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What QE4: US Monetizable Deficit Drops To Just $483 Billion, Or 2.8% Of GDP
Remember that in addition to its primary function, which is to push stocks higher i.e., the "wealth effect", the Fed's Quantitative Easing has another just as important role: to monetize the US deficit. Which is why the news that was released moments ago from the Treasury, namely that the US deficit for Fiscal 2014 has just fallen to a meager $483 billion, or 2.8% of GDP (mostly thanks to the GSE inbound receipts which in turn were courtesy of the latest dead cat bounce in housing), and down from $680 billion a year ago, is hardly what the BTFDers were hoping for.
Fiscal 2014:
Fiscal 2013:
But this is great news for the US right?
Sure, it is also horrible news for all those liquidity addicts who hope that the Fed can engage in another $1 trillion or so QE program, because at this rate the US will only issue a net ~$250 billion in debt in 2015 (before the demographic crunch takes the deficit to the moon again after 2016).
It thus means that if the Fed takes away a net $800 billion from the market in 2015 if it does in fact launch another massive, $1 trillion QE, then the Fed's ownership of the entire marketable US bond market, when expressed in 10 Year equivalent terms, would rise from the current 35% to somewhere just about 50%, in the process destroying any remaining liquidity that US bonds may have, precisely what the TBAC was complaining about last summer.
So anyone hoping that today's tumble is merely a precursor to more QE, think again. Then again, there is a simple loophole: just tell Obama and Congress to spend, spend, spend, as fast as possible. Traditionally, they have had zero problems with following this directive.
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Shares in popcorn going up. Nail biter
I'm short mirrors in Hugh Hendry's house.
What ever they do it better be quick we are losing the patient MEDIC
And all along I thought the supply of heavy-lift helicopters was the rate-limiting factor.
Yes, and now we have some "room" for taking on another war! Happy days are here again!
Long Tomahawks
block that field goal
block that punt
kick that yellen in the POOOOMOOOOOO!!!
QE4 will be helicopter money to the masses.
Nope, that will never happen unless someone borrows it first.
pods
It has happened before, about 6-7 years ago.
They'll buy student loans and subprime car fodder... right?
More MBS too.
How does one reconcile that with this...
If you want to know what the real budget deficit is, all you have to do is go to a U.S. Treasury website which calculates the U.S. national debt to the penny. On September 30th, 2013 the U.S. national debt was sitting at $16,738,183,526,697.32. As I write this, the U.S. national debt is sitting at $17,742,108,970,073.37. That means that the U.S. national debt has actually grown by more than a trillion dollars in less than 12 months.
http://theeconomiccollapseblog.com/archives/the-u-s-national-debt-has-grown-by-more-than-a-trillion-dollars-in-the-last-12-months
SGN...
I say the same thing..... but folks like the fake headlines.
off-budget bi**hezz
Stop confusing me with your math! If the government says the deficit is 483 billion, then that's what it is, don't show me 'facts' and 'figures' that contradict that, it makes me upset!
Yeah, but there are something like 120M slaves, oops, I mean private workers, so if you divide the increase in federal debt by the people who are going to eventually pay for it, it's only an additional $8,333 over last year. Is it really too much to ask the workers to pick another couple acres of cotton?
Sincerely,
-TPTB
I was wondering about those numbers, too. From
http://www.treasurydirect.gov/NP/debt/current
FY 2013
10/01/2012 16,159,487,013,300.35
09/30/2013 16,738,183,526,697.32
$578,696,513,396.97
FY 2014
10/01/2013 $16,747,478,675,335.18
09/30/2014 $17,824,071,380,733.82
$1,076,592,705,398.64
The article has 2013 too high and 2014 too low, assuming the Treasury Dept's figures are accurate. Of course, nobody has the figures for how much income the CIA makes from the drug trade and covert ownership of businesses, or how much of that is spent.
... time for obama dam ...
https://www.tradingview.com/x/mj7FHS9r/
My poop was floating today...
It always kills me when I read articles where the unavoidable conclusion is that our biggest problem is 'we don't have enough debt' and the solution is 'we need to spend more money we don't have, or we're all doomed'. This is the problem that results from creating a system based on faulty axioms and then letting it run to its inevitable conclusion.
Of course, for many on the inside, the 'faulty axioms' are probably intentional. You know, that old 'give me control of the money and I don't care who runs the country' saw from one of those Rothschild guys...
Well, it's the biggest problem in sustaining the ponzi. In this case, it isn't the axiom that's flawed, but rather, the ponzi masquerading as an economy that it refers to.
uhhhh....QE got nut-in' to do with the deficit if you write your own rules.
Buy Treasuries...check
MBS...check
securitized auto loans....check
securitized student loans...check
securitized payday loans...check
etc..
Nothing a little off budget (budget LOL) war won't fix.
There will NOT be any QE4
Why ekm1?
Dollar collapse?
Anarchy?
Military growing a pair?
World is abandoning USD.
If QE 4, world simply dump it.
Globalization dead
Economic misery ensues
What is your perspective on globalization's funeral playing out?
no without the deficit and the need to monetize, there is no rationale for QE. QE only exists in a financial vacuum. the fed sells acts as middle man from UST to the banks, converting bonds into cash, QE is just a subset of that, in which the FED then buys the bonds back. monetization has been called a check kiting scheme, QE is an additional layer. if the need to write the checks in the first place is reduced their ability to leverage the monetized capital is reduced also. like what happens to mortage derivatives if there are no more mortgages? there is some talk of the FED monetizing directly to the public, instead of the banks, but that might be difficult to implement, without Congressional approval, and harder still to regulate. eventually everyone in the game knows its a ponzi scheme, even the new suckers, who refuse to play.
The bounce has come undone.
The deficit for FY13 (Oct 1, 2012 to Sept 30, 2013) was $680.2 billion. The Federal Reserve's holdings of US Treasuries from October 3, 2012 to October 2, 2013 increased by $424 billion. The Fed monetized 62.3 percent of the deficit for that year.
The FY14 deficit was $483.4 billion. The Federal Reserve's holdings of US Treasuries increased by $374.8 billion from October 2, 2013 to October 1, 2014. The Fed monized 77.5 percent of the deficit in FY14.
the FED has been operating under GSE rules, if their balance sheet is impaired the paper goes back to UST. its always possible Congress could break that assumption, but as you point out, if the bond bubble breaks (and the paper that covers 77% of the deficit in this banana republic is called into question) somebody is going to have to fall on their sword. a couple of scenarios, the Fed is busted, and their (deferred) assets are placed off balance sheet. since the bonds are phantom collateral it would make no sense to print an equivalent amount of cash to repatriot the bonds, who would you give it to? and the resulting inflation would be more than hyper. its also possible than another bank like Goldman might take over the Feds role, or a group of banks, and backstop them with some real capital (pension funds they have to invest) and them might want a bit more power than they already have to call the shots.
Deficit $483 Billion? Yeah, right.
1 October 2013 TOTAL DEBT: $16,747,478,675,335.18
1 October 2014 TOTAL DEBT: $17,824,071,380,733.82
What do you call the amount you spend which is greater than what you earn? Oh yeah! It's called a 'DEFICIT'.
And for the last year THE DEFICIT was $1,076,592,705,398.64.
The Government has this other statistic called the, "DEAFASSHIT". It is a statistic that was developed to enhance government elected personnel retention (a.k.a. 'winning elections').
It was the DEAFASSHIT for FY 2014 that was $483 Billion.
For a long time much of the economic landscape has started to look like something out of "Alice And The Looking Glass" A bizarre and unrecognizable land, a land that is distorted and papered over by ream after ream of paper. This paper has been rolling off the printing presses of central banks all across the world in an attempt to mask reality.
Peter Schiff says, printing money is to the economy what taking drugs is to a drug addict. In the short term it makes the economy feel good, but in the long run it is much worse off. The article below delves how what was once the "long run" or "distant future" where this might end may be getting much closer.
http://brucewilds.blogspot.com/2013/01/what-happens-after-momentum-ends_6.html
This article is inaccurate. The annual deficit is still at $1 trillion - not $483 billion. Why? Off-budget items aren't included in the budget deficit calculation, but we're nevertheless coming up short $1 trillion a year...still.
See for yourself.
http://www.treasurydirect.gov/NP/debt/current
Government MATH
21X7=13
The Solve
(7*1)= 7
(7*2)=14
7+14=21
This is your government in action!
No need to thank us …. We’re here for you.
At one time a billion dollars was a lot of money and it still is. Most people that haven't given it much thought might not think so considering how modern media and politicians throw the "B" word around. On several occasions I have heard both Washington politicians and the news media accidentally confuse a billion dollars with its much smaller sister the million marker.
This drives me crazy. With a billion dollars being a thousand time larger this confusion is undefendable. The article below is a primmer on the ugly math of our debt delving into how much it cost each and every American when the government spends a billion dollar.
http://brucewilds.blogspot.com/2014/10/an-ugly-math-primer-on-american-d...
"At one time a billion dollars was a lot of money and it still is."
Pearls of wisdom to make Yogi Berra blush.
I will "think again", and there will be more QE. If they lack treasuries, other assets will be bought.