GDP ratio, implied in the metric is an insinuation that the government owns all of the GDP of the nation. It does not! It is like getting a mortgage using your company's revenue rather than your income. Only f-ing pseudo-scientists use screwed up metric like debt-to-GDP ratio to justify governments raking in debt.
On the same topic, NIRP/ZIRP/N-ZIRP have to be the new norm for US. While some of US debt might be interest rate locked for longer term, at this rate, I believe US will have to issue new debt to pay the old debt as it comes due. And since public debt seems to be on a steady rate up, any significant increase in the interest rate will be catastrophic.
There are idiots abound who will tell you that the amount of debt does not matter, only the cost of debt matters. It is due to those idiots being in charge of the policy that US does not have a recourse as far as interest rates are concerned and all savers/retirees/pensioners are screwed.
Yep....ZIRP is the new normal.....Yellen or whoever is around then will still be saying 'considerable time' or whatever bs term that they can come up with not to say - forever - for the continuation of ZIRP. This is why Yellen is telling people to buy assets as she knows that interest payments on savings are never coming back......
How long will other nations put up with this game? Not that long, actually. China/Russia are well on the way to getting rid of their $$'s and using Rubles/Yuan for commerce. The SGE should allow Asians to buy/sell gold without giving a flying fuck for what the 'fix' on paper gold is in London/NY.
Interest rates in countries that don't have such humungous debts will be allowed to rise, thus making US bonds less attractive.
So that will leave the US selling its funny money to itself via the Fed......think of a dog chewing on its own tail...what is the term? Anthropophage?
Just passed the House in Congress 3 new Bills. One of them below:
deregulation bill, H.R. 5461.
The latter legislation would give banks a way around the Volcker Rule, a ban on their speculating in the securities markets with taxpayer backing. It would weaken rules on bank ownership of collateralized loan obligations, a type of derivative that is dominated by big banks and that pools together many loans into one security. Weakening the rules would make it easier for banks to make big speculative bets with these derivatives and thereby get around the Volcker Rule.
http://www.huffingtonpost.com/2014/09/17/wall-street-deregulation_n_5838...
looking forward to buying more gold with the dip....but AUD dropped a lot as well.....gold hasn't dipped so much in AUD
Just bought another 50 oz silver
SDBullion, less than 20 $ per delivered
charged to a no interest for a yr CC
Ah I can see from that graph that US debt is going to drop to $14trillion very soon to revert to its correlation with Gold.
Surely gold is indicating that the US debt will suddenly drop.....surely it doesnt mean that gold should be.....$1,700
Unfortunately America's greatest export, war, doesn't generate an income.
Kina;
Yes, and unfortunately the biggest leverage Banks have on all Nations is "Debt" and US Economy is based on Debt & War & Big Financial Cycles to create more Debt (Leverage).
Remember back before the FED... I'm pretty sure our economy had a US Constitution and was not based on "Debt" Slavery.