MMT Alert! US Debt At $10.7 Trillion In Q4 2008, Now At $30.6 Trillion, +186% In 14 Years (M2 Money UP +162.5%) US Unfunded Liabilities At $172.4 TRILLION!

Confounded Interest ^ | 11/06/2022 | Anthony B. Sanders

[Kaiser8408a]

Ever since the financial crisis of 2008 and the election of President Obama and a Democrat Congressional sweep, the US has embraced Modern Monetary Theory (MMT or borrow, print and spend without consequence). And between the financial crisis and the Covid crisis of 2008, we have seen an increase in US public debt from $10.7 trillion in Q4 2008 to a staggering $30.6 trillion as of Q2 2022. That is a staggering increase of 186% in only 14 years.

How about US Money stock? M2 Money stock has grown by 162.5% since the beginning of 2009 and the “Blue Wave” of 2008. And nothing has been the same.

The Covid outbreak in early 2020, we saw Fed money printing that has never seen before … or since. But one thing is for sure, M2 Money Velocity (GDP/M2) is near all-time lows.

Then we have headline US inflation as a function of M2 Money growth YoY.

To paraphrase Alexander Dayne from Galaxy Quest, “They broke the financial system, they broke the bloody financial system!”

And it is the midterm election “silly season” where no politician will discuss the complete and utter mess they have made. According to US Debt Clock, US national debt is already up to $31.26 trillion (OMG!), but the REALLY scare number that not a single politician will address is UNFUNDED LIABILITIES OF $172.4 TRILLION.

Can we go back to the gold standard? Or silver standard? Or ANY standard for that matter??

Instead, we have porous borders and patently UNSOUND money, thanks to MMT.

[Kaiser8408a]

Found this when I woke up ... and it is depressing. Look at US government UNFUNDED LIABILITIES. The amount that has been promised to citizen by our reckless politicians.

[joma89]

This is criminal. Communists are in control of the United States and are working to bankrupt us.

[Bringbackthedraft]

They are going to run out of paper and ink at this rate.

[Aevery_Freeman]

DemonRatz think MMT means Magic Money Tree.

[Aevery_Freeman]

And for the widely despised Boomers who paid into Social Security all our lives...well they squandered the money buying votes instead of building infrastructure, educating our best and brightest (not just blackest) and advancing the sciences.

Hope everyone expecting SS also prepared for not receiving it because we won't - or we will and it will have little buying power.

Our new slogan will be "Puree the Rich".

[nathanbedford]

Among the moneyed classes recently the chatter has been about whether it is the Fed or inflation that is in the saddle.

Those who believe that the Fed is in charge then must decide whether the Fed will pivot and return to something akin to quantitative easing so that the music can play on, investors can return to the stock market and we will all be basked in the light of the sunlit uplands.

Those who believe that the Fed is in charge, might, to the contrary, argue that the Fed will hold the course, driving interest rates up until inflation is down to 2% and that the markets will suffer along with asset classes.

But there is another school of thought that the Fed is not in the saddle but inflation is in control and that the power over both inflation and interest rates will soon be taken from the Fed and the instrument for that divestiture or will be the bond market.

We have recently seen in Britain and that the bond market would not play so the country teetered on the brink of sovereign debt crisis. That scenario can easily occur in the USA.

It is in this context that not just our debt and not just our unfunded liabilities of $174 billion should scare the beJesus out of everyone, it is the fact that all these liabilities have been leveraged and extended into the stratosphere by the largely unregulated derivatives market.

If a crash comes, if in fact the power to choose our pain is taken away from the Fed, our sovereign debt can be at risk, and if that is not enough to undo us, derivatives can supply the coup de grace.

[nathanbedford]

Among the moneyed classes recently the chatter has been about whether it is the Fed or inflation that is in the saddle.

Those who believe that the Fed is in charge then must decide whether the Fed will pivot and return to something akin to quantitative easing so that the music can play on, investors can return to the stock market and we will all be basked in the light of the sunlit uplands.

Those who believe that the Fed is in charge, might, to the contrary, argue that the Fed will hold the course, driving interest rates up until inflation is down to 2% and that the markets will suffer along with asset classes.

But there is another school of thought that the Fed is not in the saddle but inflation is in control and that the power over both inflation and interest rates will soon be taken from the Fed and the instrument for that divestiture or will be the bond market.

We have recently seen in Britain and that the bond market would not play so the country teetered on the brink of sovereign debt crisis. That scenario can easily occur in the USA.

It is in this context that not just our debt and not just our unfunded liabilities of $174 billion should scare the beJesus out of everyone, it is the fact that all these liabilities have been leveraged and extended into the stratosphere by the largely unregulated derivatives market.

If a crash comes, if in fact the power to choose our pain is taken away from the Fed, our sovereign debt can be at risk, and if that is not enough to undo us, derivatives can supply the coup de grace.

[combat_boots]

You mean $172+ trillion

[nathanbedford]

Amazing how fast it adds up to real money.

[Worldtraveler once upon a time]

--- "The amount that has been promised to citizen by our reckless politicians."

It will of course be abrogated in time, because we are the most heavily indebted nation in the history of the world on a total value basis, while Japan is second to us in this regard. With a depleted manufacturing base and rampant corruption, this is the only future, until collapse restructures the whole. Democrats and RINOs and their kin in "western" Europe have played and continue to play a stupid and self-serving game for the few. Rebellion is in order, and "walking away" is at work already..

[cranked]

Who the hell cares?
Seriously?!

Cause apparently the mofos who keep sending billions to the blackhole Ukraine and spending tens and hundreds of billions regularly like candy don’t give one shat!

[ReaganGeneration2]

The other danger is they will go full-on programmable digital currency. When that happens, their goal is rationing and ultimately slavery.

In that case, what happens next depends on the American people. Does anyone think there will be enough critical thinkers and patriots remaining to do anything about it?

[T.B. Yoits]

Make no mistake, the Fed is running up the debt intentionally. They’re implementing slavery.

[MeneMeneTekelUpharsin]

It would be nice if unfunded liabilities were only 174 billion (read what you wrote again).

[nathanbedford]

The "B" already changed to a "T" for me, thanks.

[gloryblaze]

... It is in this context that not just our debt and not just our unfunded liabilities of $174 billion should scare the beJesus out of everyone, it is the fact that all these liabilities have been leveraged and extended into the stratosphere by the largely unregulated derivatives market....

I won't pretend to grasp all of your post, even though I read it twice (wink). But, being a 'fraidy-cat of deritives of any sort, I have only cash in bank CDs and real estate.

Will I succumb last?

[aquila48]

But not electrons and numbers in databases.

[nathanbedford]

I have only cash in bank CDs and real estate.

If we have runaway inflation, obviously, your bank CDs and cash will be inflated to near worthlessness. On the other hand, if we have inflation, perhaps not runaway, your real estate will prosper, at least relative to other investments.

Suppose we don't have inflation, suppose for some reason the system breaks down and we have massive depression. Then, I suppose, your cash and bank CDs will prosper and your real estate might go bankrupt but any mortgages on them might drag you down.

What will the politicians do if they have the power of choice? The conventional wisdom says the politicians will always opt for inflation over depression, that is, the pain of inflation is more gradual and delayed whereas the pain of depression is immediate. So if politicians have their way, the smart money says they will inflate rather than deflate.

That implies that the fiscal solution devised by politicians will tend toward inflation.

But why should we believe that the politicians will have their way? Can we trust that the Fed will have the power to inflate or deflate, that is, to print currency with cyber strokes in order to float bonds at interest rates that the bond market will pay, that is, that the bond market thinks are interest rates commensurate with the risks?

The rub here is that if the Fed fails to raise interest rates to satisfy the bond market, they cannot float the bonds except by underwriting bonds themselves and that house of cards cannot go on forever. How long can we maintain credibility if the bonds we sell to the run the government are bought only by the government? If they raise the interest rates high enough in an inflationary environment to satisfy the bond market, the treasury cannot balance the budget, indeed, the treasury cannot even function, cannot pay the running interest on the existing debt, and we have the prospect of disintegration.

So in the absence of a fiscal solution, we look to the Fed for a monetary solution and we wonder if the Fed actually has running room?

This is an environment in which we have lost the power to choose, or are at least on the threshold of losing the power to choose. Any adverse development can cause everything to crater. Consider what happened in 2008 when the secretary of the treasury and big bankers walked into the Oval Office and told George Bush that everything was going to crash before sunset.

Beyond the obvious risks: the war in Ukraine causing shortages everywhere, diesel fuel being unavailable, China's property market crashing their economy with spillover to ours. These are just by way of examples and they don't even begin to contemplate unanticipated risks, black swans, whose risks by definition cannot be anticipated.

The system is so vulnerable that any little nudge can bring real havoc. I don't have any confidence whatsoever in the administration to create fiscal sanity and little faith in the Fed, judging from its recent history of mischaracterizing inflation, to guide us through the minefields.

I am not normally such a depressive, I love life, love politics, my family and am usually very hopeful about the future.

[aquila48]

And yet the dollar is at the highest value relative to other currencies.

These scary public debt stories alluding to some economic armageddon have been around for years and years, yet nothing much ever happens.

Why?

[gloryblaze]

Oh, I realize that an apocalyptic black swan is unknowable. Maybe I was fishing for some enthusiasm for my supposedly ignorant fears of aggressive investments over the years. I’m old and so have zero debt.

Thanks for your thoughts. I suppose we’ll all find out together.

Sometime.