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In Q2 America Added $2.33 In Debt For Every $1.00 In GDP

Tyler Durden's picture


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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Fri, 07/27/2012 - 10:14 | 2656376 veyron
veyron's picture

At least someone is lending to america ...

Fri, 07/27/2012 - 10:16 | 2656386 Dr. Engali
Dr. Engali's picture

Yeah the fed.

Fri, 07/27/2012 - 10:25 | 2656417 Vagabond
Vagabond's picture

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.

Fri, 07/27/2012 - 10:39 | 2656481 flacon
flacon's picture

Here is a technical understanding of what we are witnessing:



Fri, 07/27/2012 - 10:46 | 2656508 TruthInSunshine
TruthInSunshine's picture

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)

Fri, 07/27/2012 - 10:55 | 2656545 TPTB_r_TBTF
TPTB_r_TBTF's picture

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.

Fri, 07/27/2012 - 11:21 | 2656654 camaro68ss
camaro68ss's picture

The goverment just needs to spend more money to get us out of the hole. ahahaha

This is not going to end well

Fri, 07/27/2012 - 11:28 | 2656681 TPTB_r_TBTF
TPTB_r_TBTF's picture

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.


Fri, 07/27/2012 - 21:19 | 2658429 engineertheeconomy
engineertheeconomy's picture

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

Fri, 07/27/2012 - 11:27 | 2656676 Dan Conway
Dan Conway's picture

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. 

Fri, 07/27/2012 - 14:24 | 2657625 ATM
ATM's picture

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.


Fri, 07/27/2012 - 11:06 | 2656584 blunderdog
blunderdog's picture

Awesome.  I've always loved that triple-curve, and to see it explained by Santa! 

Fri, 07/27/2012 - 12:30 | 2657008 A Nanny Moose
A Nanny Moose's picture

Will you ask him about the pony he promised me?

Fri, 07/27/2012 - 13:21 | 2657245 Anusocracy
Anusocracy's picture

Sorry, you're no better than the rest of us.

You're just going to get the same dog and pony show.

Fri, 07/27/2012 - 10:26 | 2656420 4shzl
4shzl's picture

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.  

Fri, 07/27/2012 - 12:39 | 2657027 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

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".

Fri, 07/27/2012 - 12:39 | 2657047 Carl Spackler
Carl Spackler's picture


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.    


Fri, 07/27/2012 - 11:29 | 2656689 BeetleBailey
BeetleBailey's picture

...with "money" created out of thin air...

Fri, 07/27/2012 - 12:25 | 2656984 A Nanny Moose
A Nanny Moose's picture

Which means taxpayers, current and future, does it not?

Fri, 07/27/2012 - 10:17 | 2656394 Seafarer57
Seafarer57's picture

will the adults who are supposed to be running the world, please report to your offices.

Fri, 07/27/2012 - 10:27 | 2656424 nmewn
nmewn's picture

Waaahhh!!!...I want my debt binky!!!

Gimmeee! ;-)

Fri, 07/27/2012 - 11:17 | 2656482 akak
akak's picture

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.)

Fri, 07/27/2012 - 10:52 | 2656527 RSloane
RSloane's picture

Love it...."debt binky". +1

Fri, 07/27/2012 - 10:20 | 2656403 JustObserving
JustObserving's picture

Last year the Fed purchased a stunning 61% of the total net Treasury issuance

We don't need no lenders

Fri, 07/27/2012 - 10:45 | 2656474 fuu
fuu's picture

Stunning does not do it justice.

Fri, 07/27/2012 - 10:33 | 2656464 SheepDog-One
SheepDog-One's picture

In case anyone was confused, its called 'monetizing the debt'.

Fri, 07/27/2012 - 10:41 | 2656488 Whoa Dammit
Whoa Dammit's picture

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.

Fri, 07/27/2012 - 11:02 | 2656572 TPTB_r_TBTF
TPTB_r_TBTF's picture

It's not all that bad.  DonT forget about NIRP.  We got a really good interest rate on that debt!

Fri, 07/27/2012 - 12:35 | 2657032 A Nanny Moose
A Nanny Moose's picture

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.

Fri, 07/27/2012 - 13:32 | 2657276 TPTB_r_TBTF
TPTB_r_TBTF's picture

But you ainT on good terms with Ben.  The US Govt and Ben have a gentleman's agreement, which you didnT have.

Fri, 07/27/2012 - 10:15 | 2656381 Getting Old Sucks
Getting Old Sucks's picture

Guess the other $1.33 went to banker bonuses.  Good going Timmy!

Fri, 07/27/2012 - 11:28 | 2656685 Dan Conway
Dan Conway's picture

The banksters are getting a great ROI on their investments!

Fri, 07/27/2012 - 10:15 | 2656383 Dr. Engali
Dr. Engali's picture

But what about the multipier affect? I guess it's now a divider affect.

Fri, 07/27/2012 - 10:18 | 2656398 lizzy36
lizzy36's picture

Multipier effect - divider effect.......its all greek to me ;)

Fri, 07/27/2012 - 10:36 | 2656469 Dr. Engali
Dr. Engali's picture

Ugh. I hate that.

Fri, 07/27/2012 - 10:15 | 2656384 Hype Alert
Hype Alert's picture

The Multiplier Effect!   With fractions.

Fri, 07/27/2012 - 12:17 | 2656928 fresno dan
fresno dan's picture

What we lose in GDP growth, we make up for with volume...

Fri, 07/27/2012 - 10:17 | 2656388 LULZBank
LULZBank's picture
In Q2 America Added $2.33 In Debt For Every $1.00 In GDP


You DID build That, Bitchezz!!!

Fri, 07/27/2012 - 10:21 | 2656406 SheepRevolution
SheepRevolution's picture

... out of thin air!

Fri, 07/27/2012 - 10:30 | 2656445 LULZBank
LULZBank's picture

...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!

Fri, 07/27/2012 - 11:05 | 2656581 TPTB_r_TBTF
TPTB_r_TBTF's picture

Oxygen is still free to breath.  They only charge you Carbon Credits when you exhale CO2.  Hold your breath!

Fri, 07/27/2012 - 12:38 | 2657044 A Nanny Moose
A Nanny Moose's picture

Can I get a credit for planting abunch of trees to cancel out my carbon footprint?

Fri, 07/27/2012 - 13:33 | 2657288 TPTB_r_TBTF
TPTB_r_TBTF's picture

Well, either plant the trees before you breath out or buy futures.

Fri, 07/27/2012 - 10:32 | 2656447 Dr. Richard Head
Dr. Richard Head's picture 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?

Fri, 07/27/2012 - 11:08 | 2656596 eclectic syncretist
eclectic syncretist's picture

Not out of thin air, out of air thick with the stench of fraud and immorality.

Fri, 07/27/2012 - 10:17 | 2656392 Cursive
Cursive's picture

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.

Fri, 07/27/2012 - 10:26 | 2656422 Vagabond
Vagabond's picture

Nobody is paying this back.

Fri, 07/27/2012 - 10:31 | 2656452 Cursive
Cursive's picture


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.

Fri, 07/27/2012 - 10:39 | 2656484 Weisbrot
Weisbrot's picture

digital currency is the future ultimate gloabl fiat

Fri, 07/27/2012 - 11:09 | 2656600 TPTB_r_TBTF
TPTB_r_TBTF's picture

 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.

Fri, 07/27/2012 - 10:45 | 2656501 LULZBank
LULZBank's picture

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.

Fri, 07/27/2012 - 10:52 | 2656529 DOT
DOT's picture

Punch to be replaced by Kool-Aid.

Fri, 07/27/2012 - 10:55 | 2656543 overmedicatedun...
overmedicatedundersexed's picture

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

Fri, 07/27/2012 - 11:11 | 2656606 eclectic syncretist
eclectic syncretist's picture

Ever diminishing ROI (return on issuing more fiat debt)

Fri, 07/27/2012 - 11:37 | 2656728 JR
JR's picture

Time isn't buying the Fed courtiers a solution, it's buying them cement shoes.

Fri, 07/27/2012 - 10:28 | 2656429 toady
toady's picture

I can already feel the hangover. It's gonna be a mother.

Fri, 07/27/2012 - 10:30 | 2656443 TrumpXVI
TrumpXVI's picture

Tomorrow never gets here; tomorrow is always tomorrow.

Party onward.

Fri, 07/27/2012 - 10:33 | 2656457 t_kAyk
t_kAyk's picture

Party on, Garth.

Fri, 07/27/2012 - 10:43 | 2656494 akak
akak's picture

Gold says: "QE3 --- SHWING!"

Fri, 07/27/2012 - 10:33 | 2656458 Cursive
Cursive's picture


Tomorrow dawned in 2007/8.

Fri, 07/27/2012 - 10:18 | 2656396 Jason T
Jason T's picture

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.

Fri, 07/27/2012 - 10:18 | 2656397 Sancho Ponzi
Sancho Ponzi's picture

Don't worry, it's transitory. <snark>

Fri, 07/27/2012 - 13:38 | 2657323 jerry_theking_lawler
jerry_theking_lawler's picture

so is life...

Fri, 07/27/2012 - 10:19 | 2656400 FieldingMellish
FieldingMellish's picture

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.

Fri, 07/27/2012 - 13:40 | 2657329 jerry_theking_lawler
jerry_theking_lawler's picture

heh heh....he said SERVICED.....

Fri, 07/27/2012 - 10:19 | 2656401 johnQpublic
johnQpublic's picture


Fri, 07/27/2012 - 11:28 | 2656680 Poor Grogman
Poor Grogman's picture

It's not your debt anyhow.
Someone else did that...

Fri, 07/27/2012 - 10:20 | 2656402 PulpCutter
PulpCutter's picture

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.


Fri, 07/27/2012 - 10:23 | 2656413 azzhatter
azzhatter's picture

Ridiculous argument. People have to delever so they can lever up again? Government has to lever up so it can delever later?

Fri, 07/27/2012 - 12:19 | 2656943 fresno dan
fresno dan's picture

its levers all the way down...

Fri, 07/27/2012 - 12:29 | 2656997 Messianic
Fri, 07/27/2012 - 10:25 | 2656416 Tyler Durden
Tyler Durden's picture



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.

Fri, 07/27/2012 - 10:30 | 2656444 Buckaroo Banzai
Buckaroo Banzai's picture

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.

Fri, 07/27/2012 - 11:16 | 2656536 Comay Mierda
Comay Mierda's picture

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

Fri, 07/27/2012 - 11:19 | 2656636 Hype Alert
Hype Alert's picture

The truth is such a buzz killer on a Friday, we will choose to ignore it.  Same with every other day of the week.

Fri, 07/27/2012 - 13:45 | 2657368 Anusocracy
Anusocracy's picture

Socialism is how the hunter-gatherers survived.

Their world is gone but their socialism is still here.

Fri, 07/27/2012 - 10:40 | 2656487 Central Bankster
Central Bankster's picture


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.

Fri, 07/27/2012 - 11:52 | 2656800 JR
JR's picture

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)

Fri, 07/27/2012 - 12:01 | 2656850 PiratePawpaw
PiratePawpaw's picture

"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

Fri, 07/27/2012 - 10:28 | 2656427 Buckaroo Banzai
Buckaroo Banzai's picture

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.

Fri, 07/27/2012 - 10:59 | 2656559 TruthInSunshine
TruthInSunshine's picture

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.

Fri, 07/27/2012 - 10:32 | 2656451 SheepDog-One
SheepDog-One's picture

Fucking azz hatter.

Fri, 07/27/2012 - 10:34 | 2656463 LULZBank
LULZBank's picture

You people talk about this debt as if it will actually be paid off.

What do you think wars are for? Just fun??

Fri, 07/27/2012 - 10:37 | 2656468 youngman
youngman's picture

My father lived thru the Great Depression...he saved everything and never had a loan after affected him greatly...and he always talked or lectured about the GD.....he never talked about WWII

Fri, 07/27/2012 - 10:55 | 2656544 Whoa Dammit
Whoa Dammit's picture

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.

Fri, 07/27/2012 - 11:21 | 2656652 TPTB_r_TBTF
TPTB_r_TBTF's picture

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.


Fri, 07/27/2012 - 10:40 | 2656485 Paul Atreides
Paul Atreides's picture

Ask Greece and Spain how that's working out...

Fri, 07/27/2012 - 10:46 | 2656505 FieldingMellish
FieldingMellish's picture

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. 

Fri, 07/27/2012 - 11:18 | 2656633 eclectic syncretist
eclectic syncretist's picture

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

Fri, 07/27/2012 - 11:22 | 2656660 monopoly
monopoly's picture

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.

Fri, 07/27/2012 - 11:30 | 2656697 Inthemix96
Inthemix96's picture

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????????

Fri, 07/27/2012 - 11:40 | 2656741 piliage
piliage's picture

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?




Fri, 07/27/2012 - 12:58 | 2657104 A Nanny Moose
A Nanny Moose's picture

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.

Fri, 07/27/2012 - 10:24 | 2656415 PaperBear
PaperBear's picture

Ponzi pyramid economics.

Fri, 07/27/2012 - 10:26 | 2656419 barwar
barwar's picture

Lovely money multiplier we got going there.  .4x is slighly shy of the 1.5x Romer and Bernstein predicted...


Fri, 07/27/2012 - 10:29 | 2656434 kraschenbern
kraschenbern's picture

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!

Fri, 07/27/2012 - 10:29 | 2656440 inkarri9
inkarri9's picture

On analyst estimate of $2.34...see, the government can play the one cent beat game too....rally on!

Fri, 07/27/2012 - 10:39 | 2656441 SheepDog-One
SheepDog-One's picture

OH so then obviously what we need is even MORE debt here with stawk indexes flirting around all-time record highs!! 


Fri, 07/27/2012 - 10:38 | 2656462 LouisDega
LouisDega's picture

I know this is infintile, But the Beaver made me do it..


Fri, 07/27/2012 - 10:36 | 2656471 Weisbrot
Weisbrot's picture

digital currency is the future ultimate gloabl fiat

Fri, 07/27/2012 - 10:38 | 2656472 Getting Old Sucks
Getting Old Sucks's picture

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.

Fri, 07/27/2012 - 11:06 | 2656589 maximin thrax
maximin thrax's picture

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.

Fri, 07/27/2012 - 11:56 | 2656827 Don Levit
Don Levit's picture

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

Fri, 07/27/2012 - 10:38 | 2656477 Bansters-in-my-...
Bansters-in-my- feces's picture

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.


Fuck you's timmy and ben,and the ppt and your ESF.

you's are terrorist.

Fri, 07/27/2012 - 10:38 | 2656478 proLiberty
proLiberty's picture

This is the Keynesian version of losing money on every sale but making it up with the volume.

Fri, 07/27/2012 - 10:41 | 2656490 cebri88
cebri88's picture

And if any country ask the US to give the money back , they will just blow them up. 

Fri, 07/27/2012 - 10:48 | 2656514 Getting Old Sucks
Getting Old Sucks's picture

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.

Fri, 07/27/2012 - 10:43 | 2656497 Snakeeyes
Snakeeyes's picture

Great charts! Again, the US is overregulated (except where it counts) and The Fed's only alternative is to buy Treasury debt.

Fri, 07/27/2012 - 10:44 | 2656500 RobotTrader
RobotTrader's picture

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.

Fri, 07/27/2012 - 11:01 | 2656525 akak
akak's picture

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.

Fri, 07/27/2012 - 10:54 | 2656537 yogibear
yogibear's picture

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.

Fri, 07/27/2012 - 11:18 | 2656634 Metalredneck
Metalredneck's picture

I think you owe me a keyboard.  Coffee out the snout.

Fri, 07/27/2012 - 11:20 | 2656643 eclectic syncretist
eclectic syncretist's picture

Break out like the pimples on your moms ass!

Fri, 07/27/2012 - 11:28 | 2656683 monopoly
monopoly's picture

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.

Fri, 07/27/2012 - 14:33 | 2657681 Tsunami Wave
Tsunami Wave's picture

Boner Jam


Taken out back and shot

Hockey sticked into outer space


Gotta love your analogies Robo. I'll remember your $64 PG call and $1,000 gold per ounce by the end of the year.

Fri, 07/27/2012 - 10:49 | 2656511 Bob
Bob's picture

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:

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. 

Fri, 07/27/2012 - 14:02 | 2657494 Anusocracy
Anusocracy's picture

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.

Fri, 07/27/2012 - 21:09 | 2658419 Bob
Bob's picture

Link above is now broken, but Hudson has it posted.

Michael Hudson: The New Road to Serfdom

Fri, 07/27/2012 - 10:50 | 2656520 haskelslocal
haskelslocal's picture

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?

Fri, 07/27/2012 - 11:06 | 2656587 DOT
DOT's picture

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.

Fri, 07/27/2012 - 12:08 | 2656884 Central Bankster
Central Bankster's picture

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.

Fri, 07/27/2012 - 10:56 | 2656549 Shizzmoney
Shizzmoney's picture

As a result of the debt and the corporate welfare state, people are having babies less (quite the Eurozone trend!):

"The more you delay it, the more you delay the possibility of a second or third child," says Stephanie Coontz, director of research and public education at the Council on Contemporary Families. "This is probably a long-term trend that is exacerbated by the recession but also by the general hollowing out of middle-class jobs. There's a growing sense that college is prohibitively expensive, and yet your kids can't make it without a college degree," so many women may decide to have just one child.

"We have to think through our policies," she says. "We've got to provide better support systems for working mothers as well as fathers."

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.

Fri, 07/27/2012 - 11:14 | 2656616 Bob
Bob's picture


And it's being widely redefined as the new terms of Liberty:

Even men who were engaged in organizing debt-serf cultivation and debt-serf industrialism in the American cotton districts, in the old rubber plantations, and in the factories of India, China, and South Italy, appeared as generous supporters of and subscribers to the sacred cause of individual liberty.

H. G. Wells, The Shape of Things to Come


Fri, 07/27/2012 - 10:57 | 2656551 yogibear
yogibear's picture

Bernanke and the Federal Reserve is stuck printing/QEing until faith in the US dollar becomes unhinged.

Fri, 07/27/2012 - 11:05 | 2656582 Mark Wilson
Mark Wilson's picture

Get ready to don your DOW 13,000 hats...

Fri, 07/27/2012 - 11:16 | 2656626 adr
adr's picture

That usually means you have to get ready to don your DOW 12,000 hat.

Fri, 07/27/2012 - 11:14 | 2656620 XRAYD
XRAYD's picture

But why worry, its all going on Bernanke's credit card, not mine.  Right?

Fri, 07/27/2012 - 11:15 | 2656623 adr
adr's picture

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.

Fri, 07/27/2012 - 11:25 | 2656671 eclectic syncretist
eclectic syncretist's picture

UST 10y bond yield up 6% almost overnight.  That's price stability we can believe in!

Fri, 07/27/2012 - 11:28 | 2656682 ROCE
ROCE's picture

IB notification: Shortsale ban on Faceberg !!!! But the market is not manipulated !!! Riiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiight

Fri, 07/27/2012 - 11:36 | 2656724 mtthw2
mtthw2's picture

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.


Fri, 07/27/2012 - 11:42 | 2656754 Inthemix96
Inthemix96's picture

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.

Fri, 07/27/2012 - 12:37 | 2657041 i_fly_me
i_fly_me's picture

It's ok ... we'll make it up on volume.

Fri, 07/27/2012 - 13:13 | 2657220 JamesBond
JamesBond's picture

should somebody get fired for this?



Sat, 07/28/2012 - 01:33 | 2658626 Tom Green Swedish
Tom Green Swedish's picture

What good would firing them do?  They have already placed us in a big huge pile of shit.

Fri, 07/27/2012 - 14:33 | 2657680 Morrotzo
Morrotzo's picture

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?


Sat, 07/28/2012 - 01:32 | 2658624 Tom Green Swedish
Tom Green Swedish's picture

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.

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