Posted on 10/17/2023 9:03:51 AM PDT by tired&retired
Fiat currency enables governments to create & spend money that doesn’t exist. Always ends in disaster. The only variable is how long it takes.
“Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants – but debt is the money of slaves.”
― Norm Franz
When Fitch downgraded the U.S. in August it expressed concern about the exploding debt to GDP ratio. They warned that it would be 118% in 2025. We have already blown by that number and are currently at an astounding 125%.
Can more downgrades by the ratings services be far away?
“There is still plenty of time to spend hundreds of billions more on foreign wars before the collapse”.
And line their pockets.
BINGO!!!!
The SSTF holds $2.8 trillion in non-market, interest bearing T-bills, which are backed by the full faith and credit of the USG. The SSTF is part of the $33.5 trillion national debt as are the T-bills held by China, Japan, the Fed, and others.
Since SS has been running an annual deficit for some time now, i.e., benefits paid exceed revenue collected from payroll taxes, the shortfall is made up by cashing in T-bills held in the SSTF thru the General Fund. Although the GF redeems the T-bills, the National Debt is decreased by the amount of the SSTF T-bills redeemed. It is a wash. However, the SSTF will be exhausted in 2033.
Ludwig von Mises has some great quotes as well:
“A monetary expansion results in misinvestment of capital and overconsumption. It leaves the nation as a whole poorer, not richer.”
“Continued inflation must finally end in the crack-up boom, the complete breakdown of the currency system.”
I’m 71. I’m so disgusted and tired of fighting the good fight I’m beginning to think “eff it, I’ll be dead anyway” by then.
But...I’m leaving behind a wonderful, productive daughter (and a nephew like her) who is going to take the full brunt of this and that breaks my heart. All of this should so unnecessary.
“National Debt is decreased by the amount of the SSTF T-bills redeemed.”
True, but it’s not a wash. Our government must pay cash to the Fund so they can pay benefits.
It is a wash in terms of the national debt. The GF must borrow the money to redeem the T-bills thereby increasing the national debt, but the redemption lowers an equal amount in the SSTF, which is also part of the National Debt. A wash.
On the other hand, the Medicare Trust Fund is exhausted in 2028. But what most people don’t know is that 40% of all Medicare costs come from the GF, mainly due to Medicare Part B. By law, the premiums for Medicare Part B cover only 25% of the costs. The remaining 75% comes from the GF.
So we doubled the national debt in about 3 years. How could that possibly cause a problem?
In reality, the only way the US General Fund can pay the Social Security Trust Fund is by borrowing more money elsewhere to repay them in cash so they can pay the benefits.
So while in theory what you say is correct, in reality they need to come up with the money to pay. Since they don’t have the revenue they must create more debt to repay the SS debt. Thus no decrease.
I said that the money to redeem the SSTF T-bills must be borrowed, which increases the national debt. However, the national debt is reduced by an equal amount when the SSTF cashes in the T-bills. A wash as far as the national debt is concerned. This is not theory, it is reality.
“Sorry for the bad weather report, but it’s about to get real stormy.”
I’m glad someone other than myself sees the storm clouds gathering. Too many people have normalcy bias and think that just because we have had such a long run of economic success in this country, the the good times will continue.
Strong men make good times, Good times makes weak men, weak men make hard times, hard times make strong men, ....and then it hopefully starts over again.
Of course, when you add evil men to the equation, the cycle may not always continue.
US 30-Year Mortgage Rate Hits Fresh 23-Year High
United States Mortgage Rate
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) in the US increased for a sixth consecutive week to 7.70% in the week ending October 13th. This marked a new high since November 2000 and led to a drop in demand for home loans to a 28-year low. The rate on a five-year adjustable mortgage surged by 19 basis points to 6.52%, the second-highest in MBA data dating back to 2011. Meanwhile, mortgage rates continued to increase this week in line with Treasury yields, as a stronger-than-expected US retail sales report indicated that the Federal Reserve might need to raise interest rates once more.
Oil Jumps by Over 3% to 2-Week High
Oil prices extended gains to over 3%, with Brent crude futures rising to nearly $93 per barrel, the highest in two weeks following Iran’s call for a Muslim countries’ embargo against Israel. Tensions escalated in the Middle East after a blast at a Gaza City hospital killed about 500 Palestinians on Tuesday, with Israel denying that it carried out the attack. Meanwhile, industry data showed that US crude inventories dropped by about 4.4 million barrels last week, far exceeding forecasts for a 300,000-barrel decline. Elsewhere, the Venezuelan administration and opposition leaders on Tuesday agreed to electoral guarantees for the 2024 presidential elections, paving the way for possible US sanctions relief that could increase global oil supplies.
10-Year Treasury Yield Top 4.85%
United States Government Bond 10Y
The yield on the US 10-year Treasury touched a fresh 2007-high of 4.85% on Wednesday, before stabilizing at 4.83%, as economic indicators continue to signal a robust US economy that can endure higher interest rates for an extended period. Retail sales rose more than twice the market forecast and industrial production unexpectedly increased last month. Traders also await more comments from several Fed officials this week, including an appearance by Fed Chair Powell before the Economic Club of New York on Thursday, for further insights into the central bank’s next steps. On Monday, Philadelphia Federal Reserve President Harker said that at this point policymakers should not be thinking about any increases in interest rates
“10-Year Treasury Yield Top 4.85%”
That is beginning to be a tempting investment.
I am still convinced that serious inflation is with us for the long term—but if I am wrong this would look really good in a portfolio.
Make no mistake—I am confident that it is all coming down—but we could be talking decades from now, not years from now.
It is easy to confuse important with urgent.
“It is easy to confuse important with urgent.”
That is so true. Oh, to have a crystal ball!
It’s all going to come crashing down at some point. The question is whether that crash is imminent, or way off in the future. However, I’m 60+ and have never before in my life-time seen our nation so close to the edge of a cliff.
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