Wolf Richter delivers the news that everyone with an IQ above room temp knew was coming: Update on US Government Holy-Moly Debt, Interest Expense, and Tax Receipts, and How they Stack Up Against GDP There’s never a good time for this kind of news—as you’ll see from a few of the pictures below (not all included). Once the zero percent interest rate policy ended this was inevitable. It’s the blunt interest that the Fed uses to enforce fiscal discipline on politicians. Woops! Speaker Kev didn’t get the message.
2 cents: never too far from something bad, never too far from something good. I hear said that our National debt is so large it cannot be paid off, that our productive vitality got given to someone foreign. I say nutz to that. America plays large, mistakes can be huge, and we adapt anew. Under Clinton we had surpluses, and %debt service of GDP fell rapidemento. Useful productivity, besides individual striving, is in part cultural. The US population is if anything post-covid even more wound for change and creation. The manufacturing, agricultural, & invention capability vast. Add in blessed with great resources for most anything, I am of the belief we peeps will be okay. The US gov'ts, well, there's your problem. Taking $ for mischief away from our law-makers due to debt servicing helps slow the Leviathan
What is the deal with so-called "Republicans" and their chosen from amongst themselves Speakers ??? Kev is a moron and Dade down here in Texas is an imbecile !!! It is way past time for a House cleaning, you know what I'm saying, that's right folks, stop voting for incumbents in the primaries, STOP DOING THAT ALREADY !!!
A month or so ago, I remember seeing an article that said personal credit card debt had reached one trillion dollars for the first time, to say that I was thunder struck would be an understatement! I run a small business and the first thing that came to mind was the amount of interest that was entailed in so much debt and how in the world can people manage? Bingo, “ hey, if the government can do it, maybe I can do it too.” Guess they didn’t realize that the feds use fantasy economics, you know like a reduction in the rate of budgetary increase is a “budget cut”. But then the pesky real world butts in and, guess what, ya gotta service the debt. As one commenter mentioned, you cannot ignore the laws of economics, the real kind, not the fantasy kind.
I’d like to throw out for this group a way to think about treasuries, especially the 10 year. I propose they are storage boxes for large amounts of USDs. Like China. Where is a safe place to store USDs? What do you do with them? I think that is the purpose they serve - they are not “investments”. No one buys them for that purpose. They at least nominally enjoy the full faith and credit of the US Government, backed by its ability to tax. They are (or at least have) served as solid collateral for loans. Safety of the principal is the goal, the interest is the bonus. Hence their desirability. As long as USDs are used for trade (huge) people need a safe place to store their USDs. If interest rates go up on Treasuries, the demand is even more, not less.
Mark, I think at least California and maybe some other states have delayed tax filing dates due to “heavy rains”. I kid you not. Anyway that would explain part of the spike interest payments to taxes.
Note in the graph debt to GDP is coming down. After WWII we had similar debt/GDP ratios and a burst of very high inflation which brought the ratio down in a couple of years.
Perfect summary. Just one thing left out. In 1929 there were many innovative technologies, business was booming, debt was low and we had gold in Fort Knox. 2023 and the economy is lousy, public and private debt are at all-time highs, people aren't working and stocks are in the stratosphere. There is an old saying. "Trees don't grow to the sky." What can't go on won't go on.
Seems the Biden Administration is playing lots of games with draining the strategic oil reserve and massaging any numbers they can, later revising them after they get the needed headline.
Lee Smith made the point how the Obama Administration politicized the press Corp even more. Either go with the narrative, or your cut off from getting interviews.
I was wondering when someone, anyone, would write an article about how much more it was going to cost the federal government to borrow money now that interest rates were rising. The free ride is over. While the politicians and news media try to scare people about the effects of a national default, the future holds another real dilemma fast approaching where just paying the interest on the debt is going to inevitably reduce budgets and borrowing by the government. As Victor Davis Hanson wrote in a column recently - not about this topic - but it fits: What can't go on won't go on.
2 cents: never too far from something bad, never too far from something good. I hear said that our National debt is so large it cannot be paid off, that our productive vitality got given to someone foreign. I say nutz to that. America plays large, mistakes can be huge, and we adapt anew. Under Clinton we had surpluses, and %debt service of GDP fell rapidemento. Useful productivity, besides individual striving, is in part cultural. The US population is if anything post-covid even more wound for change and creation. The manufacturing, agricultural, & invention capability vast. Add in blessed with great resources for most anything, I am of the belief we peeps will be okay. The US gov'ts, well, there's your problem. Taking $ for mischief away from our law-makers due to debt servicing helps slow the Leviathan
I might as well continue to plan to work through my 60’s and 70’s. (Not very hard though).
Just like they accomplished here in Illinois.
What is the deal with so-called "Republicans" and their chosen from amongst themselves Speakers ??? Kev is a moron and Dade down here in Texas is an imbecile !!! It is way past time for a House cleaning, you know what I'm saying, that's right folks, stop voting for incumbents in the primaries, STOP DOING THAT ALREADY !!!
A month or so ago, I remember seeing an article that said personal credit card debt had reached one trillion dollars for the first time, to say that I was thunder struck would be an understatement! I run a small business and the first thing that came to mind was the amount of interest that was entailed in so much debt and how in the world can people manage? Bingo, “ hey, if the government can do it, maybe I can do it too.” Guess they didn’t realize that the feds use fantasy economics, you know like a reduction in the rate of budgetary increase is a “budget cut”. But then the pesky real world butts in and, guess what, ya gotta service the debt. As one commenter mentioned, you cannot ignore the laws of economics, the real kind, not the fantasy kind.
I’d like to throw out for this group a way to think about treasuries, especially the 10 year. I propose they are storage boxes for large amounts of USDs. Like China. Where is a safe place to store USDs? What do you do with them? I think that is the purpose they serve - they are not “investments”. No one buys them for that purpose. They at least nominally enjoy the full faith and credit of the US Government, backed by its ability to tax. They are (or at least have) served as solid collateral for loans. Safety of the principal is the goal, the interest is the bonus. Hence their desirability. As long as USDs are used for trade (huge) people need a safe place to store their USDs. If interest rates go up on Treasuries, the demand is even more, not less.
Mark, I think at least California and maybe some other states have delayed tax filing dates due to “heavy rains”. I kid you not. Anyway that would explain part of the spike interest payments to taxes.
Note in the graph debt to GDP is coming down. After WWII we had similar debt/GDP ratios and a burst of very high inflation which brought the ratio down in a couple of years.
Economic laws cannot be avoided forever. Maybe this is the “debt spiral” they’ve always told us would come.
Perfect summary. Just one thing left out. In 1929 there were many innovative technologies, business was booming, debt was low and we had gold in Fort Knox. 2023 and the economy is lousy, public and private debt are at all-time highs, people aren't working and stocks are in the stratosphere. There is an old saying. "Trees don't grow to the sky." What can't go on won't go on.
Alternate data:
http://www.shadowstats.com/alternate_data
Seems the Biden Administration is playing lots of games with draining the strategic oil reserve and massaging any numbers they can, later revising them after they get the needed headline.
Lee Smith made the point how the Obama Administration politicized the press Corp even more. Either go with the narrative, or your cut off from getting interviews.
https://leesmith.locals.com/post/4073528/how-the-us-ruling-class-plot-against-trump-woke-a-sleeping-american-giant
I was wondering when someone, anyone, would write an article about how much more it was going to cost the federal government to borrow money now that interest rates were rising. The free ride is over. While the politicians and news media try to scare people about the effects of a national default, the future holds another real dilemma fast approaching where just paying the interest on the debt is going to inevitably reduce budgets and borrowing by the government. As Victor Davis Hanson wrote in a column recently - not about this topic - but it fits: What can't go on won't go on.