• Sprott Money
    05/06/2016 - 06:03
    The US, in its own decline, is showing this same self-destructive tendency. The worse things get, the greater the inclination of the citizenry to say, “Carry on, everything’s fine.”

US Adds $120 Billion In Debt Since Debt Ceiling Hike On Friday, $310 Billion More On Deck In Next Two Months

Tyler Durden's picture




 

Remember when the US hiked its debt ceiling on Friday courtesy of a formulaic 52 affirmative votes in the Senate, giving the Treasury $1.2 trillion in dry debt powder to attempt to grow the economy one more time according to the algorithmic fantasies of voodoo priests with pieces of Ivy League parchment on their walls? Well, two days later, the dry powder is less than $1.1 trillion. In other words, in the past two days, total US debt increased by $120 billion, along the lines of our expectations, as the Treasury filled up all the G-fund cash it had pillaged to continue issuing debt throughout the month of January even though it was formally above the debt ceiling. What is more concerning, is that as the chart below shows, the trendline of US debt since the beginning of 2011 is no longer a straight line, but has slowly transformed into a parabola, the very same word used as the root in such other infamous words as, for example, parabolic.

It gets worse: even according to the drastically, and very unrealistically, downward revised borrowing expectations of the Treasury released yesterday, the US will issue $444 billion in debt in this quarter. Today's number means that in February and March alone Tim Geithner will raise another $310 billion, which will send total debt to $15.7 trillion as of March 31. What is the final debt ceiling? Just under $16.4 trillion. So the US will have $700 billion in debt issuance capacity for the 7 months leading into the presidential election (and 9 until the end of the year).

Now naturally, if the debt ceiling becomes a sticking point at the election, Obama's chances of reelection plunge. Which makes us wonder - will Republicans grasp that the paradox of defeating Obama is precisely in giving him a carte blanche on all the stimulus programs he wants? Because if Congress approves another $200, 300 or even $400 billion in stimulus pork (the only thing better than one Solyndra? One thousand Solyndras!) the Treasury will drown in the need to raise hundreds of billions more, and will in fact hit the ceiling well in advance of the elections. As for the stimulus projects themselves, they will crash and burn just like all centrally planned endeavors, and actually results in a far worse outcome than if they had never been attempted. Because ironically, now that the entire world has passed the Rubicon, and unfortunately there really is no way of fixing anything, the only thing one can hope for is letting the status quo get on with doing what it does best, and leading the 100 year process of central planning to its sad and terminal conclusion, only after which can the "fresh start" reset occur. Ironically, the same thing is true with the farce that is the debt ceiling: the best way to finally get back to a fiscally prudent regime? Why go to town, of course.

And, we almost forgot to add, as of today, total debt to GDP is once again well over 100% even with the latest Q4 GDP data, at 100.4% and rising every day.

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Wed, 02/01/2012 - 20:24 | 2118379 wisefool
wisefool's picture

We should probably spent a bunch of money on moon bases and toy soldiers to get us out of this.

-Paul Krugman, PhD. Nobel Laureate.

Wed, 02/01/2012 - 20:28 | 2118395 Spirit Of Truth
Spirit Of Truth's picture

Sometimes you just have to suspend all reason and simply BELIEVE in the audacity of HOPE.

http://www.youtube.com/watch?v=Akoukq5DvAE

Wed, 02/01/2012 - 20:29 | 2118401 Harlequin001
Harlequin001's picture

Bullish...

Wed, 02/01/2012 - 21:12 | 2118521 Xibalba
Xibalba's picture

looks like gold ...

Wed, 02/01/2012 - 21:13 | 2118523 12ToothAssassin
12ToothAssassin's picture

If the missing MF Global money could just be 'found' and used for the debt that would be cool.

Wed, 02/01/2012 - 21:21 | 2118545 Sam Clemons
Sam Clemons's picture

Sadly, the MF Global money is only 1% of the latest increase.  And people thought that was theft...

Wed, 02/01/2012 - 22:58 | 2118776 ruffles
ruffles's picture

chump change

Wed, 02/01/2012 - 23:19 | 2118813 Harlequin001
Harlequin001's picture

incredibly bullish...

Wed, 02/01/2012 - 23:50 | 2118874 lasvegaspersona
lasvegaspersona's picture

It has been observed that each time the debt ceiling is raised an upturn in the gold curve does occur....not just your imagination.

Love these long cascades

wheeeeee

Thu, 02/02/2012 - 00:30 | 2118958 economics1996
economics1996's picture

 

The $2.4 trillion last August was Obama's re-election money.  I thought everyone understood that?  

And he will spend the money in QII and QIII to give the appearance of prosperity.  QIV means nothing to Obama.

I mean really is this not politics 101?

Clinton was the master.

 

Thu, 02/02/2012 - 00:52 | 2119003 4horse
4horse's picture

2.4 trillion went to obama . . . ?

still talking dummies: I thought everyone understood that...politics 101, askin'em for'n answer, is this not 1<= 0 =>1 ?

 

just askin for it:
http://www.youtube.com/watch?v=DwDbd4jQpkA

 

Thu, 02/02/2012 - 05:45 | 2119296 economics1996
economics1996's picture

The debt ceiling was increased $2.4 trillion last August.

Thu, 02/02/2012 - 07:48 | 2119363 jeff montanye
jeff montanye's picture

again: george w. bush and barack obama -- the two worst back to back rulers ever.  clinton, while a slimy criminal, had better fiscal policy and actually won, sort of, his one smallish war (serbia).

it's not true that all centrally planned endeavors are pointless or destructive: much government run research, education and infrastructure projects are quite useful.  stopped cholera, etc.  government, increasingly in the last decade particularly, has become so incompetent and corrupt that such a belief is dying.  since government collects so much money (and can print more) it must be held to higher standards.  jail the worst.  ron paul '12.

Thu, 02/02/2012 - 02:36 | 2119150 The Monkey
The Monkey's picture

My money is on recession this year. If true, another term for Obama is unlikely. This market is getting increasingly attractive for a big move into SPXU. I've been dollar cost averaging purchases on the recent sharp upward spikes, but there comes a day when it's time to hit it hard with the big short. Last time around credit spreads led the way (you didn't have to top time with technicals, just look for divergence in credit spreads versus equities).

This is getting to be quite the party for equities. Let's keep it rolling folks. I love a good melt up.

Thu, 02/02/2012 - 02:53 | 2119169 TruthInSunshine
TruthInSunshine's picture

Forget intrade.

If you want to know who will win the POTUS election, just add up the money contributed to each candidate by Goldman & JPM.

Whoever collects the most from those two lieutenants of the House of the Red Shield wins - guaranteed.

Thu, 02/02/2012 - 00:50 | 2118997 luna_man
luna_man's picture

 

 

'found'...Even,  if it was your money?..."be cool"?

Wed, 02/01/2012 - 21:18 | 2118529 smiler03
smiler03's picture

Pedantic. To see a truly parabolic chart in the financial world would be nothing less than incredible.

a typical parabola: http://tiny.cc/j84zs

Wed, 02/01/2012 - 21:19 | 2118538 brewing
brewing's picture

pocket change for uncle sam...

Thu, 02/02/2012 - 01:56 | 2119112 prains
prains's picture

pocket change for uncle sam...

 

except it's coming out of uncle ching's pocket, nice effort with the nonchalance though

Wed, 02/01/2012 - 22:03 | 2118636 Chump
Chump's picture

Well, you've just seen one.  "Pedantic."  I don't think that word means what you think it means.

P.S.  We don't make it to the upward slope, just a warning.

http://www.youtube.com/watch?v=OHVjs4aobqs

Mon, 02/13/2012 - 17:52 | 2155310 smiler03
smiler03's picture

I'm sorry but I thought it was obvious what I was saying. I'll rephrase it for you; "I'm being pedantic but".

Wed, 02/01/2012 - 22:36 | 2118722 4horse
4horse's picture

Pedantic  .  .  .  ?  .  .  .  neither the expected stark economy of words, on a finacial blog, nor even hyperbole itself quite account for the profligacy nor incisive sorcery of such an opening sentence, thusly:

 

 

Remember when the US hiked its debt ceiling on Friday courtesy of a formulaic 52 affirmative votes in the Senate giving the Treasury $1.2 trillion in dry debt powder to attempt to grow the economy one more time according to the algorithmic fantasies of voodoo priests with pieces of Ivy League parchment on their walls?

Wed, 02/01/2012 - 23:52 | 2118876 lasvegaspersona
lasvegaspersona's picture

smiler03

get in on the fun, lighten up and enjoy the sarcasm

Thu, 02/02/2012 - 01:04 | 2119033 Vendetta
Vendetta's picture

I prefer step functions myself however parabolas are very pretty.

Thu, 02/02/2012 - 07:53 | 2119367 jeff montanye
jeff montanye's picture

smiler: i get a "bad gateway" message.

Wed, 02/01/2012 - 21:20 | 2118541 Silver Bug
Silver Bug's picture

The debt is truly parabolic. It is quite sad.

 

http://ericsprott.blogspot.com/

Wed, 02/01/2012 - 22:39 | 2118730 Backspin
Backspin's picture

It's not parabolic, it's exponential.  I know what you're saying, and I understand that everyone says "parabolic" and that people don't mean it literally.  But the fact is that it is exponential, and the ramifications of that fact are serious.

And while we're at it, everyone should note that exponential functions ultimately grow faster than parabolic functions.  Much faster.  Much, much faster.

Wed, 02/01/2012 - 23:12 | 2118803 Matt
Matt's picture

In the immortal words of Buzz Lightyear, "To infinity ... and beyond!"

Thu, 02/02/2012 - 00:11 | 2118920 DoChenRollingBearing
DoChenRollingBearing's picture

+ another 1

Correct, exponential is worse.  I just wrote about exponential growth at my blog.

Wed, 02/01/2012 - 23:23 | 2118817 DaveyJones
DaveyJones's picture

"Naturally, if the debt ceiling becomes a sticking point at the election, Obama's chances of reelection plunge. Which makes us wonder - will Republicans grasp that the paradox of defeating Obama is precisely in giving him a carte blanche on all the stimulus programs he wants?"

Good to know they put our interests before their political own

Wed, 02/01/2012 - 23:39 | 2118843 Race Car Driver
Race Car Driver's picture

You still believe that left/right, red/blue party crap ... at this point in the game?

Thu, 02/02/2012 - 08:58 | 2119417 Dr. Richard Head
Dr. Richard Head's picture

Newt or Mitt has NO plan for cutting ANY spending and Obama has obviously demonstrated his desire for govt spending, so I have to agree that R or D - we all will be fucked with a red, white, and blue dilrod.

Thu, 02/02/2012 - 09:52 | 2119520 Chump
Chump's picture

...so I have to agree that R or D - we all will be have been fucked with a red, white, and blue dilrod.

FIFY.  The election in November is already meaningless, if we even get that far.  Consider the current lull the calm before the storm.

Thu, 02/02/2012 - 13:23 | 2120447 DaveyJones
DaveyJones's picture

some call it sarcasm

Thu, 02/02/2012 - 09:35 | 2119475 YC2
YC2's picture

What was the name of that strategy, to bring about marxism, i f I remember correctly, that involved letting capitalism run unchecked to get to the end state of socialism as quickly as possible?  I have been trying to think of this for months.  I think Obama was accused of being a disciple of it and it is just named after the last names of the people that used it/came up with it.

I feel like we are there with debt.  If we dont get a Ron Paul to reign it in, it will be reigned in by racking up ever more amounts of it eventually.  The difference to me is who gets a chair when the music stops, and also what kind of political regime we have after.

Wed, 02/01/2012 - 23:39 | 2118844 Whalley World
Whalley World's picture

More like it's Odd A City (washington) could spend so much!

Wed, 02/01/2012 - 20:32 | 2118410 doomz78
doomz78's picture

cnbc said that this parabolic spending was just temporary until the economy is back on firmer ground.   The us treasury debt is still the safest asset.  (;

Wed, 02/01/2012 - 20:45 | 2118445 Manthong
Manthong's picture

And I will feel just that much more secure when I have to send them a check each month to keep my assets safe.

Wed, 02/01/2012 - 22:41 | 2118736 Backspin
Backspin's picture

The parabolic spending is temporary.  It is the exponential spending that will catch everyone by surprise.

Wed, 02/01/2012 - 22:45 | 2118745 4horse
4horse's picture

cnbc said that this parabolic spending was just temporary until  .  .  .  it lands

 

 

nasa now having been charged with its arc

                                                            .  .  .  as well as reentry

 

                                                                                                                 astronomical

Wed, 02/01/2012 - 21:42 | 2118594 Stormdancer
Stormdancer's picture

*deleted*  out of sequence

Thu, 02/02/2012 - 06:54 | 2119329 EmileLargo
EmileLargo's picture

Hopefully Krugman has all his money in USTs.

Wed, 02/01/2012 - 20:24 | 2118381 Seasmoke
Seasmoke's picture

things sure seem to be picking up maximum speed.......

Thu, 02/02/2012 - 00:09 | 2118914 seek
seek's picture

You're correct, except you imply there's a maximum. There isn't and things are worse than meets the eye.

A classic sign of exponential growth is a doubling over some roughly constant period, aka N = X^(2t/T) where T is the time interval to double and t is the time we're at. For most processes, if you look at the exponent itself, it usually doesn't change (much) as the interval is roughly constnat, but the magnitude of the results doubles over the same roughly constant interval. And that repeated doubling over time turns into the insane, out-of-control numbers we're used to from exponential progressions. So, it'd be a fucking disaster if it were even this. But...

Tyler's graph has an offset Y axis and truncated X axis. Usually when this trick i used it's to make something look more exponential than it really is. In this case, it makes it look less exponential. Look at a 10-year or 50-year chart in constant dollars and it's pretty concerning. I eyeballed the long-term chart and it looks like we're doubling the debt every five years right now.

Now, that's bad, but what's terrifying is that a decade ago, the doubling interval was 15 years. In other words, not only are we dealing with an exponentially growing debt, we're dealing with an exponentially growing where the exponent that determines growth is changing, and as a result, the doubling time is decreasing.

If a system were simply accelerating it's speed -- it'd have a constant exponent describing it's speed equation. In the case of the US debt, the acceleration of the debt itself is accelerating, and the time interval to doubling in shortening. I don't think there's enough data to determine if the rate of interval shortening is linear or exponential, but if it's a linear case, we hit essentially infinite growth (aka dollar collapse to zero) in approximately 6 years. The scary little uptick at the very end of the chart could indicate exponentially growing acceleration. That means it happens sooner.

Nothing real can go to infinity, the charts are telling us something will change (and likely break down significantly) in five years at most. If the debt growth acceleration is itself exponential, the doubling interval will likely to be measured in months within a year. The fact that real markets aren't heading up on afterburners just shows that everyone is clueless and/or active intervention is keeping it from happening... but for how long?

Thu, 02/02/2012 - 00:18 | 2118933 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1     I wish I could give this + 1 quintillion.

seek is one of Zero Hedge's many treasures, I have found seek's remarks on gold and other matters to be spot-on.

I did not know that the exponent was increasing.  Exponential growth on steroids.  The end will not be pretty, I agree that something will break down, perhaps catastrophically, within a few years at most.

Thu, 02/02/2012 - 00:58 | 2119019 TruthInSunshine
TruthInSunshine's picture

Nice post, seek.

 

Here's a formula that some may find instructive as to how the laws of physics can demonstrate how such things pan out:

v(f) = v(o) + at

[Final velocity is equal to initial velocity plus the acceleration times time]

Thu, 02/02/2012 - 01:02 | 2119029 4horse
4horse's picture

N = X^(2t/T) = WW3

Thu, 02/02/2012 - 01:16 | 2119058 TruthInSunshine
TruthInSunshine's picture

nice

Thu, 02/02/2012 - 01:10 | 2119045 Vendetta
Vendetta's picture

I thought E=MC² described it, guess I keep seeing fiat mushroom clouds.

Thu, 02/02/2012 - 01:17 | 2119063 TruthInSunshine
TruthInSunshine's picture

We're talking about Bernankenomics here.

We've stepped it up a few notches.

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