Brandon's Economy:
Posted on 10/06/2023 8:15:07 AM PDT by Jan_Sobieski
If you are going to go out, you might as well do it with a bang. At the beginning of June, our national debt was sitting at $31,467,639,287,894.39. Today, it has risen to $33,442,148,619,617.43. That means that we have added almost two trillion dollars to the national debt in just three months.
It is the largest single debt in the entire history of our planet, and it will never be paid off. Our debt spiral has reached a terminal phase, and all we can do now is prolong the agony.
If we keep taking on more debt at an exponential rate, we may be able to extend our seemingly endless party for a little while longer. As for the bright future that our children and grandchildren were supposed to have, we destroyed that a long time ago, and so it doesn't really matter what we do now.
What our politicians are doing to us is truly a crime against humanity.
And I am not just talking about the United States. All over the world, politicians have been on the greatest debt binge in the history of the human race, and for quite a few years it seemed like they were getting away with it.
But now interest rates are rising and there is great turmoil in the bond markets. The following comes from CNN...
(Excerpt) Read more at prophecynewswatch.com ...
There is a lot of talk around about Great Reset. And Collapse. No one ever defines them.
The Fed created about $9T of the $33T over the course of the last 15 years. It’s still on the Fed balance sheet. The interest paid to those holdings is returned to Treasury and the Fed is in the process of QT — Quantitative Tightening, which is the buying back of those $9T incrementally each month. So the balance sheet total is in decline. This has the effect of reducing money in the economy.
They will end at about $1T. So the $33T will decline about $8T from their QT action over the next few years, plus whatever deficit adds. So expect about flat increase/decrease on the debt over the next 5 yrs.
I wonder what the starving masses will think about that? Rumor has it, that hungry people, are angry people.
“ The uniparty plan to keep the beast going seems to be more viruses, vaccines, and war ”
The escape from and reset from economic insanity has always been accompanied by mass death…and sometimes even a dark age.
Wait till they get to my house to seize my cash. Should be epic.
Printing more money to cover the growing budget deficits just increases annual debt servicing costs at a time when interest rates have been increased. The old debt must be refinanced at much higher rates.
We had a $2 trillion budget deficit for FY 2023 ending September 30. Debt servicing costs in FY 2023 were over $700 billion. They are projected to go over $1 trillion next fiscal year, the largest single cost in the discretionary budget, exceeding DOD's budget.
Running huge annual deficits and printing more money just accelerates the increase in debt servicing costs and the size of the national debt, which will consume the entire federal budget left unchecked. Default is inevitable. We are being sucked into a doward death spiral.
Oh, and the Medicare Trust Fund will be exhausted in 2028 requiring, by law, a reduction in benefits not to exceed revenue. The SSTF goes belly up in 2034. Medicare and SS represent an unfunded liability of $100 trillion. We can't kick the can down the road because we have run out of road.
I read Robert Kiosk’s book “Rich Dad Poor Dad”. Should be required reading for students. Then I read the Millionaire Next Door. Got half way through and put it down. I was doing all those things.
> Printing more money to cover the growing budget deficits just increases annual debt servicing costs at a time when interest rates have been increased. <
I meant they will simply create fiat money out of thin air, just as Zimbabwe did. This will not increase the debt as they are not borrowing money. They are creating money.
This sort of action is extremely reckless, and must lead to hyperinflation. But what other choice do they have?
(Well, Congress could start today to cut expenses and start to pay down the debt. However, the chances of that happening is zero.)
Just “WIPE” the debt.
Whatcha gonna do aboutit?
And yet, the political class keeps getting richer and richer.
Gee, I wonder why we have the system we do? It certainly isn’t because it’s best for the millions living in streets and camps, massed together in tiny apartments and out of their vehicles.
Hmmm
Brandon's Economy:
All the revenue collected from the payroll tax for SS and Medicare is immediately converted into non-market, interest bearing T-bills and held in the trust funds. Federal pension money is treated similarly.
The Trust Funds are held in intra-governmental holdings in contrast to the publicly held debt. Both are part of the total national debt.
SS and Medicare are running annual shortfalls (benefits exceed revenue), which are covered by cashing in the T-bills from the General Fund to pay benefits fully.
When the Medicare and SS Trust Funds run out of T-bills to cover the shortfalls, by law, benefits are reduced to revenue received. It is estimated that this would result in a 20% cut in benefits.
The T-bills held in the SS and Medicare Trust Funds are backed by the full faith and credit of the USG, just like the T-bills held by China and Japan. A default would hurt all T-bill holders.
Medicare and SS are unsustainable actuarially. They must be reformed.
The dollar has been losing buying power since the early 1900s, to the point that $1 is now $.03, and dropping. Talk about long time savers taking a hit. And folks in the stock market seeing returns on their investment smaller than the rate of inflation that eats away at said investment.
That’s what will happen. Europe will do the same. The US and EU will have crap credit for a few years and be back to A rating in 5. If everyone’s credit sucks the US is always the least sucky.
if I owe you $500,000 and cannot pay, that is a big problem for me.
If I owe you 2 trillion, that is a big problem for you.
They are adding to the National Debt. They print money to cover the annual budget deficits. They can't sell enough T-bills publicly to cover the budget deficits. Revenue is not enough to pay the bills.
The Fed printed/held money (almost $8 trillion now) is part of the $33.5 trillion National Debt.
(Well, Congress could start today to cut expenses and start to pay down the debt. However, the chances of that happening is zero.)
They can't cut enough expenses to pay down the debt. We are running a $2 trillion annual deficit. Where do you get the $2 trillion from?
The leading sentence to this article says the deficit increased $2,000,000,000,000 in 3 months. Are you saying it actually stayed flat or decreased?
Michael Pento discussed the current state of the bond market and warned of the potential collapse of the US dollar due to the erosion of faith in the world’s reserve currency. He advised investors to sell long duration bond exposure and invest in short term US government debt. Pento also discussed the inflation and GDP acceleration, as well as China and Japan’s selling of US treasuries. He warned of the massive issuance and supply of US debt and questioned who will buy it, as the Federal Reserve is no longer buying and is instead selling their balance sheet, adding to the supply from China and Japan.
LOL. Ah, they didn’t need to pass any such law. As long as they keep the printing presses near full throttle every account you own soon ends up worthless.
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