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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2rigged2fail's picture

Found it....Direct deposit to Israel for 75% of the cash

hsun85's picture

get ur tax refund before monies run out

buzzsaw99's picture

quality doom imo. no mention of yellen, which makes it even doomier. good stuff.

DingleBarryObummer's picture

Stockman's Doom-fu is strong, mheh, but he is no match for me [reels back with hysterical belly laughter]. 

RougeUnderwriter's picture

Christ I hope Trump does drain the swamp. This is treason

DingleBarryObummer's picture

The whole notion of the FED is treason.  Especially giving large low interest loans to foreign banks that are against the interest of the US. 

wholy1's picture

DOES the PREZ/CIC have the authority to issue TREASURY CURRENCY D-I-R-E-C-T-L-Y ????

Muad'Grumps's picture

You know could be going on? Treasury wants the runway to extend out the maturity profile big time. Maybe by issuing 50Y or 100Y bonds. Do it now and maybe you can get away with sub 7% rates.

Manipulism's picture

Why borrow when you can issue?

This would be the ultimate kick.

wholy1's picture

The "F-word" of consequence being used AGAIN  . . . F-E-A-R?

Publicus's picture

Just print money to fund the government, no tax nor debt is needed.

bardot63's picture

have been saying for months, they have two choices:  murder Trump, or crash the economy worldwide and blame that on Trump.  i prefer to see the economies of the planet crash, and wish them all the best success in that.  that's the only way to clean it up.

xantippa's picture

They are all just a bunch of morons. 

Elliptico's picture

Departments!  We dont need no stinkin' Departments. We can't afford no stinkin' Departments.

xantippa's picture

I used to like Stockman. Well, at least I thought he had a purpose. Now, I see through him.


The only analsyts who have been correctly calling market direction are the guys who left Goldman and formed Shepwave.



I wouild like to see just one other analyst prove their calls like they do. 

MikeM54's picture

Most traders on ZH have left. Only hacks left. The real traders who are left already use them. That is why they are still here and making money. Most of us keep a low profile though. 

Consuelo's picture



Shill-wave much...?

AR15AU's picture

How do you know Trump isn't intentionally bringing the situation to a head?


A bankrupt US government hurts liberalism far more than it hurts conservatives. 


Don't be stupid.

Wilcox1's picture

What I can't wait for is the Don to start allocating spending like Dave was talking about last week on that USA Watchdog show.

artvandalai's picture

Trump's name is good. He can get a signature loan from

Uranium Mountain's picture

The COMEX will be broken as soon as the panic begins.  They won't have Gold or Silver to deliver.   This buy paper and sell it back before delivery nonsense is going to end. 

T-NUTZ's picture

66 billion on hand and burning 6.4 billion a day, definitely does not get us to Memorial Day...

steelhead23's picture

I would like David to embellish this story a bit.  I think it is worthwhile to provide we proles with a primer on the issuance of USTs.  Primary dealers, I believe, have an obligation to bid.  Given the scale of the projected sales ($0.5 T), those primary dealers would have to raise a mountain of capital.  How, by selling everything else in sight.  What happens when a market is flooded with sale orders?  Why then, prices go down.  And what if some of those assets are used as collateral?  No, the answer isn't collateral damage - that's another thing entirely.  The answer is margin calls.  Remember what killed Lehman?  Yes, margin calls.

David is suggesting we sell now, to avoid the rush.  Or, short the phone book.  Puh-lease, forget the Hillary bashing - it's old and pointless (as is she) - Stockman is handing you investment advice - or at least a warning - which is why I come here.

Farqued Up's picture

Steelhead 23

David has been urging to get out of the trash pond for a while now. IMO, anybody still left in this turdbowl of inflated paper has much bigger balls than brains. The Pied Pipers of the Snowflakes and fellow travellers already have such a mass momentum rolling that a simple shove will send that whole honey wagon over the cliff.

I must disagree with you on one point, Hillary will rise like a Phoenix Witch as long as she is free to stir her brew. Lock her up!!

Consuelo's picture




She's already been touched by Father Time - and it burns most exquisitely on man-haters...  

steelhead23's picture

Well, I think her political future is dead as a doornail - but the pro-Wall Street DNC remains.  So, rather than continuing to beat her corpse, folks really should look carefully at the DNC.  And oh yes, I have to laugh at those who look at Clinton's positions and think 'communism'.  My friends, there is an ocean between poor communists (they are poor you know) and elitist capitalist.  Clinton's rollodex is filled with the latter - as is her bank account.  Tyranny is tyranny, but seeing communists and communism as the enemy blinds you to the thieves who are regularly seen on the covers of Forbes or Business Week touting capitalism.  (Mind you, I am NOT touting communism).  Carry on.

Herdee's picture

With interest rate hikes the government will need more tax money in order to finance the deficit. That means government cutbacks and either a border adjustment tax or a VAT (Value Added Tax). They're bust from MiddleEast wars and entitlement programs so the Federal Government is desperate for cash. It's like the Chinese recently said, don't blame us because you've spent trillions on global war and not on your own country. The Chinese just financed the debt while various U.S. Presidents sold out America's manufacturing base so that Corporations could mantain their profits for Wall Street crooks. The fucking federal bastards couldn't have given a flying fuck about ordinary working Americans. They sold themselves out to Communists and now all the Washington politicians who are long gone and sucking big pensions out of the feds are sitting back laughing like a bunch of fat assed whores.

innertrader's picture

NO border adjustment tax or VAT!





youngman's picture

Just do what Illinois does..give an IOU....

BadDog's picture

Andrew Jackson, the man who broke the bank.  Hopefully, Trump will follow this great man's legacy and do the same to the Federal Reserve System.

Farqued Up's picture

Ooooh..... I see a helluva opportunity to really accelerate this thing. Shut down every pork project to the states that voted for the devil whore, start moving all of the defense and bullshit subsidies away the West and Northast Coasts. After all, they will be the ones to have caused this Fake Armageddon, fake in that it is just what the doctor ordered about 55 years too late. Trump can use this to start whacking, call Ron Paul, he already has it worked out and down on paper for decades. Start with the IRS and go to a consumption tax collected by the states when they collect their sales taxes. Then the citizens can opt out if they are willing to grow their own food and minimize participation in the debt-death Ponzi scam.

Do it, damnit!! Kill the monster devil worshippers' straight jackets.

innertrader's picture

IT'S CALLED THE - "FAIRTAX"!!!  Read it, it's not that long.  Just try and imagine;















Herodotus's picture

Trump needs to close the naval bases at San Diego and Bremerton and sell Camp Pendleton to the real estate developers.

VWAndy's picture

 And the gravytrain rolls on. The government workers do indeed know whats best. Best for them that is.

Dr. Everett V. Scott's picture

The President is the government's Chief Administrator. Its CEO, more or less.  What would happen if he laid off the EPA?  And the Energy Department? The Labor Department? The entire self-serving .edu fiasco?

Answer: tens of millions of unelected, anonymous, and completely unaccountable bureaucrats would suddenly have to fend for themselves, just like the rest of us chumps.

The money freed up would be immense; enough to provide 52 weeks of unemployment to all those bureaucrats, and with plenty left over for the productive sector, or to reduce our ridiculously high tax burden.

Just a randumb thought, as I watch the moth circle my kitchen light...


SMC's picture

"End the Fed" may be at the end of this rainbow.

Owe banksters a few million is your problem, owing banksters 20 Trillion is their problem. :-) ROFL!
At these levels the debtor definitely has a strong negotiating position. Unfortunately, the outcome may not be very pleasant for those of us holding fiat trash.

mary mary's picture

"Congress shall coin the money".  Not the Treasury Department.  Not the FED.  Not the unelected deep state "intelligentsia".

Honest John's picture

This story assumes that Donald Trump is stupid and doesn't know what is going on.  I think that the fun starts tomorrow.  The SWAMP WILL BE DRAINED, no matter how hard everyone is trying to undermine him.  Just sit back and watch the show.

deerhunter's picture

I sold a couple entry doors in a home that was in a pricey north shore Chicago suburb . I was curious so I looked up the property taxes on the house . 48K a year. I begrudge no one a 2.1 million dollar house as I have never sold a project to a broke homeowner but damn. At what point does everyone , regardless of income levels say enough is enough to property taxes?
I was in a public library with the 4 year old grandson looking around from where he was playing . Without much effort looking around I counted 11 library employees looking at computer screens at various desks all making minimum 65K a year and most probably shopping on Amazon on my dime . The head librarian in the suburb of 110K makes 238K a year. Yes , that is not a typo.
30 - 40 million dollar police buildings , libraries , public health buildings and the employees doing absolutely nothing productive. Sucking us dry slowly at first then more quickly. IT iS INSANITY. Does anyone recall learning of the Whiskey Rebellion or heard of the Boston Tea Party? We can't continue. Can't .
I owned a home I bought in 1998 for 173k. I sold it in 2016 for 193K. I spent 30K on improvements and new roof, pool liners etc. in that 18'years I paid 112K in property taxes. The American nightmare of home ownership with our fiat currency created in the bowels of hell. Is it fixable?
I don't have the answers but I do know this, everyone has a breaking point.
Good day all.

artvandalai's picture

You should have seen the orange jump suited snow shovelers this morning in Times square. I was on the webcam for times square just to see the conditions and there were about 6 of them scooping snow. Only to have it all covered again in the next half hour. You could tell they had no train of thought on how they migth approach the problem. Typical city workers. Let's do the job now even thought we'll have to do it again in an hour.

TradingTroll's picture

Trump only has himself to blame. On inauguration day he tells Americans he wont let them down and doesnt ask them to do anything. He let Mike Flynn go but if it was Obama or HRC they would have not budged. The arms sales to Saudi, letting Israel drone freely, are painful to watch. Major scandals like Pizzagate go on without investigation. He claims Trump Tower was bugged with no evidence. His is unable to make serious progress on any major campaign promises like healthcare reform and tax cuts. He also owns the Dow now, so when TPTB drop it between April-July, its all on Trump.


His campaign was good, but it seems he wasnt adequately prepared for office. This is very sad because what comes after will be hell. In the end, it wasnt about Trump. It was about crony politicians who refuse to let an outsider in if they may spoil the party. Its about too many people breaking the law and getting away with it, right on Trumps watch. Its about treason and sedition.


The end is coming. Trump gave us hope. Sorry, its over. The Trump Presidency is unfixable. The probability he will still be in office for the 1yr anniversary of this election is low. As Nostradamus said, the black man is the last US President.

Where"s Obama? Oh, he never left DC. How *convenient*.


HRC is unpalatable. Pence will be a placeholder until some crisis and they slide Obozo back in. Just watch. "We had to do it for the children".

bh2's picture

The US Treasury retains the right to print and distribute money on its own behalf, without leave of the Federal Resserve. Indeed, the FED is a useless appendage invented by bankers to control the nation's money supply as they see fit and charge interest for the privilege.

But Treasury still retains to power to print it's own Treasury Notes in whatever quantity and denominations it sees fit. And at no cost of interest paid to moneylenders who simply create debt out of thin air.

nathan1234's picture

Actually very simple. End /Abolish the Fed.

Trump prints Govt's / Treasury's own notes.


gcjohns1971's picture

Dollars = TBILLS

In the EXACT same way as

Liabilities = Assets.

Really, and for true.

Where once the USD was a weight of Gold... Or more accurately a % of the US Gold horde...

Today a $ is a percentage of the national debt.



Dear Mr Stockman,

All dollars - all currencies, really - are IN THE CASINO.

How, pray tell, do I get out of the CASINO with all deliberate speed???

Sledge-hammer's picture
Sledge-hammer (not verified) Mar 14, 2017 8:08 PM

Two words.  Da Joos.

Random Stranger's picture


A Way to Help Everyone in the US … A Tax Holiday


I wrote this in 2013 but it's still a good idea!

My idea is to have the Federal Government to declare a hiatus or holiday so to speak, to suspend the payment of Federal and State income taxes. This would really help stimulate the economy as people would instantly have more cash to spend…More jobs would result.

For a lot of people such a plan would dramatically improve their quality of life…

I know you’re asking yourself some questions…

Where is the Government going to get the trillions of dollars it needs to continue to wage war on everyone on the planet, as well as spy on everything we do?

Where will the States get the continued funding to piss away on layers of graft and bureaucracy?

I have the solution..It seems so simple once I came up with it.
(Sort of like my registering all current and future criminals idea to prevent crime).

You merely have the Fed make up the money(debt), like they are doing right this moment with QE 3 or 7 or whatever it is by now. I mean really, they could change everything around…And those TBTF banks that they bailed out that are just sitting on the cash….Have them offer 0 percent interest loans during the “Tax Holiday” as well.

The States also need to accommodate this “Holiday” ..Just have Bernanke just create a few extra trillion to fund the necessary coffers…Again, amazingly simple!

Again, for extra revenue, Lobbyists could just pay their bribes directly to the respective local or national treasuries. Eliminate the middle man, so to speak.

Ooh, another crazy idea..The Fed could require that all US companies hold their cash here…not in the Caymans,etc. And by a certain date…preferably right around the beginning of the “Tax Holiday”!

And in order to be effective, this should be a ten year program…I mean if we sell it like a War on the Bad Economy then we should easily be able to get ten years out of it…We’re good at that…I mean as Americans and everything..

And if we’re gonna “Kick the can down the road”, as the great Krugman says, we may as well launch “The can” with one of those old Saturn Boosters we’ve got laying around…


John C Durham's picture

They are going to keep doing what they are doing. The only thing they are going to give on is "FDIC Vice-chairman Hoenig Proposes Bank Separation in DC Speech" is a token Glass-Steagall, when a "Super Glass-Steagall is needed" as David Stockman has always said. We can grind on this way until Russia/China take over the whole Earth's financial system and still, the Dollar will be taken INSIDE the US. So, we are a long way away, unless Trump installs Stockman's Glass-Steagall.