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This Time The Debt Ceiling Hike Really Is Different
Yes, indeed it is. While everyone and their grandmother is foaming at the mouth how both republicans and democrats hiked the debt ceiling for umpteen times over the past x years, the truth is that never before has the ratio of the proposed debt ceiling to the tax receipt ratio been as high as it is now. At nearly 6 times, this means that the top line (forget bottom line) cash inflows into the Treasury are 6 times lower than the current debt ceiling. And following the upcoming $2.5 trillion this number will surge to almost 8 times. So please ignore the next "pundit" who is complaining about the hypocrisy of not agreeing to an outright debt ceiling hike this time around - as usual they have no idea what they are talking about.
There is however one correlation that will continue to trend at 1.000:
h/t John Lohman and Lizzie363
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<---------But this time it's different. Honest.
<---------We are all going to die.
h/t to Cheesy Bastard Insta-Poll
This... this... poll taking. It's going to become a theme isn't it?
This... this... poll taking. It has become a theme!
Fixed it for you.
Paul Krugman has an op/ed piece out yesterday where he endorsed the plan to print an amount of USD equivalent to our existing national debt, with which to use to pay off said national debt, and we'd have a fresh start.
What an amazing idea, and just one example of why the man is a Nobel Laureate, after all.
I wish I had thought of that, but then again, that's why he wins the prizes and gets a such a prominent podium.
Krugman holds sway over his disciples precisely because his models and "solutions" are never put into practice. That way he can claim "I'm right and if TPTB would only do what I say I would be proven right". I almost wish they would do his money printing scheme to expose him for the retard that he is.
Being a tard is the new normal. He should become an airplane pilot.
In the movie Idiocracy, that so perfectly captures the modern world:
"President Camacho: Now I understand everyone shit's emotional right now. But I've got a 3 point plan that's going to fix EVERYTHING.Congressman #1: Break it down, Camacho!
President Camacho: Number 1: We've got this guy Not Sure. Number 2: He's got a higher IQ than ANY MAN ALIVE. and Number 3: He's going to fix EVERYTHING.
"
I like that film even though it was horribly, horribly flawed. Hey, even "Not Sure" could fix everything if everyone else got out of his way. Our problem is that there are so many cooks and so many special interests that it is impossible to produce clean legislation. It is also a huge problem that government is designed only to grow, never to shrink or right-size itself.
<------- LOVE me
<------- hate me
lol.
But anyway, the debt grows exponentially, the tax receipts don't. Or even if they do, at a lower growth rate. Which, deep enough into the curve, anyone who does math can assume that there is no growth because A>>B
I voted luv & hate. I mean I wanted to be fair and balanced while not tipping over backwards.
However you are correct on this one.
Perhaps a trending or some cool flames could be added to the "system" next,k?
What doesn't kill you will make you laugh until you piss your jeans.
I suspect this unauthorized use of the junk arrows is the black swan event for Sacrilege's new UI interface. He never saw it coming. This is what he gets for letting several thousand ZH regulars loose in a new UI. :>)
It will run its course and then die an ugly death.
Brilliant!!
/GuinnessCommercial
Since we are all presently, mostly alive. Wouldn't it in fact be different if we all died?
I sumbit that it is all of the above. We're going to need more arrows.
On a long enough timeline the survival rate of everyone drops to zero.
Quote from "the trader" today
Same same…. Posted on 27 July, 2011, 10:44, UTC+1 by the traderA speech says more than a thousand words? Presented without comment….
Quote by Obama 2006:
The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can not pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. Increasing America’s debt weakens us domestically and internationally. Leadership means that, “the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.” - Senator Obama, March, 2006
http://www.thetrader.se/2011/07/27/same-same/
This time is different?
Please bring back full RSS feeds! Or at least comment on why you changed the policy... Thank you.
according to tyler, the money is better spent on booze
How about clicking on this button, the same one as where it says RSS above
pull my finger?
Yes, I JUNKED TYLER, BITCHEZ
So what
he wants that 5th 7
Thanks dizzog... for some reason I had this link instead (which always showed full posts) until the server update. New one works great. Thanks.
Except that it seems your feed link updates a lot slower than the one I was using. RSS is confusing.
If I make $100,000 a year, and am given a credit limit by Amex of $1,000,000, and I put $999,999 on that limit, the solution isn't to have Amex raise my credit limit to $1,500,000... The solution is to begin to pay off my debt and attempt to live within my means... Yes those things I bought with my debt are nice, but really they are not reality.
Same applies to the government...
SInce when did the government play by the rules it binds us with?
Never willingly, but a lack of debt buyers *could* force the issue.
Can the number of debt buyers get any lower? Right now there is only 1, the printing press in Ben's basement.
But Ben Bernanke told me that math is different when you use big numbers. Surely you trust him, right? I mean, he's got a PhD in Economics!
...from an IVY LEAGUE University - Princeton, the same place where Einstein worked. LOL!
Are you sure? I thought his Phd was in Hubris!
Yeah, the debt is so large that it has its own gravity. Eventually it becomes a singularity. Everything is pulled into it and crushed. Not even light will escape its grasp.
no light has escaped washington for some time now
..,now that's a sugular finest Moose call posted today. lol
...black hole ...Bitchez. http://www.youtube.com/watch?v=iysK9Gz1wNA
Georg Cantor STILL could teach The Bernank a thing or two!
Remember that in this political system, the credit card bill gets passed to someone else to deal with....
Thus is the problem with Career Politians, and thus is the problem with increased power to the Federal government...
They can promise the moon and Mars, and they never have to worry about the repercussions of their irrational concepts...
I say make them accountable... I still want war crimes trials for anyone involved in lying us into our conflict in Iraq... But hey, Saddam COULD have killed many people so it's ok according to the Obama doctrine.
I have decided that I will only vote for the politician that will give my two princess daughters a pony. Pony up CONgressbitchez....pony up.
But What do u do when ur annual bills are $150K?
add another credit card to your wallet each year.
The debt will NEVER be paid...EVER. No one is talking about paying it down, just possibly slowing the rate of debt accumulation (and even that is highly dubious). The only possible outcomes are hyperinflation or default. Either way the result is eventually the same. The US is screwed, ergo the world is screwed. But it may take longer than many think. The creativity of politicians may keep up the charade for quite some time. You have to remember that 99% or more of the people have no idea. Once they finally see what's really going on it's going to get really ugly. The Great Depression will look like good times in comparison.
Agree 110 percent. Never underestimate a govt's ability to kick the can. Many thought 2008 would be the death blow but the Fed came to save the day. We need to default now on our own terms before we end up like Greece and have foreigners dictating our future.
You plagiarized that thought from me! Thief!
And I "thought" I had that thought copyrighted!
+1!
America and the world will not be screwed. Only those dependent on the government for either their wealth (Goldman, Oracle of Omaha, JP Morgan, Wells Fargo, etc) or sustaining their life (welfare) will be hurt in the collapse.
On second thought, yeah, much of the world will be screwed. Bringit on.
We're all dependant on the same doomed system. Having your ducks in order isn't having a good job and no debt, it's having the means to support yourself if the entire mirage of an economy ends tommorrow (which it could).
"It may take longer than many think."
The "it" is a nebulous thing. For some, it has set upon them, miserably. For others, the "no phones, no tv, it was fantastic" open-ended corner-of-the-world escape could be made to work out pretty well. And all "its" in between.
The national debt is the same as this scenario:
The American taxpayer is like someone with such a large balance on his credit cards that he will never be able to reduce the principal, and the interest that he fails to pay is added to the principal which further increases the amount of interest due, ad infinitum. In effect, all the national debt does at this point is funnel the interest on the national debt to the top 0.1% who are increasingly the sole recipients of this source of income. There is no point, at this point in time, in worrying about the size of the deficits (maybe Cheney was right in this sense and he knew it). Increasing the debt ceiling or cutting back on expenditures makes no difference. The debt will go on increasing faster than any attempts to reduce it. This is where the analogy with household finance breaks down. To make this comparison with household finance is to be a sucker for austerity measures. These are not to pay down the debt or reign in government--impossible and not in the interest of the owners. They are strictly a disciplinary measure to demoralize and render more docile the population.
To understand the underlying reason why the debt can never be paid down and will in fact continue to grow no matter how great an effort is made to pay it down, please see the following article by Antal Fekete--his best, in my opinion, because it does really lay out the underlying mechanism. Warning: Math Kills! That said, the little math there is in the article is first year highschool algebra and the article can be understood without it. The article also explains, as an added bonus, the nefarious role of super-low interest rates in aggravating the problem.
http://www.professorfekete.com/articles%5CAEFGrowthAndDebt.pdf
Great paper, thanks. Here is how I have tried to explain it in the past, and the math is even easier, I think. In our monetary system all money is created as a liability (debt) with interest that begins to accumulate the moment the money is created into existence. The creation of a treasury, the extension of mortgage, etc.... these activities create money/debt. To retire that debt, they system needs to pay off the debt PLUS the interest due. Only there isn't any money in the system to pay the interest. That money was never created. So the process to pay down debt requires the creation of more debt (this issuance of more fiat money... it's the same thing). The moral of the story... debt must always expand, it is, in fact, the very nature of the system. This is the system that we have selected to facilitate economic production. And it works, for a time, until the cost of maintaining the debt overwhelms the productive capacity of the underlying economy.
Here is what it looks like in a graph: http://peakwatch.typepad.com/.a/6a00d83452403c69e2010536e78fd8970b-pi - this is where the collapse of our monetary system begins.
Very nice. However, I'm wondering on your graph how to explain the private sector debt being so much greater than the government. Perhaps the huge difference in private sector interest rates (think credit cards, etc) has something to do with it. Eventually, public borrowing should crowd out private borrowing.
I was talking to my accountant today. I explained to him that the Federal Reserve was owned only partially by the Government. He looked at me with astonishment. I was filling him in on so much stuff and he was just taking it all in (money creation, fractional reserve).. He went to get coffee.. I looked behind me and saw all the degrees on his wall.. Thought to myself.. Jesus.. we are in trouble.. He's one of the smart guys.. LMAO
"The solution is to begin to pay off my debt and attempt to live within my means... Yes those things I bought with my debt are nice, but really they are not reality." - Governments do not exist in the same reality you do. They exist only in corporate reality in which the rules are very very different.
"Same applies to the government..."...um, no it never has, does, or will.
Government exists in a smaller dimnesion space and with their policy collapses the dimensions of the space you exist in.
That is why the State has no heart, it is not human. It is the Frankenstein, wroshipped and given life, by the death cult.
This is done through paper, which inherently has less dimensions than a human, but has been given the same rights.
See: "Articles of Incorporation."
Pardon my inability to summarize this as well as I'd like to.
If you love life, health, common sense, fellowship, etc, you are the enemy of the State.
No the solution is shelter your assets and to declare bankruptcy because you will never be able to pay it all back.
However, aren't the "rules" so ephemeral now that it doesn't even matter? When analyzing the global problem of debts et. al, I now often wonder if there are any rules. If there are rules, how long will they last? Can they last? Were they ever rules to begin with?
I am not an investing guru--I chose years ago just to invest in myself via my businesses. It is the only way I could ever understand the rules because they are mine. No one else needs to abide by my rules because they are customers. In a way, even my rules are ephemeral because the game can change at a moment's notice and I would have to adapt.
I think about these things as they relate to money. Just seems to me like no rule really applies. The scary part about that is we will soon all be very confused. Confusion breeds a lot of ill will and ill tempers. I happen to believe that's exactly where we are headed at the moment.
This sucker is going to blow one way or another and a whole new set of "rules" will be attempted. I have my doubts about whether they will be bought hook, line and sinker like the last set.
Confusion has a way of reining supreme for a lot longer than you think.
Not if you are a Keynsian.
If you had bought gold, silver, platinum, palladium with that $999.999 just a few years ago you'd have no problems paying off anything.
A problem not solved by true progressive tax increases. Why? Because there is no such thing as progressive taxation. Forget representation. At this stage in the game call the ceiling any number; it don't matter.
When the fundamentals get a serious correction it will be too late.
http://www.foxbusiness.com/markets/2011/07/25/obama-to-banks-were-not-de...
Goes to show you who their real masters are.
This is my favorite chart, pretty much the same as the above:
http://1.bp.blogspot.com/-KfmgOaqyfII/TimeGKsq3GI/AAAAAAAAAEw/kQO41lqrew8/s1600/US+debt-GDP.jpg
Pretty much sums up how screwed we are to the point the average idiot can understand.
The reversion to mean is going to be epic, but painful. All parabolic moves end in oceans of tears.
Your chart explains why the 50's are considered the 'Good old days'
Tax cut time bitchez!
finally, time to take some medicine! fuck i hope interest rates go up!
+1 for the Gundy reference. Did you spend time in Stillwater too?
I agree why would anyone save with 0.25% returns on savings. Better to buy hard assets than hold cash for nothing.
The wall of worry has become the wall of optimism: every blue eyed bull move gets smacked horrible fundamentals and news. I've been sayin
Overheard in House chambers: "Tax Receits? We dun need no steenkin tax receipts"
inflation of the money supply is a tax nobody gets to vote on...
That would be a nobody named Bernanke.
And every time they raised it they said that in the future when the economy gets better we will grow out of it...or pay it down..or whatever.....when we all know it just keeps going up and up and up....
This is your economy. THIS IS YOUR ECONOMY ON DRUGS !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
On roids, man! <--- the watchword of the post 9/11 era
You forgot the accompanying visuals. Here let me help.
In the first scene, we see happy children gathered around a lemonade stand on the sidewalk in suburban America, quenching their thirst while enjoying their summer vacation.
In the second scene, we see that the police have arrived with a cease and desist order, and are busy smashing the stand, because the child entrepreneur could not produce the proper permits, inspections, and licenses to legally operate within city limits (in order to ensure the safety for all, of course).
All of the children are then subjected to fingerprinting and DNA sampling due to running afoul of the IRS tax evasion laws. They are then added to the Homeland Security Database of domestic terrorists for attempting to undermine the authority of the US government.
How's that? Did I miss anything?
Final scene: The Children are loaded into a Black Mariah, headed to GITMO for a little "extraordinary rendition" -- fade to black.
Banzai should do a before and after of this. Drug of choice: Crystal-meth.
Without a functioning ponzi even the underground socialist can't have hope and change..... sad.
And all of these horse trades are being done behind closed doors out of the public eye.
Can anyone NAME THIS QUOTE? "We'll have the negotiations televised on C-SPAN," he said, "so that people can see who is making arguments on behalf of their constituents, and who are making arguments on behalf of the drug companies or the insurance companies."
Barack Insane Obama said that!
Do I get a booby prize?
Well that would be Prompter Obama on the campaign trail. Can I get a loaf of bread for my prize?
What a buffoon, or rather what buffoons the people who voted for him are
No bread for you per se, but you can have plenty of circus on the TV.
hey JM your 'he said' link doesn't work
Each and every time the debt ceiling was raised between 2000-2008 the rationale proffered was that of voodoo/trickle/Reaganomics driven growth.
This time is different. The hypocrites in congress are not playing ball because they only seek more power. The truly ridiculous thing is they are still spouting "tax cuts for the winners" for jobs and growth but let's be damn sure the other party gets pasted first. That strategy is not wholly unsuccessful which is a harbinger of real problems.
It's wanton debasement of the U.S. which by the way, is an excellent way to get bumps on this site.
Calamity is certainty! Plan and prepare accordingly!
what's the problem? just get rid of the food stamp program, and pass out flintstone vitamins instead!
The below just came to my In-Box from a proprietary research outfit I subscribe to. I can't share it all, but here is the opening salvo. It is the best, close to real-time info available just about anywhere.
Business Software Spending Slows
Debt Reduction Impasse Already Having Serious Consequences for Corporate Capital Spending
To view full report,
Overview: Last quarter we saw a tightening in the software spending environment. Now a new ChangeWave survey points to a deeper erosion in overall business software spending going forward.
The July 11-25 survey points to the slowdown affecting most major software categories.
The survey also shows that corporate capital budgets have taken a significant hit over the past 90 days – and the debt reduction impasse in Washington is an important contributing factor. Thus even as the national debate focuses on the potential consequences of an August 2nd default, the survey findings show the impasse is already having serious consequences for corporate capital budgets and that real damage to the U.S. economy has started to occur.
A total of 1,632 respondents involved with software purchasing in their company participated in the survey."
Lot's of info backed by data.....the picture is pretty clear, but the future is looking a little murky.
actually a decline in software "spending" is a good thing for the overall biz.
a decline in spending on hardware would also be a good thing.
These two area are a sinkhole of mal-investment.
The quest for sick-sigma or whatever is a fraud.
Well, you are entitled to your own opinion, but corporate America happens to disagree.
On top of that, you can rest assurred that software and hardware spending acccounts for a vew points in the unemployment numbers.....better tools = fewer hands, like it or not.
Yea but the trend is the same.
Tranzitory bond support Bitchez!
those are some hot charts! if you were to assign letters to the number-values, as in some ancient languages, or any language, where there are correspondences, they might spell out some mythical tale
about the wrath to come
The manner in which the banksters have managed to get the most profligate spenders on this side of the solar system to trip over themselves to prove that their 'team' will impose the greatest austerity is fucking hilarious.
'Our cuts will have the most consequences; good consequences..." LOLOLOLOL
These are the same clowns that happily took it in the copper penny from the bloody-murder screaming banks, without even asking for the courtesy of a reach around. Now they are stumbling over themselves in an effort to prove they can pass the buck on to who will be responsible for the illegitimate bastard that is the consequence of their whoredom.
Rothschild realized that the greatest power of the King was seiniorage
"The Rothschilds can start or prevent wars. Their word could make or break empires" -- Chicago Evening American, December 3, 1923
Right on cue...criminal syndicate bankers and corporate cronies are moving to suspend AAA credit rating requirements as collateral against other debt...in response to a credit agency downgrade of US debt. If the situation moves against you, just change the rules. Anything to perpetuate the debt bubble.
Just a blurb out of the mouth of an investment banker on the BlowHorn for now, but this will probably become a very interesting story over time.
I hear the faint cries of starving sheeple...I hope they dont have guns....
Actually, those people already gave up their guns for grocieries a little while back. We're good.
http://www.dallasnews.com/news/state/headlines/20100604-Austin-police-to-trade-groceries-for-9424.ece
It's Like slavery really
In the 1850's the plantation owners backed by the English banks rammed through revision after revision, expanding the area that slavery was allowed, culminating in the Dred Scott decision.
Ole Abe pointed out to the common man, farmer and worker, that soon slavery would be universal.
What free man can compete with slave labor? So the country elected Abe and the rest is history.
Now the Fed, The banks, the Dems collect no money fron 50% of taxpayers. Even giving them more.
And more people have government jobs or on the dole, slave labor
Deals are made with industrialist to ship jobs & factories over seas, slave labor
All this spending --- All the taxes, All the borrowed money, All the printed money ---- all of it has been spent.
And now they want more ---- does the beast ever get satisfied.
It is the banks that get the money first -- then the politicians, then though tax advantages the industrial complex.
And all of the retiriees and union members who vote democratic ---- you are on fixed income --- when the dollar inflates --- your purchasing power goes down ---- your real wages go down.
What you need is to stop the madness, stop the spending
"It's Like slavery really"
Umm. No.
So let us take this seriously: Total default ? Or what haircut can bondholders expect ? Rate hikes after the haircut ? How will America's EFSF-style sinking fund look like, with SDR denominated bonds ?
Besta luck with austerity USA --- You'll LURVE it!!
Maybe now you'll get out and protest like the rest of the planet?
Oh, wait, the MSM hasn't told you to yet, wonder why that isn't happening?
./sarc
Yes, because protesting is so effective.
At this point protesting is almost like fucking to get your virginity back. Pretending it will make a difference to make yourself feel better is fine, but don't act like the citizens of the United States are going to actually give a shit this time.
By the time they do, it will be too late. We all know this.
I think the Tyler solution? does nothing but decrease eventual revenues. When Bush tax cuts expire, and the econ absorbs all the Bush lunacy, we can face the new changes in resource availability using science rather than idiotology.
So let me get this straight:
This is NOT
1. debt-ceiling-hike to tax receipts ratio
this is really
2. debt-ceiling to tax receipts ratio, right ?
But what does this ratio express ?
If it was the former, then it would be an indicator of how fast the new debt will be burnt through, although debt-ceiling-hike to average deficit ratio would be more telling.
If it is the latter, well, that number would also rise if deficits didn't widen or even shrank, since the debt ceiling only rises and never shrinks.
So it would be a pretty meaningless indicator.
.
I wouldn't give anybody the $2.5 Trillion number. Out of control spending and sovereign debt slavery is the big issue of our generation and the people are the ones that need to decide how to deal with it at the ballot box.
Da boyz should raise the ceiling just enough to last 10 months. Let Americans decide their own fate when they're fully engaged and can hear the public debate on the subject spring 2012.
Doubling down on massive deficit spending that actually made things worse than the expert projections of doing nothing should be amusing arguments everybody should hear for themselves.
When all money (notes and coins excepted) is created as interest bearing debt, how can you have a debt ceiling.
Surely it is fundamentally flawed for the government to have a debt ceiling, as a debt ceiling prevents more money creation, which in turn would make it difficult for existing debtors to service loans.
So unless the public increase their indebtedness, which would seem unlikley given the current level of household debt that exists; the government has to create more money either as interest bearing debt or by simply by printing it, thus allowing existing debtors to service interest bearing loans. Based on the assumption that neither is done, the banking system is presumably back to insolvency again, because one man's debt is another man's deposit.
No Shit Sherlock ;)
what happened in Norway can happen in Washington
the important statistic is the present value of total US & state commitments as a % of private sector output that actually matters (excluding most warfare, counter-productive regulatory regimes, government distortion of the market, transfers of wealth with no associated productivity).
the cold hard facts: no level of monetized stimulus is going to save the US. no level of austerity is going to save the US.
if you want to delay the inevitable reckoning, you raise the debt ceiling to just include interest & cut the government to balance- with the Fed keeping a lid on rates. if you want to accelerate the inevitable reckoning, do anything else.
Unfortunately, I believe there is too much interest to pay at this point and it will just keep growing. Furthermore, there is no way they will cut the government to balance. So the best they can do is optimize by lessening the second or third derivative (successively higher derivatives the closer we are to the singularity). Great idea, though!
It's beyond obvious that at some point debt is too great to be repaid. We should all thank Antal Fekete and numerous other folks for providing their particular mathematical proofs and projections.
However, the US is defaulting on its debt even now and has been for some time. That's what a policy of holding interest rates unnaturally low is. Getting rid of the real burden of the debt is not a problem except for the poor suckers who are holding cash, bank accounts, or dollar denominated securities. It will happen. We've done it before and survived.
Getting rid of the real burden of deficits is a much greater problem, because it means reducing real payments to huge voting blocs, to the point where some voters, maybe many, will actually starve to death. (Not that dead voters matter that much in the political calculus, but the survivors will be many of whom many will be on the edge.) Cutting these real deficits will be done one way or another.
What we have between the Republicans and the Democrats is a not very promising start, but at least it's a start. It will get easier as time goes by until the real deficit becomes manageable or the government falls and the nature of the required analysis takes a dramatic turn, perhaps into areas of military strategy and tactics.
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