The US Government Now Has Less Cash Than Google

Tyler Durden's picture

Authored by Simon Black via,

In the year 1517, one of the most important innovations in financial history was invented in Amsterdam: the government bond.

It was a pretty revolutionary concept.

Governments had been borrowing money for thousands of years… quite often at the point of a sword.

Italian city-states like Venice and Florence had been famously demanding “forced loans” from their wealthy citizens for centuries.

But the Dutch figured out how to turn government loans into an “investment”.

It caught on slowly. But eventually government bonds became an extremely popular asset class.

Secondary markets developed where people who owned bonds could sell them to other investors.

Even simple coffee shops turned into financial exchanges where investors and traders would buy and sell bonds.

In time, the government realized that its creditworthiness was paramount, and the Dutch developed a reputation as being a rock-solid bet.

This practice caught on across the world. International markets developed.

English investors bought French bonds. French investors bought Dutch bonds. Dutch investors bought American bonds.

(By 1803, Dutch investors owned a full 25% of US federal debt. By comparison, the Chinese own about 5.5% of US debt today.)

Throughout it all, debt levels kept rising.

The Dutch government used government bonds to live beyond its means, borrowing money to fund everything imaginable– wars, infrastructure, and ballooning deficits.

But people kept buying the bonds, convinced that the Dutch government will never default.

Everyone was brainwashed; the mere suggestion that the Dutch government would default was tantamount to blasphemy.

It didn’t matter that the debt level was so high that by the early 1800s the Dutch government was spending 68% of tax revenue just to service the debt.

Well, in 1814 the impossible happened: the Dutch government defaulted.

And the effects were devastating.

In their excellent book The First Modern Economy, financial historians Jan De Vries and Ad Van der Woude estimate that the Dutch government default wiped out between 1/3 and 1/2 of the country’s wealth.

That, of course, is just one example.

History is full of events that people thought were impossible. And yet they happened.

Looking back, they always seem so obvious.

Duh. The Dutch were spending 68% of their tax revenue just to service the debt. Of course they were going to default.

But at the time, there was always some prevailing social influence… some wisdom from the “experts” that made otherwise rational people believe in ridiculous fantasies.

Today is no different; we have our own experts who peddle ridiculous (and dangerous) fantasies.

Case in point: this week, yet another debt ceiling debacle will unfold in the Land of the Free.

You may recall the major debt ceiling crisis in 2011; the US federal government almost shut down when the debt ceiling was nearly breached.

Then it happened again in 2013, at which point the government actually DID shut down.

Then it happened again in 2015, when Congress and President Obama agreed to temporarily suspend the debt ceiling, which at the time was $18.1 trillion.

That suspension ends this week, at which point a debt ceiling of $20.1 trillion will kick in.

There’s just one problem: the US government is already about to breach that new debt limit.

The national debt in the Land of the Free now stands at just a hair under $20 trillion.

In fact the government has been extremely careful to keep the debt below $20 trillion in anticipation of another debt ceiling fiasco.

One way they’ve done that is by burning through cash.

At the start of this calendar year in January, the federal government’s cash balance was nearly $400 billion.

On the day of Donald Trump’s inauguration, the government’s cash balance was $384 billion.

Today the US government’s cash balance is just $34.0 billion.

(Google has twice as much money, with cash reserves exceeding $75 billion.)

This isn’t about Trump. Or even Obama. Or any other individual.

It’s about the inevitability that goes hand in hand with decades of bad choices that have taken place within the institution of government itself.

Public spending is now so indulgent that the government’s net loss exceeded $1 trillion in fiscal year 2016, according to the Treasury Department’s own numbers.

That’s extraordinary, especially considering that there was no major war, recession, financial crisis, or even substantial infrastructure project.

Basically, business as usual means that the government will lose $1 trillion annually.

Moreover, the national debt increased by 8.2% in fiscal year 2016 ($1.4 trillion), while the US economy expanded by just 1.6%, according to the US Department of Commerce.

Now they have plans to borrow even more money to fund multi-trillion dollar infrastructure projects.

Then there’s the multi-trillion dollar bailouts of the various Social Security and Medicare trust funds.

And none of this takes into consideration the possibility of a recession, trade war, shooting war, or any other contingency.

This isn’t a political problem. It’s an arithmetic problem. And the math just doesn’t add up.

The only question is whether the government outright defaults on its creditors, defaults on promises to its citizens, or defaults on the solemn obligation to maintain a stable currency.

But of course, just like two centuries ago with the Dutch, the mere suggestion that the US government may default is tantamount to blasphemy.

Our modern “experts” tell us that the US government will always pay and that a debt default is impossible.

Well, we’re living in a world where the “impossible” keeps happening.

So it’s hard to imagine anyone will be worse off seeking a modicum of sanity… and safety.

Do you have a Plan B?

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Wile-E-Coyote's picture

Well, when you put it that way.......the US is f***ed.

Giant Meteor's picture

Well, Google it is then ...

edit, for clairfication ..

The United States of Google

Guess we'll have to come up with a new national anthem ..

I'm on it ..

Pliskin's picture

May I suggest 'Entrance of the Gladiators.' ??



Giant Meteor's picture

Ok, Entrance of the Gladiators it is!

And you will be entertained!

Stan Smith's picture

Funny how during the Obama administration it was... "Everything is Awesome"

Now with Donald J. it's... "We're going to have a war/depression/recession/loss/etc."

Yet largely nothing has really changed.

Giant Meteor's picture

In fairness, eveything was only awesome for Obamabots ..

Probably best not to do the inverse ..

Everything has not been awesome, going back a bit further than either ..

I mean shit just didn't happen after the last national election cycle, and further, I believe it can safely be surmised that the rise of DJT would indicate, many folks (aside from Obama bots and shillary voters) did not think things were awesome.

Although in fairness again, even many of THOSE did not think things were awesome.

Now Obama, thought mostly, HE was awesome ..

SoDamnMad's picture

I'm just looking for what we got for all of Obama's spending. Did the military just bury pallets of money out in the Iraqi desert for a select few to live on?

headdishwasher's picture

I suspect that President Trump is the first President we have had in decades who could read and understand a balance sheet.

Giant Meteor's picture

Well certainly he must have some understanding of red ink, and of course bankruptcy laws ..

venturen's picture

yes...where when you get a loan against a deal...that goes bad....the BANKERS gets it should be! A bank shouldn't give you a mortgage....and then when the value isn't there....they have recourse to steal from you! BANKRUPTCY IS ONE OF OUR MOST IMPORTANT stop bankers from taking advantage of people. If they do lots of bad deals they GO OUT OF BUSINESS! They are the experts!

Giant Meteor's picture

Good points you raise.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)

That one was a hoot ...

Anyway, bankruptcy on the bank banker, billionaire scale is strategic planning ..

On a personal scale, as individuals, its , so you fucked up and can't pay your bills you slug ..

Look I didn't make the rules, just reporting on them ...

espirit's picture

They sold the CONgress Critters the TBTF meme.

(with a hefty slush fund no doubt)

Pliskin's picture

'I suspect that President Trump is the first President we have had in decades who could read.'


Wile-E-Coyote's picture

With such a big military it's time to go to the likes of Google and Apple with the bayonets fixed. It should buy a few days.

small axe's picture

Brexit, Trump, upcoming EU elections -- the "experts" are on the verge of epic failure.

Here's hoping common sense wins the day.

TDK's picture

what the Fuck is Trump doing? muppet

espirit's picture

Shining a fucking light on the cockroaches, dickjam.

TDK's picture

i think he IS one of the cockroaches sadly ... even more greedy and self centred than the others

Cardinal Fang's picture

Blizzard this week is practice run for me.

Food supply? Check
Ammo? Check
Fuel supply? Check
Equipment inventory? Check
Equipment function? Check

63 unimog 404S? Check
85 pound malinois? Check
Arctic gear and training? Check

And so on....

venturen's picture

round up the government official and crony bankers and put them on trial...Goldman, JP Morgran, Barblay, DB, SNB, etc


Death to Bankers

PitBullsRule's picture

Google can't print money.  Stupid article.

BitchesBetterRecognize's picture

neither the Government since The paper money AKA FIAT is actually printed by the FED and lent to the Government at interest 

HenryKissingerChurchill's picture

Google can't print money.  Stupid article.

google can use the world information that funnels through it, as "investment inteligence" and "blackmail" ... almost like printing money... but definetively SLOWER

bshirley1968's picture

Imagine that, the goy government is broke and all the money is at the Jewish corporation.  Yeah, your probably right,  it's probably just a coincidence.

JohnGaltUk's picture

I am going to emigrate to Google Land

Pliskin's picture

Debt ceiling, pfft, it's just a con to make the masses think that the government has some kind of fiscal responsibility, guess what? 

It'll be raised, then raised again and again, ad infinitum. 

What a croc!

directaction's picture

One thing is absolutely certain:
All hell is about to break loose.

East Indian's picture

I dont understand; the US Govt still can print US Notes; and US notes do not add to the debt (they add to the inflation, though). Why cant Trump try that? 

underthevolcano's picture

Well, you certainly do not understand even the most fundamental concept of a debt based economy. The 'Fed' can only print notes against Treasuries that Congress issues. No Treasuries, no greenies.

East Indian's picture

But the Fed's monopoly was granted by the Govt, and Govt can withdraw it any time, isn't it?

Smedley's picture

Check out that graph since Trump got into office!!!

They are cutting off the money flow.....


underthevolcano's picture

You really mean they have stopped printing more green paper, dont you?

Smedley's picture

Printing whatever they're running this CIRCUS on!!!!

It's Hilarious now.....


underthevolcano's picture

Once again a story telling us how profligate the 'government' is. Maybe it's time to reconsider raising that taxation rate on the uber wealthy BACK UP to 85% where it used to be. Since they have all the public's money anyhow.

GeezerGeek's picture

Make the tax on poor people 85%. They will be incentivized to get ahead and make more money. That's how it works, right?


roadhazard's picture

"Trump will fix it"

ajkreider's picture

This is a debt ceiling issue.   Once that is raised, it will go back up.  We are reprising Oct. 2015. 

underthevolcano's picture

And so your debt to GDP is already at 107% of GDP (more if you deduct the value of hookers). How much debt do you think the world will allow the US to accumulate before the SHTF. As the man said yesterday: 'These are ridiculous interest rates for a bankrupt'.

ajkreider's picture

The "cash crunch" has come in the last two months (as it does before every debt limit).  The debt has been with us forever.  These are different issues, and not closely related.

If you care, the debt to worry about is public debt, which is about 77% of GDP.  And if you subtract the financial assets of the FED, you get to around 60%.

aloha_snakbar's picture

Maybe Goggle can give .gov a loan. Would *hate* to see .gov brand them as "terrorists" and invade them like they were Iraq...

mo mule's picture

That's a great idea!  It solves several problems.  Google has become a problem for .gov.  Trump could label them now as torrorists. Take their company and it's money, for the good of the country of course. That is needed the left has strayed to far, give what's left of it to the CIA and throw Eric to the curb. haha

We Are The Priests's picture

Could this be the proverbial "stuck between a rock and a hard place" moment?  I suppose one way to tell is measure the amount of MSM coverage of the issue.

If they cover it--no big deal.

Crickets--We're fucked.

Consuelo's picture



"This isn’t a political problem. It’s an arithmetic problem. And the math just doesn’t add up."


Funny, that's the same 'formula' Karl Denninger tried to pass off for a couple of years, post 2008...   It sorta didn't work out too well on paper though...

Consuelo's picture



Weeping, Wailing & Gnashing of teeth...


Then they bump it up again and we're off to the next 'big thing'...

headless blogger's picture

Wow. It's Google's big moment. They could literally get their start in on-line banking if they wanted.

Archive_file's picture

National Chapter 11 ASAP.

Ajax_USB_Port_Repair_Service_'s picture

Turn in your old dollars for new dollars!


BouncingCat's picture

Payment on the federal debt is legally the top priority over all other spending.  The only way we would default on the federal debt is if the government illegally paid lower priority expense.