Fed Quietly Revises Total US Debt From 330% To 350% Of GDP, After "Discovering" Another $2.7 Trillion In Debt

Tyler Durden's picture




 

Everyone has seen the chart of "Total Credit Market Instruments", which as of its most recent update on March 31, 2015, was just over $59 trillion, or 330% of US GDP.

 

For those who have not seen it, as well as for those who are familiar with this chart, take a long look, because this is the last update of this particular data series, pulled straight from the Fed's Z.1 Flow of Funds (section L.1), you will ever see.

So did the Fed spontaneously terminate the reporting of what until the second quarter's update of the Flow of Funds, was the most comprehensive official summary of Household, Financial, Corporate and Government debt in existence? And if so why?

Many Fed watchers assumed that this is precisely what happened, and indeed, searching high and low for the infamous L.1 Section revealed nothing.

We can only assume that the vocal outcry that emerged in the aftermath of the Fed's release of its Q2 Flow of Funds statement missing this most critical of data sets on September 18, was so loud that three weeks later, this past Friday on October 9, the Fed released an official follow up explanation what exactly happened.

Here is what happened to the missing so very critical data series, straight from the horse's mouth:

Q: In the September 18, 2015 release of the Z.1 Financial Accounts of the United States, some tables in the summary section on credit market instruments seem to have disappeared. What happened to these tables and where can I find the equivalent data series?

 

With the September 18, 2015 Z.1 release, the classic presentation of the instrument category "credit market instruments" has been discontinued and replaced with two new instrument categories, "debt securities" and "loans".  Reporting debt securities and loans separately brings the Financial Accounts more in line with the international standards for national accounts. The debt securities instrument includes open market paper, Treasury securities, agency- and GSE-backed securities, municipal securities, and corporate and foreign bonds. The new loans instrument includes depository loans not elsewhere classified, other loans and advances, mortgages, and consumer credit. Together, debt securities plus loans include all of the financial assets or liabilities previously included in credit market instruments. While the underlying instrument categories that make up the sum of debt securities and loans are the same as those in old "credit market instruments" concept, changes to a few of these categories make the new sum of debt securities and loans larger than in previous publications. 

 

This change has had three major impacts on the table structure of the publication: (1) summary tables focusing on "credit market instruments" have been eliminated; (2) remaining summary tables have been renumbered; and (3) new instrument tables for debt securities (tables F.208 and L.208) and loans (tables F.214 and L.214) have been created.

That's the "what", as for the why, note what the Fed said above: "the new sum of debt securities and loans larger than in previous publications." Which means that not only did the Fed stop reporting a consolidated total debt series, it admits that the actual debt was higher. Some $2.7 trillion higher.

Oops.

Here is the Fed's mea culpa on that particular topic:

Q: Why is the level of total debt outstanding in the September 18, 2015 release of the Z.1 Financial Accounts of the United States so much higher than it was in the previous Z.1 release?

 

Total debt outstanding was revised upwards due to methodology changes to both Treasury securities and security credit. Total debt outstanding is now the sum of two new instrument categories: debt securities (table L.208) and loans (table L.214). The aggregate of these instrument categories was previously called credit market instruments.

 

Treasury securities, part of the debt securities instrument category, now include nonmarketable Treasury securities held by federal government defined benefit retirement plans (FL343061145). The inclusion of federal government defined benefit retirement plans resulted in an upward revision to the level of federal government debt of about $1.408 trillion for 2014:Q4. See the published FEDS Note "Federal Government Defined Benefit Retirement Plans" for more details http://www.federalreserve.gov/econresdata/notes/feds-notes/2015/federal-....

 

In the domestic financial sector, borrowing previously classified as security credit liabilities (see release highlights) are now included as part of loans for the securities brokers and dealers sector. These are: (1) U.S.-chartered depository institutions loans for purchasing or carrying securities (FL763067003); (2) foreign banking offices in the U.S. loans for purchasing or carrying securities (FL753067003); and (3) Households and nonprofit organizations cash accounts at brokers and dealers (FL153067005). The revision to broker dealer debt for 2014:Q4 was roughly $962 billion.

 

Similarly, borrowing previously classified as security credit liabilities of the household sector are now classified as loan liabilities. Margin accounts at brokers and dealers (FL663067003) are now included in the household sector's other loans and advances instrument category. This change resulted in an upward revision of $370 billion to the outstanding amount of household sector loans for 2014:Q4.

The bottom line:

The total revision to the level of debt outstanding (debt securities plus loans) due to these methodology changes is approximately $2.74 trillion 2014:Q4. 

And so the Fed has managed to kill two birds with one stone: it no longer provides a simple, one-stop-shop way to reconcile the total US credit stock, and it quietly boosted total US consolidated credit by $2.7 trillion to $62.1 trillion as of June 30, 2015.

Luckily, for those who still care about such trivial memorandum items as "data" - made up as it may be - and would like to keep track of total US credit exposure, now better known as total debt and total loans, they can simply add up the two line items, with debt (found here) and loans (found here).

This is how the old and new data look like: as noted, the consolidated total has risen by $2.7 trillion as of March 31, the last time the Fed reported the "old" series, and is currently a total of $62.1 trillion.

 

Not surprisingly, with GDP not revised higher, it means that the two most important data sets for the US economy, total debt (or credit) however defined, and total GDP, now look as follows:

 

The end result is that the ratio of Consolidated Credit to GDP, has quietly risen from 330% to 350%, without anyone in the broader public saying a word and without any of the official institutions, so seemingly concerned about the total stock of global debt, even noticing. And why should they: the S&P500 is back over 2000 so all is well.

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Sun, 10/11/2015 - 15:40 | 6655883 kowalli
kowalli's picture

rent a tent

Sun, 10/11/2015 - 16:09 | 6655961 CaptainAmerika
Sun, 10/11/2015 - 16:27 | 6655986 CClarity
CClarity's picture

Oh to be on the US$ and be able to print print print - just what is the GDP to debt ratio for the PIIGS?  No where near 350%

Sun, 10/11/2015 - 16:35 | 6656028 tc06rtw
tc06rtw's picture

  
 That’s proof God favors America…
  
       He made  OURS  the reserve currency!

Sun, 10/11/2015 - 16:43 | 6656052 SoilMyselfRotten
SoilMyselfRotten's picture

And we thought only the Pentagon could lose track of trillion$

Sun, 10/11/2015 - 17:54 | 6656187 HardlyZero
HardlyZero's picture

CRASHGURU showed this earlier....

.. on the cusp we actually might be if I look at these 2 FRED charts:

http://investmentresearchdynamics.com/a-liquidity-crisis-hit-the-banking...

 

and the discussion point for September 16, 2015...there was massive buying to protect Glencore.

What’s even more interesting is that the spike-up in reverse repos occurred at the same time – September 16 – that the stock market embarked on an 8-day cliff dive, with the S&P 500 falling 6% in that time period.  You’ll note that this is around the same time that a crash in Glencore stock and bonds began.   It has been suggested by analysts that a default on Glencore credit derivatives either by Glencore or by financial entities using derivatives to bet against that event would be analogous to the “Lehman moment” that triggered the 2008 collapse.

 

So where does this all end up  ?   Now we know how/why the market is taking off again now (the recent massive short squeeze)...the market knows there will be bailouts for critical resource companies and it is now 2008 all over again.

Sun, 10/11/2015 - 18:39 | 6656303 Oracle of Kypseli
Oracle of Kypseli's picture

That is the extra money they spent to suppress PM's

Sun, 10/11/2015 - 18:53 | 6656353 NoDebt
NoDebt's picture

"What difference does it make at this point?"

None of it's getting paid back.  NONE. OF. IT.  Endless rolling of debt until the implosion.

Sun, 10/11/2015 - 20:38 | 6656721 Captain Debtcrash
Captain Debtcrash's picture

They did the same thing in the opposite direction at the beginning of the year. Total credit market debt to GDP is one of the most telling charts there is. When it breaches 100 trill 2.7 isn't going to make that much of a difference, if we make it that far.

The point is that in a debt based monetary system total debt must grow faster than the money supply which causes the ability to service that debt to lag particularly if money velocity is falling. This forces extreme monetary policy, and eventually a dog whistle is sounded and market participants reverse course, monetary velocity skyrockets and it's game over. Tick tock.

Sun, 10/11/2015 - 21:37 | 6656858 cookie nookie
Mon, 10/12/2015 - 03:49 | 6657475 Keyser
Keyser's picture

Just imagine what the ratio would be if they actually added in the long-term unfunded liabilities of SS and Medicare / Medicaid... Yet the people never question the lies of their masters... Truly amazing... 

Mon, 10/12/2015 - 11:05 | 6658411 All Risk No Reward
All Risk No Reward's picture

Look at the chart above... as long as exponential debt growth is in play, you can play games with debt.

What did we learn about exponential debt functions?

They can't persist forever.

When this breaks down, "I'm lovin' it" will not longer be the motto of choice.

BTW, the exponential debt growth in the original article exposes the criminality of the Fed - their sole mandate is to ensure that debt growth is commensurate with GDP. That chart is exponential to GDP growth.

Sun, 10/11/2015 - 17:54 | 6656201 BullyDog
BullyDog's picture

Exactly lose 1.2 Trillion and the next day you have planes flying into buildings destroying the offices investigating said lost money. 

 

Wonder what tomorrow will bring,  Evoporating gold from 33 liberty?

Sun, 10/11/2015 - 18:08 | 6656231 mtndds
mtndds's picture

sneaky phuckers, its all transitory and  racist.

Sun, 10/11/2015 - 18:37 | 6656300 SoilMyselfRotten
SoilMyselfRotten's picture

That's some real coincidental shit BD, all the media outlets musta picked up and ran with that one.

Sun, 10/11/2015 - 18:45 | 6656324 y3maxx
y3maxx's picture

It is now 11:59:58.......

Sun, 10/11/2015 - 20:05 | 6656602 tarsubil
tarsubil's picture

Reminds me of the time I misplaced a couple trillion in debt. I was dusting under the refrigerator and there it is. Can you imagine my surprise? Of course, I can look back now and laugh since it was all monetized.

Sun, 10/11/2015 - 20:33 | 6656705 JamesBond
JamesBond's picture

too funny

Sun, 10/11/2015 - 16:20 | 6655991 TongueStun
TongueStun's picture

Bush's fault.

Sun, 10/11/2015 - 16:26 | 6656013 The Once-ler
The Once-ler's picture

  
       …  that’s for the NEXT revision.

Sun, 10/11/2015 - 18:13 | 6656240 Mentaliusanything
Mentaliusanything's picture

It's not Bushes Fault....... It's Nixons !

Mon, 10/12/2015 - 02:41 | 6657420 Theosebes Goodfellow
Theosebes Goodfellow's picture

Technically speaking, it was Franklin Delano Roosvelt's fault, or arguably Woodrow Wilson's. But FDR is definitely on the hook for the Fed.

Mon, 10/12/2015 - 11:07 | 6658426 All Risk No Reward
All Risk No Reward's picture

No. No. No.

It is the fault of the Debt-Money Monopolists!

Sure, it is fun to make fun of the morons they put in place to pretend the voter has power.

But the oligarchs do that for a reason - to keep you talking about the puppets.

Talk about the Puppet Masters - the Debt-Money Monopolists.

Help others understand the system.

Mon, 10/12/2015 - 17:30 | 6660223 TheReplacement
TheReplacement's picture

Is not Nixon's.  Is Wilson's.

Sun, 10/11/2015 - 18:17 | 6656243 Bring the Gold
Bring the Gold's picture

Well yes it is Bush's fault. Well it was Bush, Obama, Clinton and the 12 year HW Bush admin (can't blame Reagan he was brain dead post 3/30/1981). So yes, 20 of the past 34 years of unreal in-debtedness created by government were *A* Bush's fault.

In reality though, it was a bi-partisan effort of captured Deep State traitors who wanted to put our country into debt so deep we can never get out. The whole red team, blue team thing is soooooo out dated.

Sun, 10/11/2015 - 16:11 | 6655966 Squid-puppets a...
Squid-puppets a-go-go's picture

THANK YOU, Tyler

But quite honestly even you dropped the ball on this one. Normally you'd have been applying constant pressure for the us govt to update its frozen $18T from, what? 18 months ago. I even messaged you about 3 months ago to say whats the goss on the REAL figure, but you happily reprinted articles that all spoke of $18 as the figure without question

rare fail, dude. Not that you were alone - other contrary sites also failed to put the blowtorch on this topic and remind the public that $18 was a frozen fixed amount

(then theres the unfunded future liabilities issue...)

Sun, 10/11/2015 - 16:21 | 6655998 pelican
pelican's picture

"A trillion here a trillion there, it is not like it is our money"  Overheard in DC

Sun, 10/11/2015 - 16:43 | 6656053 Four chan
Four chan's picture

it's not like it's money. 

you try doing this with real money and see what happens.

Sun, 10/11/2015 - 22:37 | 6657038 yogibear
yogibear's picture

Put Krugman in charge and ramp the debt from $18.4 trillion to $50 trillion. Send checks out to everyone.

Let's have a good time before everyone around the world realizes the game and no longer accepts the currency.

Sun, 10/11/2015 - 16:46 | 6656059 Tyler Durden
Tyler Durden's picture

The US debt number of $18.112975 trillion is frozen and will remain frozen as long as the US does not increase its debt ceiling of $18.113 trillion which is where the official debt number tops out. What the US is doing is merely burning through the emergency measures of cash which we calculated will be fully exhausted in one month absent a debt ceiling deal.

How is that still news to anyone after we covered it extensively in 2011?

There are many things to be disgusted with and/or report on. This is absolutely not one of them, especially since one can easily calculate what the real stock of US debt is simply by tracking the increase in the monthly budget deficit.

Sun, 10/11/2015 - 18:36 | 6656293 rubiconsolutions
rubiconsolutions's picture

Common corpse math

Sun, 10/11/2015 - 20:21 | 6656656 Big_Hitman
Big_Hitman's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.wallstreet34.com

Sun, 10/11/2015 - 22:00 | 6656929 Big_Hitman
Big_Hitman's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.wallstreet34.com

Sun, 10/11/2015 - 15:45 | 6655899 theFNG
theFNG's picture

MOAR!!!!!

Sun, 10/11/2015 - 16:21 | 6655995 Dubaibanker
Dubaibanker's picture

On another subject...Putin just said the following hours ago:

As I said the other day, US has to make a choice.....either US will support Russia/Assad/Syria/Peace/Iran/Iraq.....OR....support ISIS.

I was right. US has chosen the side of ISIS instead of peace in the world!

Russian President Vladimir Putin discussed the ongoing anti-terror operation in Syria during an interview with Russian journalist Vladimir Solovyov in Sochi, Sunday.

SOT, Vladimir Putin, Russian President (Russian): "If we speak about the military component, we tell our partners, when we hear them blaming us for our strikes not hitting ISIS or other terrorist organisations like Jabhat al-Nusra and others, but the allied part of the opposition so to speak. And we told them: If you know the situation on the ground better than we do as you have been there for more than a year - unlawfully, but still you are present there - if you know better, though I doubt it but let's say, give us the targets. We will work on them."

SOT, Vladimir Solovyov, journalist (Russian): "Have they declined?"

SOT, Vladimir Putin, Russian President (Russian): "Yes, they declined. They said 'No, we will not be working on this level', it is not clear why. If they really know better and want to fight terrorism, tell us the direct locations where the terrorists are sheltering, where they have command points, ammunition depots and equipment, give us the targets. What could be easier? But so far we haven't reached such level of joint work, but I'd like to repeat that the first steps in establishing the contacts on the military level have been made."

https://www.youtube.com/watch?v=PKmydfR5pZo

Sun, 10/11/2015 - 18:53 | 6656354 bigkahuna
bigkahuna's picture

this is no surprise, if the US can't have its way in Syria/Iraq - we're on the way to the next goat rope...

bend over taxpayers

Mon, 10/12/2015 - 01:04 | 6657310 Peter Pan
Peter Pan's picture

ISIS is just the four last letters of the word CRISIS.

I think the CR stands for CREDIT

Apart from that I believe that the only thing that is propping up the dollar is the predicament of the rest of the world that has US dollar debt in its reserves and does not want to lose that "asset"  by admitting that it's rubbish.

Sun, 10/11/2015 - 15:45 | 6655900 coast
coast's picture

donald rumsfeld said that the pentagon cannot account for 2 trillion...and now 2 trillion more in debt...where the hell is all this money going?   Didnt I read somewhere that total federal tax revenue was around 1 trillion or 2 trillion?  Cant remember but at the same time, printing money must be lots a fun. little boys and cocaine for everyone!  how about having CDS kidnap some more kids so you can drink their friggin blood?   sick bastards...

Sun, 10/11/2015 - 15:47 | 6655903 kowalli
kowalli's picture

1trillion for Islamic state and 1 trillion for undercover cia prisons or some other dirty duties

Sun, 10/11/2015 - 16:44 | 6656051 LetThemEatRand
LetThemEatRand's picture

Probably more like 1.9 trillion to the Rothschilds and their cohorts, and .1 trillion to the Islamic state and cia prisons.  It doesn't cost a trillion to arm some radicals just to keep up the illusion that the West is under constant threat.  But controlling the entire world and living in obscene luxury is expensive.

Sun, 10/11/2015 - 17:26 | 6656146 Stroke
Stroke's picture

That must be where the used Toyota pick-ups are going

 

I'm keeping mine

Mon, 10/12/2015 - 17:36 | 6660253 TheReplacement
TheReplacement's picture

The local Toyota dealership has been calling my cell, home, and emailing me about how they need late model used trucks because business is booming so much now...

Disgusting.

Sun, 10/11/2015 - 16:22 | 6656000 TongueStun
TongueStun's picture

So it's still Bush's fault?

Sun, 10/11/2015 - 16:48 | 6656066 coast
coast's picture

There is much more to write, but to keep it short, I will just give you a tiny bit of the puzzle...The bankers had nixon go off gold standard, which gave bankers more power...But there were still laws, so they had bill clinton get rid of the glass steagle act...Bush ran with the ball and used 911 to invade the middle east for the bankers..Then george bush handed the baton to obama, and they are correct when they say that niggers can run faster than whites.

It goes back centuries, thomnas jefferson fighting the bankers, or even two thousand years ago when Jesus turned over the tables of the money changers and was crucified for it.  Or 1913, or the civil war etc...All wars are banker wars....Some think God is bad in the old testament..  ALl He was doing was fighting the banksters.  The same thing you would do if you had the fucking balls to do it.  But you dont.

Bankers is the word I use...but they have many more names..rothchild zionists, and crap, what is that word for the jews who are not jews?  I cant remember...something like autistic jews or something lol... It starts with an "a" I think ...sorry cant remember, but you get the point. 

Sun, 10/11/2015 - 18:33 | 6656285 cosmyccowboy
cosmyccowboy's picture

kennites... which means sons of cain

 

Sun, 10/11/2015 - 18:35 | 6656294 Mr. Magoo
Mr. Magoo's picture

It was all downhill from the time Andrew Jackson died so the real republic only lasted about 50 years, After the takeover in 1867 and illegal 14th amendment which made us all equal debt slaves things progressively and slowly got us where we are today boiling frogs

Sun, 10/11/2015 - 18:02 | 6656215 EscapeKey
EscapeKey's picture

oh ffs not that bullshit again - the money is not gone, it's just not accounted for properly.

think of going to the supermarket 10x but throwing away the receipts. you know you spent the money, you know where it is - but you don't know if it was spent on milk or bread.

Sun, 10/11/2015 - 20:38 | 6656720 JamesBond
JamesBond's picture

love your sarcasim 

Sun, 10/11/2015 - 15:51 | 6655909 Ajax_USB_Port_R...
Ajax_USB_Port_Repair_Service_'s picture

 A nice healthy upward revision of the GDP will fix everything. Please stand by.

The NFL players are wearing pink to protest these reporting changes.

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