Stockman Explains The Mystery Of The Treasury's Disappearing Cash

Tyler Durden's picture

Authored by David Stockman via,

As of October 24, the U.S. Treasury was flush with $435 billion of cash. That was because the department’s bureaucrats had been issuing debt hand-over-fist and piling up a cash hoard, apparently, for the period after March 15, 2017 when President Hillary Clinton would need to coax another debt ceiling increase out of Congress.

Needless to say, Hillary was unexpectedly (and thankfully) retired to Chappaqua, New York. But the less discussed surprise is that the U.S. Treasury’s cash hoard has virtually disappeared in the run-up to the March 15 expiration of the debt ceiling holiday.

That’s right. As of the Daily Treasury Statement (DTS) for March 7, the cash balance was down to just $88 billion — meaning that $347 billion of cash has flown out the door since October 24.

And I find that on March 8 alone the Treasury consumed another $22 billion of cash — bringing the balance down to $66 billion!

To be sure, there has been no heist at the Treasury Building — other than the normal larceny that is the stock-in-trade of the Imperial City.

What’s different this time around is that the bureaucrats have apparently decided to sabotage what they undoubtedly believe to be the usurper in the White House.

To this end, they’ve been draining Trump’s bank account rather than borrowing the money to pay Uncle Sam’s monumental bills. This has especially been the case since the January 20 inauguration. The net Federal debt on March 7 was $19.802 trillion — up $237 billion since January 20th.

But that’s not the half of it. During that same 47 day period, the Treasury bureaucrats took the opportunity to pay-down $57 billion of maturing treasury bills and notes by tapping its cash hoard.

In all, they drained $294 billion from the Donald’s bank account during that brief period — or about $6.4 billion per day. You wouldn’t be entirely wrong to conclude that even Putin’s alleged world class hackers couldn’t have accomplished such a feat.

At this point I could don my tin foil hat because this massive cash drain was clearly deliberate.

Last year, for example, during the same 47 day period, the operating deficit was even slightly larger — $253 billion. But the Treasury funded that mainly by new borrowings of $157 billion, which covered 62% of the shortfall. Its cash balance was still $223 billion on March 7. Again, that cash balance is just $66 billion right now.

(the last time we saw this situation was 2011, when US debt was downgraded)

Moreover, the Trump Administration has only a few business days until its credit card expires on March 15 — so it’s also way too late for an eleventh hour borrowing spree to replenish its depleted cash account. (Besides that, I’m predicting a very dangerous market event will start on the 15th.)

The Treasury will likely be out of cash shortly after Memorial Day. That is, the White House will be in the mother of all debt ceiling battles before the Donald and his team even see it coming.

With just $66 billion on hand it is now going to run out of cash before even the bloody battle over Obamacare Lite now underway in the House has been completed. That means that there will not be even a glimmer of hope for the vaunted Trump tax cut stimulus and economic rebound on the horizon.

Needless to say, the punters and robo-traders on Wall Street do not see the coming disaster, either. But have they not noticed that the Donald is unpredictable, impulsive and reckless in the extreme; and that he might take next summer’s midnight debt ceiling showdown to the brink and beyond in a manner that the Boehner/Obama establishment would have never even contemplated?

Besides, where is Trump going to get the votes to solve it?

Trump’s already burned all bridges with the Democrats beyond repair by his immigration ban, deportation orders and Mexican Wall/border control campaign. But after his valid but slightly misstated tweet about Obama’s order to tap the wires at Trump Tower (actually either NSA or the Loretta Lynch did), there is not a Dem vote left on Capitol Hill for anything he wants to do.

At the same time, Speaker Ryan’s Obamacare Lite is already on life support on Capitol Hill, which also has big implications for the debt ceiling battle. The conservative backbenchers realize that Ryan’s plan amounts to another giant Republican-endorsed entitlement and will add upwards of $1 trillion to the nation’s already giant $10 trillion structural deficit over the next decade.

Accordingly, they are in open revolt and the coming campaign from the White House to force them to walk the plank in April will likely end in failure. That’s because the bill will be withdrawn once it becomes evident that the Rand Paul conservatives and the moderates in the Senate are both off the reservation.

Or in the alternative, the House fiscal hawks will be left seething about the blatant fiscal profligacy of the Ryan plan if the Speaker succeeds in ramming it through, Nancy Pelosi style. Either way, a long summer walk on the debt ceiling plank is about the last thing the so-called GOP “majorities” are likely to coalesce around.

But as they say on late night TV, there’s even more. Namely, when the deep state bureaucrats shelved Uncle Sam’s credit card a few months ago and actually paid back $57 billion of debt since the inauguration, they bestowed a huge favor on Wall Street.

Rather than draining cash from Wall Street by selling $157 billion of new debt between January 20 and March 7 as they did last year, they stopped the issuance entirely and actually pumped in $57 billion to pay-off maturing securities.

In a word, the Treasury took its boot off the neck of the bond dealers, thereby enabling the 15% frolic higher in the stock market that has become known as the Trump Reflation Trade.

In all, it amounted to a giant — but temporary — shot in the arm in the casino. It was a quarter trillion dollars freed-up to buy stocks rather than new Treasury issues.

Needless to say, those myths begin to die on March 15 and the screaming aberration of the past four months — that is, a broke Uncle Sam paying down his debt — goes into reverse.

To be sure, as the cash balance dwindles to the vanishing point in the next 90 days, the Treasury will resort to its normal trust fund divestment gimmicks — a maneuver that can only prolong the day of reckoning by a few months. But even then there will be a “surprise” on the other side of the debt ceiling battle that will be even more shocking to Wall Street.

Namely, when the debt ceiling is finally increased, the Treasury will need to borrow at least $500 billion in a matter of days to pay back the trust funds it borrowed from and replenish Uncle Sam’s operating cash.

In that event, the government bond dealers will be selling equities and other “risk assets” like junk bonds hand-over-fist in order to finance the tsunami of Treasury debt.

And as the man says, that’s the good news part of the story. The bad news is that not only is the Obamacare “repeal and replace” campaign opening up a legislative blood bath that will stall tax cuts and infrastructure stimulus indefinitely, but the Trump White House is now demonstrating that it will give the words erratic, incompetence and self-inflicted wounds a whole new definition.

I’ve been saying that the problem with the Wall Street robo-machines is that they can read the words in the financial news headlines, but not the political tea leaves in Washington. With each passing day that proposition is being proved in spades.

And with each new “unexpected” stumble in Washington, the case to get out of the casino with all deliberate speed becomes all the more urgent.

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Logan 5's picture
Logan 5 (not verified) Mar 14, 2017 1:42 PM

Deep [State] Pockets ~ That's where all the confetti goes

Looney's picture


Hillary was unexpectedly (and thankfully) retired to Chappaqua, New York

She should’ve been retired to a Federal SuperMax in Colorado or, better yet, Alaska.  ;-)


NugginFuts's picture

Wait a sec - didn't someone promise that outcome if he won?

froze25's picture

From what I understand when the money runs dry, Trump gets to decide what gets funded and what doesn't.

nope-1004's picture

Since when does an international reserve currency, complete with its own printer, not have "any cash"?  I mean, the Treasury Bond IOU game is a total shell for ponzinomics, it makes no logical sense that the US could ever run out of money, unless done deliberately.

Perhaps the Fed is trying to strong-arm Trump, or this is the big event that HYG is forecasting.


WorkingFool's picture

My first guess was that the third world Marxist monkey sent another multi-billion dollar payment to Iran

Tiwin's picture

Wrong. The 'muslim' sent it to Israel , along with his sincere apologies for not getting that 4th Jew confirmed for  the Supreme Court.

WorkingFool's picture

My first guess was that the third world Marxist monkey sent another multi-billion dollar payment to Iran

CJgipper's picture

I predict that the American people win this game of chicken.  Remember last time the government shut down because of the debt ceiling?  Yeah, me neither.  Get it yet?

Uncertain T's picture

My guess is you're right Cjgipper.... Trump wants this fight.  I want this debt fight.... It will be a good reason for layoffs.

Arnold's picture

Treasury can by pass the fed and sell to the ECB and Japs, who would love to have them directly.

All it takes is a phone and a pen.

Consequences be damned, full speed ahead Gridley.

Fed is trying to lower its balance sheet anyway.

slightlyskeptical's picture

Not he fed, the treasury. Munchkin is dropping the ball or getting ready to play really dirty. 

NugginFuts's picture

For the downvoter with a short memory:

Well, are we going to lock her up or not? Or are we waiting to indict her Goldman buddies too?

Got The Wrong No's picture

If you haven't noticed they are working on it. Weiner is supposedly singing like a bird. You people who think everything can get done in 52 days make me laugh. Especially with all the Obstruction. 

Belrev's picture

Another much better woman in France, Marine Le Pen, just spit in the face of French journalist by telling them "French people don't trust you, are you aware of that?"

J. Peasemold Gruntfuttock's picture

If a few quick bucks are required just lease out the gold in the depositories. 

Oops, sorry I forgot it might already be unavailable, and ever so slightly encumbered.

Could always lean on JP Morgan for a silver loan.

Or better still demand all of the banks return the bail-out cash they have been advanced since 2008 that they refuse to put into circulation.

Problem solved.


J. Peasemold Gruntfuttock

Stainmaker's picture

Debt ceiling fustercluck should be good for the PMs

Jubal Early's picture

"Deep [State] Pockets ~ That's where all the confetti goes"

Yes but it will be interesting to see how they behave when their gravy stops flowing.  I am eagerly anticipating what branches of government Trump defunds in what order.  And it will be very telling.  Barry the Kenyan of course cut the park service first, and then other things that would starve his opponents and provide fresh meat for his base.

Trump could start with something sacred to the useful idiots, like completely defunding EPA.  Or NPR.  Or even mandates like cost sharing for various useless projects.  It would be one way for Trump to regain control of the narrative (not that I think he will do anything I like).

Pool Shark's picture

Funny how the One Thing Republicans and Democrats Always agree on is Profligate Spending.

When the debate over raising the debt ceiling begins, there will be bickering, posturing, name-calling, threats, back-room deals, and possibly outright war; BUT, regardless of what Stockman says, THE DEBT CEILING WILL ALWAYS BE RAISED; count on it.

If you want to know why the Debt Ceiling will ALWAYS be raised, see this beginning at the 14:30 mark:

Jubal Early's picture

But you neglect do describe the timing.  They ALWAYS make a contrived crisis out of it, and they have shut or reduced various departments punish opposition in the past.  So ultimately I have little doubt that it will be raised.  The question is after which victor emerges.

Miner's picture

With a fed rate hike coming in bright red flashing lights, isn't it a breach of someone's fiduciary duty for the treasury NOT to borrow now while money is cheap?

PoasterToaster's picture
PoasterToaster (not verified) Mar 14, 2017 1:46 PM

What is the mechanism for removing lifer bureaucrats?

Lonesome Crow's picture

"What is the mechanism for removing lifer bureaucrats?"

1. The elimination of the ability to take money out of public offices, directly and indirectly.

2. The elimination of the laws of confiscation.

3. The promulgation of education and excellence.

Jubal Early's picture

RIF = Reduction In Force.  

We should be hearing something about this soon.  Seniority plays a big role, as does performance ratings.  Of course EEO (Equal Employment Opportunity, or better known as the Department of Racists, Sexists and Feminists) will do all it can to block the firing of people of color or vagina, so the federal workplace will likely end up infested to an even higher degree with these parasites.  But it is possible when the president is willing and able to face the political ramnifications.

Lonesome Crow's picture

"RIF = Reduction In Force."

A good principle of which 1 and 2 belong from the simple-as-1-2-3 list I've indicated. However, number 3 is prerequisite and therefore RIF is unlikely to ever come from within the establishments of indoctrination. It is not in their nature and thus not possible at all for this president to achieve as long as the culture regards corruption as of more account than excellence.

max2205's picture

So the fed ran up the bubble market.....knew it 

Arnold's picture

A pension suspension memo related heart attack.

Dugald's picture


Preferabley something that goes BANG......

BigFatUglyBubble's picture

Meh, sounds exciting but they have cash to slush around even if they don't raise the debt ceiling.  It's all a dog and pony show. 

2_legs_bahhhhhd's picture

Is 300bil$ on with margin enough to goose the markets for the last three months ... if it isn't, look out below

roadhazard's picture

LOL... what are THEY doing taking out loans in his name.  Where's that fucking tax form.

Muad'Grumps's picture

As of march 10th there was only 30B left in the cash account. March 8th...66B.

NugginFuts's picture

How much left on March 16?

Muad'Grumps's picture

Treasury stopped reporting Mar 10th. It does this time from time for a few days.

In.Sip.ient's picture

Or this is all a deliberate setup to

justify "temporary" ( soon permanent )

layoffs across ALL gov't departments...


Keep in mind, the US MUST HAVE higher

interest rates, a lower US$ and reduced

gov't just to survive


Sitting here telling us how terrible the outcome

will be, simply under estimates the real DISASTER

that failed state status ... for the US of A (!) ...

would really be...


Donald J. Trump's picture

Me likes to think Trump will use this crises to his advantage and defund his adversaries and make some serious policy changes with little oppo sition.  Can Congress be laid off?

AR15AU's picture

precisely... Trump goes "uh oh guys, seems we've ran out of money... congress... ball's in your court... i'm going golfing!"


meanwhile, liberal institutions everywhere start hemhorraging as their lifeblood is cut off.

Arnold's picture

Got the Krauts and the Chinks coming in next week.
Going to Mara Largo.

Congress Critters, you're up.

Year and a half until midterms you know.

William Finn's picture

I literally just had lunch with a buddy who is a military contractor and just took over his firm's operations.  He said, verbatim, "The hardest thing about my new job is trying to explain the concept of a budget to my employees.  The military never asks for a budget..."

So glad they take tax dollars so seriously.

hongdo's picture

Should demand a pert chart schedule of specified deliverables, WBS budget, and earned value reporting.  But it would be a waste of time as the MIC changes their mind like Imelda Marcos changed her shoes.  Can you spell cost-plus ECP?

2ndamendment's picture

And yet real asset prices for gold and silver continue to plummet..... Yeah, and I am sure there's no manipulation in the "markets."

2ndamendment's picture

The hilarious part of this is all the leftists who refused to file their tax returns may truly NOT be getting their rebate back from the Treasury. 

2_legs_bahhhhhd's picture

Fuck em... most of them are tax eaters that slop the public trough. They should be paying more to fund their delusional dystopias.

MickV's picture

The Usurper was Hussein Obama, born British of a British subject Kenyan father. The natural born Citizen requirmement stipulates that one must be born in the Country of US Citizen parentage (both, or a single unmarried US Citizen mother), where no possibility of dual allegiance exists. The very pupose of the requirment is "prevention of foreign allegiance" (See Federalist 68). Therefore it is impossible that one born of foreign parentage or on foreign soil is eligible.

SCOTUS has defined the term multiple times, but the apologists of the Usurper (including the Republican Party, who promoted their own ineligible candidates in the 2016 election-- Cruz and Rubio-- One born in Canada, and one born of non US Citizens) typically just ignore SCOTUS citations proving that Hussein Obama was not eligible.

"The Constitution does not, in words, say who shall be natural-born citizens. Resort must be had elsewhere to ascertain that. At common-law, with the nomenclature of which the framers of the Constitution were familiar, it was never doubted that all children born in a country of parents who were its citizens became themselves, upon their birth, citizens also. These were natives, or natural-born citizens, as distinguished from aliens or foreigners". 

Minor v. Happersett, 88 US 162, Pg. 167 (1875): Wong Kim Ark, 169 US 649, Pg. 680 (1898)