This page has been archived and commenting is disabled.
Why US Rates Can Never Rise: In 1 Awkward Chart
Just before the FOMC decided to not decide last Thursday, we asked if the scuffle depicted below was Japanese lawmakers’ attempt to act out what they imagined might go on in the Eccles Building during what was billed as the most important Fed decision in recent history:
We went on to note that Japan - which, you're reminded, is the poster child for Keynesian insanity with a debt load that now totals ¥1,057,224,000,000,000 - tried to raise rates at one point, only to reverse course within seven months.
Now that the Fed is allegedly set to hike at some point in the not-entirely-distant future, and now that Japan has completely lost its mind and declared that despite Abenomics' abysmal and demonstrable failure, the economy will somehow expand at a 20% clip going forward, we thought this an oppotune time to demonstrate, with one helpful infographic, why the US can never raise rates. Put simply: the US is second only to Japan on the list of countries with the worst debt to central government revenue ratios.
Coming soon to Washington:
»
- 72627 reads
- Printer-friendly version
- Send to friend
- advertisements -
Uncle Sam says feed your family with propaganda...yummm>>>--- --- - - -
The Central Bankers are all degreed and highly educated but there is obviously something beyond conventional wisdom and common sense at work here.
Clearly, a Divine Wind must blow throughout the BOJ and the Fed.
So looking to the future, how do you say “Divine Typhoon” in Japanese?
Lets call it like it is. To be an economist means you werent smart enough to be a doctor or a rocket scientist. They take a bullshit easy degree and get a false sense of importance. My fucking dog fundamentally understands economics more than most degreed individuals. Opportunity cost to eat or take a shit and she draws the line there. I love my dog
One thing that has kept some sectors afloat in the USA is its money laundering caapacity for foreigners. Just as the Caymans has a vibrant economy due its banking methods and favorable tax laws, usa has loosened its scrutiny of origins of cash flooding into the country from dubious sources. Hasn't helped the oil & gas industries or retail but it's been a boon to bankers and the RE and related industries.
As Xi tightens controls on Loot exiting his country into foreign housing markets [esp usa, canada, australia], many of these RE markets are already feeling the pinch including Singapore, Macau, Australia in particular. This is double trouble for Canada and Australia who are also seeing their export sectors devastated due to plunging demand from China.
I read people want hard assets as a safety investment against their falling currencoes (RMB, Brazil, Canada, Australia) but jumping into overpriced RE does not seem sound. Underpriced hard assets [like gold or other PMs] seem a better asset protector. My Canadain friend bought all the gold coins he could with his extra money and glad he did since their paper has dropped almost 40%! Even oil is pretty cheap right now.
Hard to beleive HK'ers are jumping into Melbourne and Tokyo which my realtor tells me are still very very overpriced.
Oh well, we shall see.
Good points. A Chinese buying in Tokyo seems unwise for other reasons besides overpriced houses since Japanese are not very keen on them to put it milkdy, and Melbourne RE will still see a yuuuuuuuuuuuuuuuuuuuuuuge correction.
Too bad countries [esp HK and China] are not providing safe investments with a decent return for their own citizens that they feel they have to flee or invest overseas.
If anyone is interested in the prophetic of this consider End Times Investing on facebook. 'Veto Bank' before end month.
https://en.wikipedia.org/wiki/Bank_War
The problem with economists is the degree program itself. A few good classes in money and banking and a lot of propaganda. Economists’ rank about #6 on the GRE. If economics was allowed to be taught you would get a much better economist.
As it is you graduate clueless about the boom bust cycle and to role credit expansion plays in economics.
The rich purchase real estate in foreign places instead of PMs because they automatically receive green cards, permanent visas, or citizenship. They then have an escape from prosecution at home.
They are paying all cash and plan on holding forever, so RE in highly desirable first world coastal cities is one of the least stinky turds on the pile for those looking to hold hard assets.
"Kami Kaze" = "Divine Wind" or "Divine Typhoon" (?).
Typhoon subalashi des.
Just because they are highly educated doesn't mean they are smart.
Non-Science Education = Indoctrination
Contrary to popular belief Economics is not a science, if anything it's a political "science".
The field of study originally
was called "political economy" for the very good reason that
the relationships are man made, not scientific "laws" (like physics).
Hence, the established "economic" relationships are always also "political".
To mask that inherent relationship, in an Orwellian twist, it became
'politically correct' to misleadingly rename it as "economic science".
Many nowadays adhere to a belief in the false separation of economics and politics.
Endeavoring to establish a utopian society based on imagined "economic science",
they consequently render themselves impotent by refusing any "economic" connection to falsely imagined purely "political" problems.
-
The political-economic status quo, if never seen as arranged by man, becomes impossible to change within the self-imposed aversion to political "interference" in economics.
Serfs wanting change while keeping the economic arrangements of serfdom,
or the colonized while keeping the arrangements of mercantilism,
or modern debt-serfs while keeping neoliberal corporatism.
All three arrangements defended in their time as god's plan,
or the natural order,
or "capitalist science".
Just like with computers..... garbage in = garbage out
https://www.youtube.com/watch?v=WG6TRjmNAy4
Maybe because the Fed will incur losses on all of its past debt purchases ? And China..?
Oh but all that debt is now HTM (held to maturity) yeeeah
China,
invisible.
It is OECD data, China and Russia aren't OECD members. I'm sure it has something to do with the fact that they don't want to open their books.
S&P500 needs to retest 1890, 1860 and 1830 in my view. Lower Lows to come. After that, Higher highs into 2016 as the Bond Market pops/rates up.
Negative Reversal 1h and 4h chart
http://tripstrading.com/2015/09/26/sp500-negative-reversal-1h-and-4h/
Wave 5 down
http://tripstrading.com/2015/09/19/sp500-weekly-chart-2-or-5/
http://tripstrading.com/2015/09/19/sp500-wave-4-up-finished-wave-5-down-...
2015 looks quite similar to 2011 and 1987.
http://tripstrading.com/2015/09/26/sp500-2015-vs-2011-vs-1987/
http://tripstrading.com/2015/09/25/in-need-of-a-profitable-trading-strat...
Were Number 2!
Were Number 2!!
Tiger pounce countered by dlagon craw technique...
velly effective.
Welcome to the desert of the real. [/Morpheus]
These calculations rarely if ever include unfunded liabilities, which dwarf the funded debt. Of course, GDP is a largely bogus statistic that is continually manipulated upward.
If the economy is smaller than what is stated and the debt is orders of magnitude larger, the ratios in this graphic are massively understated - at least for the US.
BOHICA - forever.
Too true.
And the rule of thumb is that once Debt : GDP ratios pass 80%, then economic contraction ensues, only acting to exacerbate the problem as production contracts, welfare dependents expand (in quantity and girth) and basket-case businesses and individuals go bankrupt and default.
Add to this the fiat ponzi wealth debasement scheme and catastrophic economic collapse is a mathematic inevitability.
Fascinating that neither China nor Russia feature on this list, illustrating that it is no wonder that firstly economic/ currency war, then proxy hot wars and soon to be direct hot wars of aggression are being inflicted by the USSA and it's Zio-backed co-conspirators.
There are seemingly only several factors to save us, namely the rise of renewables to break to geo-political skullduggery of hydrocarbon dependence and the other rule of thumb kicking-in...people spending >40% of their income on food and leading to riots on the street to bring the system down - as centuries of human behaviour have already demonstrated time and time again.
Try as I might, I can't seem to find that sorta large nation to the East on this map. The one who is supposedly crashing/burning/hard-landing & all that stuff right about now...
This won't end well.
Ray Fukin' Dalio was at the Xi state dinner - they're going to bail his sorry risk/parity ass out!
Bravo on that chart!
That certainly took some time and thought to put it's enormity in context!
I'm looking for the other two 'big dogs' Russia and China... Oh shit, we're F#@k^d!!!!!!
Look at a chart that shows debt to profits and income. All the other dollars are accoutned for and those are the only places that money will come from to repay the debt.
Good Lord!Boehner approved That chart is awesome. Thanks Tyler. :-D
All those 10'sust Belgium bought in '14 sure raised their rankings ;-)
All those 10'sust Belgium bought in '14 sure raised their rankings
And all of those 10'sust Belgium, er...er...er...China is selling in '15 will surely raise the USA rankings
I think they print my FAFSA to keep me from complaining. I've too much to do and too much money to worry about joining a revolution.
The markets will dictate rates in '16.
Central banks have lost control. Kampo has halted treasury purchases, on anything under 10 years.
How do you think yields will move? Kuroda is implying that he's not monetizing MOAR debt.
Kampo restrictions were lowered earlier this year, for foreign investment, because the Japanese[JGB] markets were so saturated.
The BoJ won't meet it's inflation target in 10 years.
The biggest problem we face is hidden inflation.
The MOAR we print the more expensive things get. That's not demand driven inflation.
Hidden population culling comes to mind.
I have been saying this for years. The Fed can't and won't raise rates because rate normalization will be the death knell of the growing Entitlement State. Hell, they are now openly importing millions of clients who will never be taxpayers. Why? So they can continue to vote for MOAR spending and debt, while fueling growth in corporate profits. This is happening in both the US and Europe. Companies want consumers to drive profits--they don't give a shit where those consumers get their spending $$. And compared to an actual citizen, an immigrant needs fucking everything. They're perfect little consumer-bots.
Some other thoughts:
The markets will dictate rates in '16.
Wrong--the Markets have been co-opted, like so much else. The people who pull the strings are no doubt being threatened in a variety of ways.
The biggest problem we face is hidden inflation. The MOAR we print the more expensive things get. That's not demand driven inflation.
This is partially true. The people are slowly wising up to the fact that you can do absolutely nothing and still get taken care of. Which is why labor rate participation keeps dropping. More people are deciding they want to just vote for a living. The flip side is that those who DO work (& still pay taxes), will want the deadbeats to fork over a lot more for their efforts. It will start to get even worse when they turn up the Helicopter $$ spickets.
I call Bullshit on this chart.
How about External Debt to GDP?
Then we see that the problem in Europe is the PIIG-ENS
Portugal, Ireland, Italy, Greece, Spain, UK, Nederlands.
External Debt for Luxembourg is like 4000% and would be #1 according to Wikipedia Data I captured a while back.
Luxembourg is an Enigma.
I believe that the debt in Luxembourg you are talking about is mainly due to foreigners making deposits in their banking system. Those deposits are both an asset and a liability. It is not public, but corporate debt.
Yeah that makes sense.
I think last I saw US was showing a figure just for foreign holders of Government Treasuries.
https://en.wikipedia.org/wiki/List_of_countries_by_external_debt
- External debt, the total public and private debt owed to nonresidents
Here is a table on External Debt from Wikipedia based on WB, IMF & CIA World Fact Book Data.
Rank, Country, External debt, US dollars, Date, Per capita US dollars, % of GDP,
1, United States, $18,540,448,667,000, 2015, $58,437, 106%,
2, United Kingdom, $9,590,995,000,000, 2014, $160,158, 406%
3, France, $5,750,152,000,000, 2014, $86,317, 222%,
4, Germany, $5,546,869,000,000, 2014, $68,720, 145%,
5, Luxembourg, $3,472,282,000,000, 2014, $3,696,467, 3,443%,
6, China, $3,000,000,000,000, 2013, $2,220.57, 37.5%,
7, Japan, $2,861,488,000,000, 2014, $24,000, 60%,
8, Italy, $2,651,413,000,000, 2014, $43,621, 124%,
9, Ireland, $2,639,672,886,310, 2014, $52,227, 103%,
10, Netherlands, $2,526,895,000,000, 2014, $226,503, 316%,
11, Spain, $2,305,648,000,000, 2014, $52,045, 167%,
12, Switzerland, $1,610,897,000,000, 2014, $154,063, 229%,
13, Australia, $1,395,638,000,000, 2014, $52,596, 95%,
14, Canada, $1,337,445,000,000, 2014, $29,625, 92%,
15, Belgium, $1,286,918,000,000, 2014, $113,603, 266%,
Devastating List to this Article's Chart on International Debt.
Little former British Colony, Hong Kong, is number 16 on list with $1.23 Trillion USD External Debt, 334% of GDP.
- I'm mixed up a little with
International Debt Issues to GDP for Spain
2011: 124.81570 Percent (+ see more)
Annual, Not Seasonally Adjusted, DDDM07ESA156NWDB,
International Debt Issues to GDP for United States
2011: 48.64225 Percent (+ see more)
Annual, Not Seasonally Adjusted, DDDM07USA156NWDB,
International Debt Issues to GDP for Switzerland
2011: 79.80957 Percent (+ see more)
Annual, Not Seasonally Adjusted, DDDM07CHA156NWDB, Updated: 2013-06-06
International Debt Issues to GDP for Netherlands
2011: 171.67530 Percent (+ see more)
Annual, Not Seasonally Adjusted, DDDM07NLA156NWDB,
International Debt Issues to GDP for Luxembourg
2011: 168.16330 Percent (+ see more)
Annual, Not Seasonally Adjusted, DDDM07LUA156NWDB, Updated: 2013-06-06
The UK is going to crash hard, its current account deficit is running at a fairly catastrophic 5.9%, average house prices are 10x average income, and its only industry is finance. Its a nation that imports 40% of its food and is running with around 1% spare electricity capacity. Its a power plant shut down away from being exposed as the third world nation its become.
Any run on Sterling will lead to inflation in not only Chinese made luxuries but also food and other core items. If the Bank defends the currency with a interest rate hike, the housing market cracks and the City explodes.
Its an egg shell economy.
Wanna know who is in power, look to see who doesn't provide data:
- Cayman Islands, 79,000,000, Billion, 1998 est.,
- Bermuda, 160,000,000 Billion, FY99/00,
- British Virgin Islands. 0, 2012,
- Channel Islands
How did it come to be that "national debt" was to be measured against some mythical "national income"?
The "government" has a debt, and all the people in the country (who are NOT the government) are considered to be the debtor somehow. Lunacy.
Whether you like it, or not, you are the collateral for that debt.
You have allowed your Government to sell you into slavery.
They is why they exact taxes from your income. That is a DEBT PAYMENT.
And it is designed that you will NEVER have the funds to purchase yourself out of that enslavement.
You were born into it.
You were assigned a registry number, a certificate of ownership, a bill of sale, upon your birth.
You have been continually lied to about the purpose of that registry number.
And most likely you will die as a slave.
You are complicit in this as you validate it.
And slaves are punished by caging, as a wild animal, if they choose not to comply.
Now those are unpalatable facts and quite revolting if you'd ask me. But no matter how much revulsion I have to these facts it does not change the reality one iota.
While true, this is an incredibly pessimistic fact to live by. You have access to financial markets. It is possible to become rich and be less of a slave, no? OK so we still live on the prison planet, but there's a greater degree of freedom possible today than ever before. The dosile sheep who waste their money buying shit they don't need and are too narrow minded to look outside their incredibly tiny realm of perception deserve to remain as slaves if they so wish to spend their freedom. Those who study, save, trade/invest wisely.. Don't you think they can attain a certain level of freedom?
Yes, and the Federal debt should be compared to Federal tax receipts not national income. GDP should be compared to all public and private debt. So the Feds have $3T in taxes coming in, but spend $3.5T that we know of and have $19T in debt. So knocking some zeros off it would be analogous to a household having an annual income of $30K and spending $35K per year all the while having $190k of debt. But as Tall Tom says below, we are all less than share croppers here. So once you under stand that, does it really matter any more?
Hey, and add to all that, the unfunded liabilities. In many countries, the pension is still distributed from the workers to the pensioners in real time. There are no public savings for future pensions. It just works in the same way as a Ponzi scheme. That type of unfunded liability is not drawn in the graph above.
Where's China?
Where's Russia?
Where's Waldo?
I sure wish we had american politicians who would fight for what they believe in
99% of them already do. They are fighting for as much $$$ they can get regardless of who is paying.
I *LOVE* that touchdown poster.
The FED is like a 1500 lb. man stuck in a bed, in a room, in a house he will NEVER be able to leave....
Someone needs to shiv that man ...
Falling on the sword will be the better option for FRED.
It's negative rates and QE to infinity as the US, Japan and Europe march down the path of Zimbabwe economics.
The highest paying employers are Wall Street and the government.
Teachers, firemen and cops driving around in new $80,000 BWMs, Teslas while the other people drive around in 10 year old autos or owe a lot on their cars.
Like in communism it was better to be part of the communist government and pick up all the perks and higher pay.
It is a basic rule of financial physics. If you spend more now than you take in, then you have to pay it back later. Since we are only what we produce, this means more production will go to others instead of ourselves. By necessity, we will have less for ourselves and therefore a lower standard of living.
Live high now with debt = Misery and poverty later on.
meh>?
The Absurd Idea That the Fed is Not Going to Raise Rates
http://www.economicpolicyjournal.com/2015/09/the-absurd-idea-that-fed-is...
A Second Look at So Called Austrians
http://www.economicpolicyjournal.com/2015/09/a-second-look-at-so-called-...
We have a debt problem but this chart is stupid.
Why care about central government revenue paying offf state and municipal debt, when those municipalities collect revenue? Of course countries like the US and Germany come worse on that measure, as they have strong state systems. And several of these entities have balanced budget requirements.
Secondly, the total US public debt, minus the financial assets on the Fed balance sheet is about $8.7 trillion, which is about 300% of tax revenue.
American exceptionalism will take us to number 1!
The amazing thing is that Japan has the lead even considering that they do not have much military spending, did not previously have much of a welfare state, and did not waste any money on tsunami protection for their nuclear power plants!
Anyone have a platinum coin to pay off the Fed?
Was not able to connect the dots until I read this about inkblot charts....
Systems for Rorschach scoring generally include a concept of "determinants": these are the factors that contribute to establish the similarity between the inkblot and the subject's content response about it, and they can represent certain basic experiential-perceptual attitudes, showing aspects of the way a subject perceives the world. Rorschach's original work used only form, color and movement; currently, another major determinant considered is shading, which was inadvertently introduced by poor printing of the inkblots (which originally featured uniform saturation), and subsequently recognized as significant by Rorschach himself.
Rates will rise and will rise rapidly. Economy literally dies with 0% interest rates.
Central government would have to take over all means of production
It's not so much the central banks and gov'ts
that are going to raise interest rates. It's
the private banks that will raise interest rates
in a cash starved environment.
Time line seems to start around mid July 2016...
Oh they will rise, when a loaf of bread costs $1000