This Is The Only Chart Americans Should Be Worrying About Right Now

Tyler Durden's picture

In 2015, President Obama and Republican congressional leaders agreed to suspend the federal debt ceiling until March 15, 2017. After that date – less then two weeks from now – the Treasury will surpass its cumulative $20 trillion borrowing authority.

And while the stock market (and VIX) signal utter calm, signs of stress are very clear in America's money markets. Swap spreads are suggesting traders are getting nervous that any hiccup in efforts to remove the burden could trigger a shortage on short-term government securities.

And even more notably, investors are willing to pay more for bills maturing in four weeks instead of five.

That’s because they don’t want to be caught empty handed while the Treasury slows debt sales to push its cash balance lower as part of the 2015 pact to suspend the debt ceiling. The spread between the March 9 and March 16 bills may get a “a little more noticeable” as Treasury cuts issuance and provides a “clearer sense of how long bill supply is going to be lower than normal” going into the March 15 deadline, Jefferies economist Thomas Simons said in a phone interview.

So, with two weeks left until the debt ceiling suspension expires, Treasury's cash balance plummeted to $109 billion this week as of Thursday... making this the most important chart in the world right now...

Once it hits zero, as FiscalTimes notes, newly ensconced Treasury Secretary Steven Mnuchin is expected to order “emergency measures” to effectively buy more time for the government to pay its creditors and cover revenue shortfalls to keep the government operating. The stakes couldn't be higher: Failure to raise the debt ceiling would do irreversible damage to the U.S. credit rating, trigger an uproar in U.S. and global markets, drive up the future cost of borrowing, postpone Social Security payments and tax returns, and force layoffs of non-essential government workers.

Deutsche Bank points out, there was a large withdrawal of cash last week as the IRS began sending out tax refunds. Despite a change of law last year which delays the refunds for early filers, the pace of refunds are similar to previous years. Between now and March 15, the Treasury can expect roughly another $40 billion of cash drawdown from refund activities. The Treasury cut its 4-week bill auction again this week to $18 billion, which is down from $35 billion last week and $45 billion two weeks ago. It also cut the 3-month and 6-month bill auctions by $4 billion each for next week. In the near term, the driver of bill supply is still the debt ceiling. But later in the year, the Fed’s balance sheet policy will have a major influence on supply outlook. If the debt ceiling is raised by late summer, a September Fed balance sheet unwind could potentially bring a flood of supply to the market and drastically cheapen the front end.

Not everyone is ignoring the potential risks ahead, David Stockman dropped this reality bomb last week:

“I think what people are missing is this date, March 15th 2017.  That’s the day that this debt ceiling holiday that Obama and Boehner put together right before the last election in October of 2015.  That holiday expires.  The debt ceiling will freeze in at $20 trillion.  It will then be law.  It will be a hard stop.  The Treasury will have roughly $200 billion in cash.  We are burning cash at a $75 billion a month rate.  By summer, they will be out of cash. 

 

Then we will be in the mother of all debt ceiling crises.  Everything will grind to a halt.  I think we will have a government shutdown.  There will not be Obama Care repeal and replace.  There will be no tax cut.  There will be no infrastructure stimulus.  There will be just one giant fiscal bloodbath over a debt ceiling that has to be increased and no one wants to vote for.”

Stockman predicts very positive price moves for gold and silver as a result of the coming budget calamity.

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hedgeless_horseman's picture

 

"Debt Ceiling."

Even after reading those words hundreds of times, they still always makes me laugh.

JRobby's picture

Another way Obama & Owned Legislature FUCK ALL!

ALL!

Leaving behind a mess that may be insurmountable but really designed to let One World Bank / GOVT swoop in to "rescue" enslaving ALL!

ALL

Delving Eye's picture

They have access to [CONTROL-P] and can print as much $$ as they want. We don't and can't.

Stuck on Zero's picture

Debt ceiling, glass ceiling, ... all kabuki thater.

JamesBond's picture

Then stop sending out tax returns to those who paid no federal taxes in the first place.  

 

jb

prime american's picture
prime american (not verified) JamesBond Mar 5, 2017 4:01 AM

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odatruf's picture

No kidding.

And the idea that the stakes could not be higher is a fucking laugh. If anyone with a brain simply thinks about it, .gov can pay 100% of debt obligations and roughly 90% of all other obligations without another damn increase.

The idea that the debt is the thing they'll not pay is ab fucking surd. It's a cash flow issue and nothing more.

GUS100CORRINA's picture

The solution is a simple one: President TRUMP can just issue an executive order allowing the Department of the Treasury to print money just like President Kennedy did with excecutive Order 11110. See text below. Of course there might be risks like assassination as JFK found out shortly after the order was issued.

======

Public Law 88-36

The House of Representatives took up the president's request early in 1963,[5] and passed HR 5389 on April 10, 1963, by a vote of 251 to 122.[6][7] The Senate passed the bill on May 23, by a vote of 68 to 10.[8][9]

Kennedy signed the bill into law on June 4, 1963 and, on the same day, signed an executive order (11110) authorizing the Treasury Secretary to continue printing silver certificates during the transition period.[10][11] The act, which became Public Law 88-36 (77 Stat. 54), repealed the Silver Purchase Act of 1934 and related laws, repealed a tax on silver transfers, and authorized the Federal Reserve to issue one- and two-dollar bills, in addition to the notes they were already issuing.[12] The Silver Purchase Act had authorized and required the Secretary of the Treasury to buy silver and issue silver certificates. With its repeal, the President needed to delegate to the Treasury Secretary the President's own authority under the Agricultural Adjustment Act.[13]

philipat's picture

USG is running annual defecits in the order of $1TRILLION. That's before Trump's agenda on military spending, the wall, infrastructure and tax cuts kick in. So if by "it's a cash flow issue" you mean a permanent negative cash flow of $1 Trillion + pa, then OK you are correct. Hemmingway famously wrote in response to the question "How did you go bankrupt?", that it was "Two ways. Slowly at first then suddenly". In theory at least, Government debt is supposed to be repaid (repayable?). So, IMHO, it is a tad more than an insignificant temporary (implied in your comment) "cash flow issue".

odatruf's picture

I understand your point, but no it isn't any more complicated than that.

Follow this:

Revenue is roughly $3.3 Trillion. Interest on the debt service is roughly $240 billion (this number is going to go up fast as rates increase, but follow my logic anyway). Pay this first.

Now you have just about $3 trillion for everything else. That's a cash flow and priority issue.  There is no legal requirement that the government spend one thin dime beyond interest if it would force us over the debt ceiling set by law. Yes, I know we have entitlement (they are better called mandatory spending) programs that the courts have said make up a legal obligation, but that obligation a) can be changed with a new law and b) can not force the violation of the debt ceiling law. When there is a direct contradiction like we have here, the more recent law will prevail. Since the ceiling was adjusted more recently than Medicare, SS and even the parts of Medicaid changed by the ACA, the debt ceiling wins.

Sure, the court could see it another way and no one would be surprised. But if you were betting, this would be the smart money play.

Dragon HAwk's picture

Man they got to stop playing this rerun, we have all seen it too many times,  it's getting real Boring

SgtSchultz's picture

"But I can't be out of money, I still have checks left"

jmack's picture

There is one other little event that happens march 15 as well...

 

 

BTW, gold rallied quiet nicely after the RTH close friday.  we may have put in a short term bottom, and will channel for the next two weeks in front of these two events.  or it may go gap up monday and never look back.

Suckerman's picture

You mean Julius Caesar assasination?

TVP's picture

Wow good job pointing out that FOMC meeting is the same day.  Total inconsequential coincidence I'm sure.  

Farqued Up's picture

No more debt ceiling increases, no more deficits, let the fiat printers pay for it, the Cabal has plenty of money. I need a long tax holiday.

FreeShitter's picture

Most americans cant even read a chart.

apoplectic query's picture

Trump could just have the treasury mint a Trillion dollor coin and deposit it in the accounts from which all the checks are written. No debt generated from that. Make payments on the principle and interest of the $20 Trillion debt as it comes due. Mint more coins as needed. Problem solved. And close the Fed because we don't need it.

odatruf's picture

That was bullshit when suggested for Obama and it's bullshit now.

thefinn's picture

Bill Still has been suggesting this for some time. In fact he suggests doing it to pay off the debt as it comes due and get rid of the Fed altogether - the last bit I agree with and would be willing to go along with almost anything to get there ;)

Ballin D's picture

Why pay the debt? Just nullify everything the Fed holds. Trump eliminated the deficit anyway, outside of these tax refund outflows up front, the 20 trillion limit shouldn't be a big deal

BigFatUglyBubble's picture

The Central Bank's private investors would not allow their politician puppets to do that.

BigFatUglyBubble's picture

Trump eliminated the deficit anyway

He did not.  He used joo-speak to make it seem like he did.  

HRH Feant's picture
HRH Feant (not verified) thefinn Mar 4, 2017 8:37 PM

I agree with anything that gets rid of the Federal Reserve!

buzzsaw99's picture

That’s the day that this debt ceiling holiday that Obama and Boehner put together...

that sounds dirty when you say it out loud.

MASTER OF UNIVERSE's picture

The Corporation of the United States of America is going to Congress for the Corporate USA Welfare Check because the Banana Republic is getting too close to the Third World, and it needs moar smokes, weed, and a case, or two, of beer.

 

Welfare is a bitch, eh, USA.

Ink Pusher's picture

Sorry but;  

"Welfare" didn't bankrupt the country...

Decades of continuous Warfare did.

It's was only partially funded by the banksters.

We ended up paying the invoice total and still are.

 

Sudden Debt's picture

Let America go bankrupt and start over again.

1 year of pain and everybody would be out of debt.

 

In 5 years, America would get a shot again at truelly becomming the greatest economy again.

thefinn's picture

As long as bankrupting the corrupt banking cartels and getting rid of the fiat system would be part of the plan.

That's the real issue.

 

Lore's picture

The rest of the world is not going to let America just walk away from its international debt obligations.  What're you gonna do, nuke your creditors?  And yet, postponing the pain of major monetary and fiscal reform seems to be the primary driver of American foreign policy these days, the main reason why countries like Russia (more-or-less debt free and independent of the western 'central' bank cartel) and Iran (that trade outside cartel control) are actively demonized by controlled media.

Americans COULD legislate a new sound currency and a publicly accountable utility responsible for its administration: no more of this debt-based cartel petrodollar racket.  And forget about Bitcoin, because if cryptocurrency was a real solution to unchecked government overreach, everybody would do it.  As it stands, governments appear to be readying their own in anticipation. 

When SHTF, governments do what's best for governments, starting with new taxation and debtflation and curbing your rights and freedoms to protect yourself -- until a critical mass of the electorate makes a stand. Then the real hardship begins, because without the familiar infinite web of unpayable debt, vast unnatural portions of the 'financialized' economy disappear. Some regions may never recover. Maybe some shouldn't.  The progressive-left in particular seems long overdue for some kind of cosmic spanking.

God DAMN it, the advertisements embedded in this page are infuriating!  Tyler, is it really necessary to jam-pack all of this shit that's popping up? 

HRH Feant's picture
HRH Feant (not verified) Sudden Debt Mar 4, 2017 8:36 PM

I agree! Time to print that $20 trillion dollar coin.

Dismantle the Federal Reserve and fire all of them.

Default on the debt? Yes. I don't give a damn about the debt.

Start minting real coins at the US Treasury.

Most US citizens are broke right now. Those that still have money in a 401K are going to wake up, oh on say Friday, October 13th, 2017, and find out their mutual fund just went tits up. All of that money invested in the stock market will go poof. Just like it did in October of 1997. Poof!

(Yes there is a Friday the 13th in October. Spooky, eh?)

thefinn's picture

America is dead as long as the debt isn't dealt with.

 

earleflorida's picture

'I fought the Yuan and the Yuan w`on' ****(G.W. Bush Dec. 11, 2001 China gets xtra`freepass into WTO)****

and now 'BitCoin' is valued in parity to GOLD....WTF!?!

Bush #41 & Bush #43 + the Big 'O' quadruple our debt to $20 Trillion.

Ps. WJC did keep it manageable, but the 'Honey`Trap jew Lewinsky kept Bill on the sidelines fighting for his political life, while the GOP passed 'NAFTA and CAFTA. It kept WJC sidelined just as the 'Deep State' is hamstringing Trump from getting on to doing his job.

I'm tellin ya folks,... the Bush's and Obama have destroyed America--- Abolish the "Patriot Act". and, as a sidenote dissolve the CIA once and for all!!!

deerhunter's picture

It's all smoke and mirrors except for the 150 a month the IRS sucks out of my checking account .

lolmao500's picture

Failure to raise the debt ceiling would do irreversible damage to the U.S. credit rating,

What bullshit. More debt = good credit rating? This is crap. Extending the debt once more should be NEGATIVE for the credit rating. DEFICIT TO 0 = GOOD.

Saying the opposite is just bankster propaganda.

FredGSanford.'s picture

I remember when the 'debt ceiling' was 8.7 trillion. I thought that was crazy. That was in 2007. Now I think little of debt ceiling talk nor
The 20 trillion dollar debt. It's beyond amazing. The situation we are in is unprecedented in world history. Don't tell us about the Roman Empire. This has never happened. The debt we have is so deep and so wide and so long and so tall that it can never bet paid back in a million years. This sea of debt will drown a lot of people. No way around it. And it's gonna be bad.

ThuleNord's picture

Google Weimar. Then look how hitler walked in and kicked the banks out and erased all debt with a new currency over night. And we wonder why he's always portrayed as the "bad" guy.

Consuelo's picture

 

 

 Revealing the insidious and criminal nature of usury must be kept in the closet - at any cost...

Consuelo's picture

 

 

I have brought this up a few times before in the past, but it bears repeating just for perspective:

 

Year: 1995

Where: Michael Reagan radio show

Subject: National debt approaching $5T...

Status: Alarm bells going off...

 

And here we are today...

HRH Feant's picture
HRH Feant (not verified) FredGSanford. Mar 4, 2017 8:29 PM

Same here. How long can the cray cray last? Until a black goose shits on everyone. When will that happen? Sooner rather than later!

bentaxle's picture

They need a distraction, like starting a war. Good job the Donald is on good terms with the CIA. No wait.

Mini-Me's picture

"Government workers" is an oxymoron.  "Non-essential government workers" is a redundancy.

sinbad2's picture

Ides of March 15 March 2017.

Who will be Brutus?

HRH Feant's picture
HRH Feant (not verified) sinbad2 Mar 4, 2017 8:28 PM

Hmmmmm. Good question! Will it be Janet Yellen when she raises rates?

Munchin when he helps Trump decide how to spend the federal budget?

Or will there be a black goose that shows up and shits on this parade?

Wait and see . . . ;)

Consuelo's picture

 

 

Would that there should be an actual 'calamity'...

 

The real calamity comes when entities outside of U.S. control or coercive force, decide they've had enough.   Then and only then.   Sorry David - indeed integrity doth beg justice, but justice will have to wait...

Sid Davis's picture

The growth in federal debt, not even counting the unfunded promises like Social Security, Medicare, and government pensions, has grown at a compound rate of 8.2% since 1900. It doubles about every 8 years; there is really no way to stop this growth other than to default or to start printing government money as a substitute which will then destroy the value of the dollar.

The reason for this developing disaster is the while the debt and the GDP are in the same size, the debt is growing at 8.2% and the GDP is now only growing at about 1/4 of that rate. It will be harder and harder to pay the debt because the economy won't be generating enough wealth to keep us alive, fund government spending, and to pay the debt, especially as the net energy that fuels our industrial age rapidly becomes negative over the next several decades, and the economy, instead of growing, spirals into the new paradigm of long term contraction.

If you print paper money to substitute for interest bearing debt that is fundamentally worthless, the printed non-interest paper takes on the same value as the worthless debt it is being issued to replace. The government would still pay its bills; it is just that what they pay you wouldn't buy diddly when you go to spend it. Don't expect the federal government to try this until after 2020.

As for gold, don't expect it to go up against the dollar, because temporarily an increase in interest rates will keep the dollar strong. Gold could go into the low $700's by 2020 before it starts a new bull market against the dollar. Right now we are still in the bear market that began back when gold finally reached $1,800.

Does anyone really believe the government will deliberately default, deliberately stop running deficits, or deliberately take away from the banks the monopoly on loaning new money into circulation at interest?
Of course they will pass a new debt limit and in another eight years the debt will be ~$40 trillion and in 8 years after that it will be ~$80 trillion.

Sure, at some point people are going to wise up to the huge default risk. I personally expect to see rates on the 10 year Treasury to gradually go back above 6% this autumn, and above 8% by the summer of 2018. The FED won't be able to control these rates because the market is more powerful that these crackhead bureaucrats.

Wilcox1's picture

The next thing the Dave said was that our President Donald Trump of US(A) will have the authority to ALLOCATE SPENDING!!! Just too cool!! His greatest strength working for US(A)!! The debt ceiling shenanigans will hopefully make the 2 weeks fun and interesting, but our Don is highly unlikely to blink. The shithook establishment is going to find out that the checkbook is mightier than the briefcase. THIS IS SO MUCH FUN!!! WIN WIN and WIN AGAIN!!! An INFINITE WIN!!!