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In Q2 America Added $2.33 In Debt For Every $1.00 In GDP
As noted before, courtesy of the GDP revision, all the kneejerk reactions in the past 3 years to various GDP headlines (preliminary, first and final revisions at that), were all for nothing. In fact, today's GDP number will be revised and re-revised in the next two months, then re-re-re-revised at the annual revisions in 2013, 2014 and 2015. In other words, the number after (and likely before) the decimal comma is irrelevant. One thing however stands, and that is the trendline change in actual GDP compared to the change in debt used to "buy" said GDP. Which is why we present our favorite chart showing how much more total federal debt was added per quarter over the GDP. Bottom line: in Q2, the US added $274.3 billion in debt while adding $117.6 billion in GDP (from the revised data: Q1 GDP of $15,478 billion rising to just $15,595 billion in Q2). Probably what is more indicative, is that in Q2 the delta change between debt and GDP rose from 2.28x in Q1. But that too is largely noise and will be revised. What won't be revised is that over the past two years, the US has added 2.42x more debt than it has added GDP.
Another way of visualizing the above courtesy of two trendlines- that of US debt and of GDP:
And that is all that matters (and all who say corporations benefit from the relevering of the sovereign host due to some wrong equation they learned in Econ 101 may want to take a long hard look at Q2 corporate revenues and then explain why it has just printed the first year over year decline since the Lehman collapse).
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At least someone is lending to america ...
Yeah the fed.
Normally ponzi schemes collapse sooner because the investors run. There is no where left to run in the global fiat ponzi, and the paper will eventually be worthless anyways... So just keep piling on and kicking the can, giving more rats time to abandon ship.
Here is a technical understanding of what we are witnessing:
JOHN HOEFLE ON THE TRIPLE CURVE
http://www.youtube.com/watch?v=8VF-8B-W0d0
At this rate, even negative yielding treasury bills won't be enough to save the Ponzi.
Good job, Congress, POTUS and The Non-Federal Reserve-less Non-Bank. (Golf Clap)
Maybe The Plan does not call for saving the old system?
if i am the guy running the old Ponzi, why would i want to save it? I would just start another one and con the sheeple again, and again...
Easier to start a new ponzi than save an old one.
The goverment just needs to spend more money to get us out of the hole. ahahaha
This is not going to end well
Did anyone ever promise you an exit from your hole? ahahaha
This will end well for the guys at the top of the Ponzi. The new Ponzi will start well for them too. Same as it ever was.
Author made a BWA (Basic Wrong Asumption)
We are not in debt
We don't have a printing press. We didn't print any money. We didn't spend any money. We don't have the money
Ben has a printing press. He printed money. He spent the money on himself. He has all the weath that he printed. Ben is in debt and needs to pay that money back
I completely agree. The criminals behind the Euro are just buying time while they work on implementing plan G. Enough sheeple will still fight to keep the old euro together. You can easily change euro for us$ or Fed Reserve or blah blah blah.
It's not a new Ponzi they wish to start. It is the total destruction and shaming of the "capitalist" system as the cause of all the worlds ills. It's the greedy banksters, the hoarders, those that don't pay their fair share. The blsme is being laid so that the sheeple accept the new reality. That reality will be one where those very smart and very caring people take care of us and provide for everyones needs. We will give them all the powers they need to accomplish this as we will be so afraid we will have to.
Or at least that's how I see their strategy. Not saying it will work, just that it seems to be the plan.
Awesome. I've always loved that triple-curve, and to see it explained by Santa!
Will you ask him about the pony he promised me?
Sorry, you're no better than the rest of us.
You're just going to get the same dog and pony show.
Not to worry -- Kruggles has already 'splained that "we owe this money to ourselves" -- so it doesn't matter. Through the looking glass with the NYTimes and its Nobel-winning shill.
Krugman's theory is only correct if we are talking about one individual or entity (e.g. borrowing money from yourself and issuing an IOU or intercompany borrowing). More than one single party and the argument is lost. I'm guessing that future Social Security recipients would be mildly peturbed if the U.S. Treasury stiffed holders of inter-governmental debt because it's "money we owe ourselves".
Good to see the Keynesian REVERSE MULTIPLIER in effect.
Someone put a sock in Krugman's beak.
His phoney intellectualism is so tiring, but the middle class has to "pay the piper" for the destructive acts of him and his association of clowns.
...with "money" created out of thin air...
Which means taxpayers, current and future, does it not?
will the adults who are supposed to be running the world, please report to your offices.
Waaahhh!!!...I want my debt binky!!!
Gimmeee! ;-)
You know you can't have your binky until after you get your crapped-up Keynesian diaper changed ---- it's full of Krugman again, and DAMN does that thing stink!
(At least changing crap-filled diapers contributes directly to GDP. The more crap, the greater the economic expansion! Pure Keynesianism in action.)
Love it...."debt binky". +1
Last year the Fed purchased a stunning 61% of the total net Treasury issuance
We don't need no lenders
Stunning does not do it justice.
In case anyone was confused, its called 'monetizing the debt'.
For every $2.33 that America created in debt in an attempt to revive the economy, the bankers skimmed $1.33, and only $1.00 was left over to go toward the actual economy.
It's not all that bad. DonT forget about NIRP. We got a really good interest rate on that debt!
This is all I heard from 2003-2006. "Who cares about the principle, as long as your rate and payment are low?"
That worked out well. The government bubble will peak soon.
But you ainT on good terms with Ben. The US Govt and Ben have a gentleman's agreement, which you didnT have.
Guess the other $1.33 went to banker bonuses. Good going Timmy!
The banksters are getting a great ROI on their investments!
But what about the multipier affect? I guess it's now a divider affect.
Multipier effect - divider effect.......its all greek to me ;)
Ugh. I hate that.
The Multiplier Effect! With fractions.
What we lose in GDP growth, we make up for with volume...
You DID build That, Bitchezz!!!
... out of thin air!
...thin air!
Now That, you DID'NT and will be taxed accordingly by Ministry of Al Gore.
The air you breathe... You think it just got to your nostrils like that, you mouth breathers!
Oxygen is still free to breath. They only charge you Carbon Credits when you exhale CO2. Hold your breath!
Can I get a credit for planting abunch of trees to cancel out my carbon footprint?
Well, either plant the trees before you breath out or buy futures.
....to push on the string of aggregate demand. Krugmanomics suck donkey dick.
I think WBonzai should consider a Tijuana inspired Donkey Show with Krugman. The question becomes, who would Kruman be - Donkey or Juicy Lucy?
Not out of thin air, out of air thick with the stench of fraud and immorality.
This answers the question, "Why are you so skeptical of the recovery," or "Why are you so bearish about the future?" Well, because we've borrowed from the future to party today. Tomorrow, when it gets here, is going to be a bitch.
Nobody is paying this back.
@Vagabond
That misses the real problem - this monetary regime can continue for a long time further and within that system, we will have much slower growth and a lowered standard of living. Easy money has faciliatated good times and now that punchbowl is being taken away.
digital currency is the future ultimate gloabl fiat
e$ coming soon to that terminal in your pocket (mobile phone). Optionally you may choose to have a chip implanted, or use the RFID chip on your new Id card.
Freedom! Freedom of choice. Choose your new method of payment.
Dont be so pessimistic. We will then start a new Dollar and restart from Zero!
And then the party will just carry on... to maternity!!!
Err or was it eternity? Doesnt matter, you know what I mean.
Punch to be replaced by Kool-Aid.
OT but we had a large number of posts about this topic:
- A citizen with a gun stopped a knife wielding man as he began stabbing people Thursday evening at the downtown Salt Lake City Smith's store.
of course for all those saying an armed audience at bat man would have never helped stop that nut..hmmm
Ever diminishing ROI (return on issuing more fiat debt)
Time isn't buying the Fed courtiers a solution, it's buying them cement shoes.
I can already feel the hangover. It's gonna be a mother.
Tomorrow never gets here; tomorrow is always tomorrow.
Party onward.
Party on, Garth.
Gold says: "QE3 --- SHWING!"
@TrumpXVI
Tomorrow dawned in 2007/8.
We're the only major economy that still has twin deficits over 10% ...Britain at 9.9% a close second.
We'er a basket case. http://www.economist.com/node/21559356
Don't worry, it's transitory. <snark>
so is life...
Just wait until interest rates rise and the debt then has to be serviced... it will be impossible. Therefore, either rates will never rise again or the debt will never get serviced (default). Enjoy.
heh heh....he said SERVICED.....
transitory
It's not your debt anyhow.
Someone else did that...
The old "you can't borrow your way out of debt" argument, chanted 24x7. Maybe if you repeat a lie endlessly, some idiots will believe it?
"You can't fix debt with debt" is false, and the reason is that it depends on the category of debt; private versus public. After a private debt bubble (aka, Minsky moment), public debt can step in and provide demand until the private debt is deleveraged, and private demand picks back up again. America did it after 1938, and that's also how the world has gotten out of most recesssions since then.
America's TOTAL (public and private) debt to GDP ratio has been dropping since 2009. While you're waiting for the Apocalypse, America is paying down private debt at the fastest rate since the 1950s.
http://articles.marketwatch.com/2012-06-08/commentary/32103077_1_debt-pr...
Ridiculous argument. People have to delever so they can lever up again? Government has to lever up so it can delever later?
its levers all the way down...
No, dig UP, stupid!
http://www.youtube.com/watch?v=b97zJxKEqAk
When presented with math and facts does socialism spontaneously combust like antimatter?
And of course this:
Granted, a bulk of the surge above is due to the epic levering of students whom the administration has decided to make the next generation of debt slaves.
Unfortunately not, it seems. In fact, socialists just seem to dig in their heels when their stupid ideas get knocked down by reality.
It is a mental disorder.
they also forget there are never enough FRNs in existence to pay off interest on the principal lent out to the economy.
Therefore the only way for the economy to stay "solvent" is through a ponzi scheme of more and more printing to pay off interest and principal from past loans
the exponential decay in the value of the dollar since 1913 is proof of this
the socialists LOVE this because eventually the living standards will be eroded so much that all the serfs will be dependent on the government for sustenance
then the Hunger Games becomes reality. along with 1984, Brave New World, Atlas Shrugged, etc
the socialists only have one job to do - keep 'mericans IGNORANT of this fact until it's too late
and they are doing a fine job at this, with support from all major media outlets - CNBC, FOX, MSNBC, CNN, NYTIMES, etc
they will just keep baffling you with bullshit to keep you ignorant while they slowly, but surely, rob you of your wealth
The truth is such a buzz killer on a Friday, we will choose to ignore it. Same with every other day of the week.
Socialism is how the hunter-gatherers survived.
Their world is gone but their socialism is still here.
TD
Link your article discussing why real gdp is negative when debt is saturated, so these trolls can finally understand why we get nominal gdp growth and exponential debt growth.
We enter the black hole of debt, not casually, but at warp speed.
The disordered domination of finance, the dictation of finance, over industry and the acquiescence to that reversal of order, promotes the return of the Servile State. (paraphrased from Money Manipulation and Social Order)
"I reject your reality and substitute my own"...Socialism
P.S My reality is having a hard time right now, can it have some more of your money? Thanks
Bullshit. This is the wrong place to be publishing dopey Keynesian crap like this. Go back to DailyKos, or HuffPuff, or whatever stupid liberal website you came from.
The world hasn't "got out of" a recession since 1913. The recessions just get papered over, and the negative effects are pushed into the future.
Son of a bitch, people like you are fucking ruining this country.
So, what you are saying is that the entirety of economic growth statistics in a fiat-debt-credit based economy, where no inherent value underlies the currency used in commerce, is dependent on the ability of radical central planners of fractional reserve banking to create bubble after bubble, regardless of the sector or segment it's in, and that these bubbles are literally the only way that what is a Ponzi of an economic system can perpetuate itself?
I agree.
Fucking azz hatter.
You people talk about this debt as if it will actually be paid off.
What do you think wars are for? Just fun??
My father lived thru the Great Depression...he saved everything and never had a loan after that...it affected him greatly...and he always talked or lectured about the GD.....he never talked about WWII
My dad was bron during the depression, and never would buy stocks, because he was taught by his parents that stocks were just to make the rich richer by funding the companies that the rich own.
Well ... my Dad was born during the Depression and he bought Fund shares because his financial adviser told him to. He rode the waves in the 80s and 90s, cashed out and is enjoying retirement.
Ask Greece and Spain how that's working out...
Ratchet effect. Public debt rarely, if ever, gets paid down. When gov'ts have had chances to pay down debts, they usually go the opposite direction and load up. This debt will HAVE to be serviced.
Yeah! Paying down debt via defaults, bankruptcies, and write-offs. But hey, what's wrong with that in your bizarro world with Rex Nutting there. It's the same as using the profits of productive capital enterprise to pay down debts right? lmao
Speaking of idiots. I think Pulp is MDBonus in disguise. Debt has never allowed any country to sustain itself. You cannot grow on debt. Sure, short term it may "look good" but the more debt you incur the more pain you must sustain when there is no one left to take on your debt. This country is NOT growing, it is festering on false hope. The only way for a country to grow is by investment of real money. Not the crap we pull in from thin air.
Never in the history of Man has a country survived long term by creating debt. It never has worked and it will not work now here in America or Europe, China or the Middle East.
Please, go troll on a site where there are no individual thinkers and they drink whatever is given to them. It will not work here.
This has to be said pulpcutter, sorry if someone posted something similar,
What in fucking gods green earth do you not understand about 16 TRILLION in debt and growing?
Remember, they only created the principal, not the fucking INTEREST?????????
If you cannot wrap you're small mind around that sunshine, you seriously need to fuck off and do a bit of research, its called a ponzi FIAT game for a reason you fucking clown????????
Interesting thesis. From your link...
"Cecchetti and his co-authors found that growth can be impaired once nonfinancial corporate debt hits about 90% of GDP, or when household debts hit 85% of GDP, or when public debts hit about 85%.
later, in the same article...
"In the U.S., household debt has now fallen to 84% of GDP from a peak of 98%. Nonfinancial corporate debt has fallen to 77% from a peak of 83%. Financial sector debt has plunged from 123% of GDP to 89%. Public debt has risen to 89% from 56%."
So, by your own link and argument, US growth is now officially impaired by public debt. Do you care to revise your bullshit argument?
Here we go again. What ultimately sustained our exit from TGD 1.0, was the obliteration of the productive capacity of every major industrialized nation on the planet. We were the only nation left with the industry required to replace all those Broken Windows.
There was a similar impact after the Japan disasters. GM's sales improved because there was nothing to buy from Japanese makers. GM even state as much in its 2Q12 (IIRC) report.
Let's not forget the two US insolvencies (FDR gold confiscation, and Nixon gold elimination), and utter destruction of the USD purchasing power. In fact, we have been little more than a string of insolvencies since 1913.
Ponzi pyramid economics.
Lovely money multiplier we got going there. .4x is slighly shy of the 1.5x Romer and Bernstein predicted...
http://otrans.3cdn.net/45593e8ecbd339d074_l3m6bt1te.pdf
Bwaahaahaahaaa....
All right guys. So we're losing $1.33 cents on every $1.00 we make on GDP. But we'll make it up on volume!
On analyst estimate of $2.34...see, the government can play the one cent beat game too....rally on!
OH so then obviously what we need is even MORE debt here with stawk indexes flirting around all-time record highs!!
QE-NEW YAY!! FREE MONIES YAY!! Buy STAWKS!!
I know this is infintile, But the Beaver made me do it..
dow_13000_embroidered_hat-p233122193355283430bzjgs_152.jpg
digital currency is the future ultimate gloabl fiat
Here's another of my senile, I mean senior abstract thoughts. The government intergrated the payroll tax into the general revenues/budget and issued/issues bonds to the SS trust fund. They include this amount in the national debt. While this is a liability, aren't the bonds also an asset they can borrow against without raising the national debt. Far fetched, but what isn't these days? Hope this doesn't give them any ideas.
Yes. Were that debt monetized (the intergovernmental bonds held in the SS "lock box"), SS run as a bank, and contributors treated as stock holders, that bank could lend out trillions in loans, unencumbered with bad loans like the TBTF banks, and mail every "investor" a chack for several thousand dollars each year. So large would that bank be that we could let go of all the large banks, stop the bailouts, and still have plenty of liquidity.
Getting Old Sucks:
You have it right.
Those bonds which were lent to the Treasury from the Social Security trust fund are an asset to the trust fund, and a liability to the Treasury. From an accounting perspective, it is a wash.
The asset part was used immediately over the years, to pay for current expenses and lower the deficit.
The liability part did not become a cash transaction, until the cash income of the SS trust fund was exceeded by the cash outflow, which occurred in 2010. That means, for about 27 years, while the asset part was being used on a cash basis, the cash part of the liability was deferred. In addition, just a small fraction of the interest on the principal liability is paid, for the entire loan interest due is much higher than the cash loss of the trust fund each year (which is the only loan interest paid back on a cash basis).
And, we haven't even got to the liability principal yet.
Wouldn't you love to have that kind of a "loan?"
Don Levit
Looks like the Kartel Korruption was at it on the silver market this morning.
The Kitco silver chart is a captured moment of Korruption,and is a crime scenes evidence in real time.
Ps....
Fuck you's timmy and ben,and the ppt and your ESF.
you's are terrorist.
This is the Keynesian version of losing money on every sale but making it up with the volume.
And if any country ask the US to give the money back , they will just blow them up.
Or, we could start making shit again. With all the USD distributed world wide, we declare that the USD ceases to be the world's reserve currency, and they can only spend it here.
Great charts! Again, the US is overregulated (except where it counts) and The Fed's only alternative is to buy Treasury debt.
http://confoundedinterest.wordpress.com/2012/07/27/a-regulated-decelerat...
Big name financials like Capital One, Travelers and Wells Fargo are hovering right at the highs, when they break out it is going to shock a lot of bears.
RobotLemming's former stockpimping favorites of Netflix, Faceberg and Lululemon now hovering over the toilet bowl after being blowtorched, when they take the final flush it is NOT going to be a shock to anyone except the mindless pumpers and momo-chasers of a rigged, overinflated and artificial market gasping its last breath while on life support such as yourself.
Oh, and once again, fuck you.
Especially if Bernanke's next QE shocks the market and is double what was expected. Banks can take all the slosh and buy back their own shares. Bernanke and the Federal Reserve banksters will never ask banks to payback the money.
One big Ponzi scheme. The Bernanke and Federal Reserve is stuck to print until it blows up. The Federal Reserve cannot get out of printing. They cannot raise rates, they will just keep twising and printing money (dollar trashing) to keep the game going.
I think you owe me a keyboard. Coffee out the snout.
Break out like the pimples on your moms ass!
Hooray, Robot is back. Did you add to CMG, NFLX, SBUX, UPS, FB and MCD on the dips? And do not forget to chase AMZN here. They earned a penny and will not even lose 200 million next quarter. But soon, oh so soon, they will earn $5.00 a share to make it a great investment.
Yup AMZN is the place to be.
Boner Jam
Lamposted
Taken out back and shot
Hockey sticked into outer space
Blowtorched
Gotta love your analogies Robo. I'll remember your $64 PG call and $1,000 gold per ounce by the end of the year.
Gee wiz, how does shit like this happen?!
Could it have anything to do with the guys who hold the debt, you think? As in, "follow the money"?
Michael Hudson made a few good points about this when he called the GFC back in 2006 and placed it on The New Road To Serfdom:
http://www.outstitute.org/blog/download/MichaelHudson/Hudson_RoadToSerfd...
Follow the real money, folks. It's gonna take increasing amounts of money to continue covering up the gutting of the real economy . . . and the increasingly privatized government is but a convenient means to an end.
Government has been privately run since it came into existence thousands of years ago.
Democracy changed nothing except to give the puppet masters a curtain to hide behind.
Link above is now broken, but Hudson has it posted.
Michael Hudson: The New Road to Serfdom
http://michael-hudson.com/wp-content/uploads/2010/03/RoadToSerfdom.pdf
Seriously. How does one even attempt to compare these two measurements as if they're coorelated?
GDP = anytime anyone spends a buck, measuring all directions of everything. So yeah, not much being spent related to the amount of debt accumulated.
But where is that extra $1.33 in debt if the assumption is it was spent? If it was spent, it'd be in GDP, right?
So is it sitting in reserves? Shoring up bad banks? Sitting on "the side lines"?
It is my opinion that this comparison is cute, but barely tells 20% of the story. Debt to revenue may be better. Or debt to output, etc. What am I missing?
Although quite different in appearance a kick in the gut and a punch to the neck are correlated when employed on the appropriate time line.
Let me help you. The point of the article is to disprove the idea that we can grow our way out of the debt crisis. The politicians/fed reserve think they can spend their way out of the recession, a recession caused by excess debt and mal investment. Bernanke intends to assist in this folly.
As a result of the debt and the corporate welfare state, people are having babies less (quite the Eurozone trend!):
But hey, who gives a fuck about families, right? SkyNet and HFTs will all just take our jobs, and our precious corporations won't need slaves to breed anymore.
And it's being widely redefined as the new terms of Liberty:
Genius.
Bernanke and the Federal Reserve is stuck printing/QEing until faith in the US dollar becomes unhinged.
Get ready to don your DOW 13,000 hats...
dow_13000_embroidered_hat-p233122193355283430bzjgs_152.jpg
That usually means you have to get ready to don your DOW 12,000 hat.
But why worry, its all going on Bernanke's credit card, not mine. Right?
It is actually kind of funny that the stock market has broken through record levels, well almost for Obummer, for each of the last three presidents.
The exact same record level.
What an incredible growth story. The Dow keeps on trying to break out to 15k only to break down and get cut in half. Is this time supposed to be different? The growth is based on fantasy just like the last two trips to Hedge Fund Nirvana.
I guess too many analysts have economics confused with string theory. They believe the economy can exist in multiple planes at once. Record profits can actually exist with faltering sales.
UST 10y bond yield up 6% almost overnight. That's price stability we can believe in!
IB notification: Shortsale ban on Faceberg !!!! But the market is not manipulated !!! Riiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiight
All this debt does not matter. The central bankers and the big banks will always win. A few words and lies and all is solved. I'm a long term bear like the rest of us, but my friends and family don't want to hear it and I'm tired of sounding the warning bells--So now go bankers and big government and ya the Fed,they are our masters. I think I'll also rejoin the consumer economy and buy everything until my credit cards are maxed, afterall that stratagy is working for my neighbors. I will stop venting now and go look for a bigger house to buy--CNBC says the housing bottom is here.
After careful thought and moderation on my behalf, after runing these technical analysis' through my vast and capable head, and then after crunching the numbers from $1.00 right up to $2.33, I have found conclusive evidence, beyond all reasonable doubt:-
That we should be cutting some fuckers head off right about now. These cock sucking swines are taking the whole world for a ride. When the fuck are we going to stand up and stop it?
I can fucking dream eh? Cunts I tell you, every last blood sucking motherfucking one of them. We need some type of bankster weed spray, the fucking shits.
It's ok ... we'll make it up on volume.
should somebody get fired for this?
-jb
What good would firing them do? They have already placed us in a big huge pile of shit.
Dow 13 and change, everybody breaking out the champagne...
Then the smart money shorts and puts it all the way down to 6 or 7 thousand.
Pump to 13, dump to 6, lather, rinse, repeat. How many times is that going to happen in the average retail retardo's lifetime before they figure out the "market" is a casino? How many goddamned times? How can people be this stupid?
I hate to tell you but we are all totally screwed. The 1 percent owns half the country and the government has spent t every dime of the rest our money (not entirely true right now but it will be soon by all other estimates). The 1 percent and bankers won't have an issue but the taxpayers will. They already did it before.
The only solution, might be to pull all money from big banks and to put it in regional / newly created normal banks. This will prove to be pointless because once again the government has already made the money worthless, and the 1 percent will always keep their money in bigger institutions. If the general public pulled all their money from the big banks I think it won't have much of an effect at all.
All of our problems stem from a few things. The government spends too much(causing a whole host of other problems) (because they can because the debt is denominated in dollars and essentially acts as interest free at the expense of the American people), Banks have run amuck, and greedy corporations value profits over doing the right thing morally (they really don't care about USA other than to pad their profits). The government is asleep at the wheel spending to much watching porn all day, and to be honest why would they want to solve any problems it would put them out of a job. But they don't think that way. They don't think morally or ethically, all they care about is themselves and getting re-elected. This is how the mess started. These people were supposed to be held to a higher standard. Now they are just a bunch of cheap sell-outs.
There is no way out now. We are officially fucked.