How Washington Ruined America’s Future: The annual interest on Treasury debt will soon pass $1 trillion

Economic Prism ^ | 07/24/2023 | MN Gordon

[SeekAndFind]

United States Secretary of Treasury Janet Yellen has an incredible job. She writes rubber checks to pay America’s bills. Yet, somehow, the rubber checks don’t bounce. Instead, like magic, they clear.

How this all works, considering the nation’s technically insolvent, is quite miraculous. But it works, nonetheless. Again and again, the Treasury borrows money. And Washington spends it.

Yellen likely knows that full faith and credit is too good to be true. The U.S. government’s gross fiscal mismanagement should call the veracity of its notes into question. But why focus on it when there’s an abundance to be acquired from weekly Treasury bill auctions?

On a recent trip to China, Yellen was spotted by a local food blogger consuming a plate of magic mushrooms. An aide to Yellen later confirmed that she did, indeed, order them. The restaurant’s “staff said she loved [the] mushrooms very much. It was an extremely magical day.”

We don’t know what their acute effects on Yellen were, while she was in Beijing. But the mushrooms appear to be contributing to her chronic hallucinations about the U.S. economy’s current health. This week, for example, while attending the G20 meeting in India, Yellen remarked:

“For the United States, growth has slowed, but our labor market continues to be quite strong. I don’t expect a recession. The most recent inflation data were quite encouraging.”

These, no doubt, are the fantasies of a person under the influence of mind-altering chemicals. Either that, or her mind has turned soft over decades of working as a professional economist for the Federal Reserve and the Treasury.

Tempered Perspective

The unemployment rate reported by the Bureau of Labor Statistics (BLS) is, in fact, just 3.6 percent. Yellen can celebrate the data point. But the quality of the jobs being created is not the type that will drive economic growth.

Higher-paying technology and finance jobs are being purged. While leisure, hospitality, and government are the sectors contributing to employment growth. These jobs may be important. Still, they will not create new wealth or help America compete with its global rivals.

Yellen, while under the influence, also remarked that she doesn’t expect a recession. Maybe this is why you should expect one.

Her predictive acumen has missed the target in the past. If you recall, in 2017 she said she did not believe another financial crisis would happen in our lifetime. Since then, we’ve had one financial crisis after another, including the most recent bank failures this spring.

Just this week, Bank of America reported its bond losses in the second quarter increased $7 billion to nearly $106 billion. And Starwood Capital Group just defaulted on a $215.5 million mortgage on an Atlanta office tower. Probably nothing to worry about, right?

In addition, this week Taiwan Semiconductor Manufacturing Company (TSMC), the mega chip maker, reported its first profit drop in 4 years. Revenue slipped 10 percent from a year ago. What’s more, net income fell 23.3 percent. Wasn’t AI supposed to drive silicon wafer production to commanding heights?

With respect to what Yellen called ‘encouraging inflation data’. While under the influence, she was likely referring to the recent CPI report from the BLS, which showed that in June, consumer prices increased at an annualized rate of 3 percent. This is still 50 percent higher than the Fed’s arbitrary inflation target.

Moreover, the energy commodities component showed a 16.7 percent price decline over the last year. This has coincided with President Biden draining the Strategic Petroleum Reserve to a 40-year low. Without these short-sighted actions, the current inflation data would be much less encouraging.

Structural Crisis

In short, the U.S. economy’s prospects do not quite align with Yellen’s positive outlook. And if you look out further than just the current data reports, you’ll be greeted with a structural crisis of significant consequence.

In fact, simple arithmetic quickly reveals the precarious predicament the 118th Congress is putting the American people in.

The Treasury Department, the agency Yellen oversees, recently reported that for the first 9 months of the 2023 fiscal year, the federal government ran a budget deficit of nearly $1.4 trillion. That’s a 170 percent increase from the same period last year.

The big surprise, however, was that interest on Treasury debt securities for the first 9 months of FY2023 topped $652 billion. A 25 percent increase for this period a year ago.

Rapid and repeated interest rate hikes by the Fed to contain the raging price inflation of its own making, has blown out the interest owed on Treasury debt. Anyone with half an inkling knew this was coming from miles away.

The growth of federal debt has been out of control for decades. But the rate of debt growth in the 21st century has rapidly accelerated.

The solution that’s commonly offered by the politicians for getting a handle on Washington’s debt problem is for the economy to somehow grow its way out. Countless policies over the years have generally involved borrowing money from the future and spending it today.

Yet economic growth never manages to outpace the debt increases. Instead, the debt piles up higher and higher with each passing year. The simple fact is you can’t grow your way out of debt when the debt’s increasing faster than gross domestic product (GDP).

For example, in 2000 the federal debt was about $5.6 trillion, and U.S. GDP was about $10 trillion. Today, the federal debt is over $32.5 trillion, and GDP is about $26.5 trillion. In just 23 years the federal debt has increased by over 480 percent while GDP has increased just 165 percent.

How Washington Ruined America’s Future

Recently, the Peter G. Peterson Foundation attempted to characterize the $32 trillion federal debt. The number is so large it is difficult to comprehend. Here is some of what the foundation came up with:

The $32 trillion debt is more than the combined values of the economies of China, Japan, Germany, and the United Kingdom. It represents $244,000 per household or $96,000 per person in America. And if every household contributed $1,000 per month towards paying down the national debt it would take over 20 years.

Without question, Washington has run up an impossible tab. Yet, what does it have to show for all this recklessness?

America’s cities are decaying from the inside out. The infrastructure is crumbling. The country has been involved in one overseas quagmire after another. And the populace is struggling with gender identification pronouns.

The political will to stop this massive debt pileup has been nonexistent. Democrats and Republicans have both spent like drunken sailors. There’s been no tradeoffs or compromises to cut spending. There’s been zero effort to balance the budget. And now it’s too late.

As mentioned above, interest on Treasury debt securities for the first 9 months of FY2023 topped $652 billion – a 25 percent increase from a year ago. But this is just the beginning.

As interest rates continue to rise, the annual interest on Treasury debt will soon pass $1 trillion. That would put this line item at par with outlays for Social Security, the U.S. government’s largest expenditure.

This would also put spending on interest payments above the combined spending of research and development, infrastructure, and education.

Consequently, by repeatedly borrowing and spending money, piling up massive debt, and then being forced to jack up interest rates, Washington has ruined America’s future.

Yippee! Look Ma, no hands!

[ARW]

“ It represents $244,000 per household or $96,000 per person in America. And if every household contributed $1,000 per month towards paying down the national debt it would take over 20 years.”

This is true at 0% interest but the payback is closer to 60 years at 5% and $1,000.00/month.

[Responsibility2nd]

Related....

$57,200,000,000 Added to US Debt in Four Days As Billionaire David Rubenstein Issues Warning on America’s Economic Future

7/24/2023, 12:05:00 AM · by cba123 · 42 replies

Daily Hodl ^ | Daily Hodl staff

The amount of total outstanding public debt on America’s balance sheet is soaring. Newly updated numbers from the government’s FiscalData platform show the country’s debt has surged by $57.2 billion in just four days. After surpassing the $32 trillion mark on June 16th, the total debt accumulated by the US has already jumped an additional $590 billion as of July 20th. In a new interview on Bloomberg TV, billionaire investor David Rubenstein says the US can only manage its ever-increasing pile of debt with inflation, which will further expand America’s income inequality gap. “When I left the White House under...

[Paladin2]

Washington was not so bad.

Compare and contrast with McCarthy and Ditch....

[everlast]

Without fair elections or something popping off, we will never reverse this. Welcome to the New World Order

[rellic]

The problem with the USA is we have Democrats.
Until we rid ourselves of them we are sunk.

[rellic]

The problem with the USA is we have Democrats.
Until we rid ourselves of them we are sunk.

[Sequoyah101]

What difference does it make now?

We are pretty well screwed, blued and tattooed already. We have been that way for quite some time now and are just running out the clock.

[kabar]

Yet we can still borrow close to $200 billion and counting to fight a proxy war in Ukraine, a war where there is no vital US national security interests at stake. Endless wars have been a major factor in our exponential increase in debt.

[Paladin2]

Real Interest [check Inflation, especially my personal Inflation rate...] needs to be positive.

[Paladin2]

Jao BiXiden and Victoria Nuland are losing the Uke War of Rooskie Aggression.

[Mr. Jeeves]

The endless wars do serve one important purpose - to demonstrate to wavering partners the tools and technologies that really backstop the US dollar.

Wisely evading any of these conflicts might signal an encroaching weakness in that backstop that would have those partners scrambling to adopt alternatives.

[SaveFerris]

(Higher-paying technology and finance jobs are being purged)

2008 once again.

[Right_Wing_Madman]

The endless wars do serve one important purpose - to demonstrate to wavering partners the tools and technologies that really backstop the US dollar.

The burned-out Bradleys in Zaparozha had the opposite effect. The BRICS have accelerated their plans for life after the dollar.

[Degaston]

Anyone with basic math skills can figure out that the trend is going way over 1 trillion per annum and staying put there for as long as can be seen. Those who don’t understand this simply don’t have enough credibility to be taken seriously.

4-5% of 32.59 trillion is 1.30 trillion to 1.63 trillion.

Interest rates will be approx 4-5%
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202307

National Debt is $32,592,962,824,463.71
https://fiscaldata.treasury.gov/datasets/debt-to-the-penny/debt-to-the-penny

[SaveFerris]

(Welcome to the New World Order)

It is inescapable now.

The Godless Globalists have made that a certainty.

Coming up:

World War III.

Starvation.

Population Reduction.

A Great Reset.

The Four Horsemen of the Apocalypse.

[kabar]

The tools and technologies are not working. The fools and knaves that lead America, aka the Biden National Security Team, are leading us off a cliff. Ukraine will make our disastrous, ignominious exit from Afghanistan look like a master stroke by comparison. Great Empires end by spending themselves into penury.

When Adm Mike Mullen, then Chairman of the JCS, was asked what the greatest threat was to our national security, he replied, “The National Debt.” Currently, we are spending over $500 billion annually on debt servicing costs alone, which is more than the defense budgets of China and Russia combined. We can’t afford these endless wars.

[SaveFerris]

Also mention the Unfunded Liabilities

Well over 205-206 Trillion by now

[kabar]

Eve of Destruction

The Eastern world, it is explodin’
Violence flarin’, bullets loadin’
You’re old enough to kill but not for votin’
You don’t believe in war, but what’s that gun you’re totin’?
And even the Jordan river has bodies floatin’

But you tell me over and over and over again my friend
Ah, you don’t believe we’re on the eve of destruction

Don’t you understand what I’m trying to say?
Can’t you feel the fear that I’m feeling today?
If the button is pushed, there’s no running away
There’ll be no one to save with the world in a grave
Take a look around you boy, it’s bound to scare you, boy

But you tell me over and over and over again, my friend
Ah, you don’t believe we’re on the eve of destruction

Yeah, my blood’s so mad, feels like coagulatin’
I’m sittin’ here just contemplatin’
I can’t twist the truth, it knows no regulation
Handful of Senators don’t pass legislation

And marches alone can’t bring integration
When human respect is disintegratin’
This whole crazy world is just too frustratin’

And you tell me over and over and over again my friend
Ah, you don’t believe we’re on the eve of destruction

Think of all the hate there is in Red China
Then take a look around to Selma, Alabama
Ah, you may leave here for four days in space
But when you return, it’s the same old place
The poundin’ of the drums, the pride and disgrace
You can bury your dead but don’t leave a trace
Hate your next door neighbor but don’t forget to say grace
And you tell me over and over and over and over again my friend
You don’t believe we’re on the eve of destruction
You don’t believe we’re on the eve of destruction

[joma89]

Bankrupting the county is the democrat communist party’s plan.