Saturday, October 31, 2009

$12 Trillion in debt - did anyone notice?

Anyone hear that sound - yup, crickets chirping.

This week's MASSIVE/UNPARALLELED sale of US debt ($153 Billion) caused the Gvt's public debt load to slice through the $12T mark like a hot knife through butter.

Next: expect our Congressionally authorized debt ceiling of $12.104 trillion to be breached by the end of November 09 - if so, and if the limit isn't raised by then, our Gvt could be forced to shut down... Don't expect that to happen though - lawmakers will once again raise the ceiling, as they have done more than 90 times since 1940 -- eight of them since 2002.

2002: Raised from $5950 billion to $6400 billion
2003: Increased again - from $6400 billion to $7384 billion
2005: Wasn't enough - increased to $8184 billion
2006: Raised from $8184 billion to $8965 billion
2007: Big one this time - from $8965 billion to $9815 billion
2008: July 08 housing Bailout package included provision for increase to $10,600 billion
2008: Another Bailout Package Plan - increased ceiling from $10,600 billion to ~ $11,300 billion.
2009: Ceiling increased to $12.104 Trillion as part of the American Recovery and Reinvestment Act of 2009 - an economic stimulus package that was approved in February.

The United States total public debt, commonly called the national debt, or U.S. government debt (clock below), is the amount of money owed by the federal government of the United States to holders of U.S. debt instruments.

Note: this national debt figure (above) does NOT include unfunded liabilities.

David Walker, Former Comptroller General of the United States, places "Unfunded Liabilities" - Future Obligations of our Nation IF we actually had the money in the bank today - at > $100 Trillion.

So, will our National debt (and unfunded liabilities for that matter) ever be repaid?

Well, that answer could be a No or Yes...

Answer #1 - No: If our country defaults on its debt the debt won't be paid - but that option will be avoided at all costs (Pun intended)...

Answer #2 - Yes: And this option has already been selected.

It WILL be paid through significantly devalued payouts caused by monetary expansion that will eventually lead to a currency collapse and hyperinflationary blowout (same end result as a default, just more palatable).


T Z said...

Contrary to popular belief, the US dollar is not just backed by the full faith and credit of the US government. It is backed by the full might of the US military. Any foreign central bank holder of US Treasury bonds who demand repayment will see their country invaded by the US. They should welcome such a move. See, after an American Shock & Awe invasion, US will invest heavily to rebuild and country infrastructure to the most high tech and efficient standards. Thus deliver excellent return-on-investment. US can do this very well in foreign country, even at the expense of its own.

jerry said...

The Iraq and Afghani wars are about to reach $1T. see

Randy said...

Understand and agree with both comments - As I stated in "Dollar: Faltering Foundation of US Economic Strength" - WAR will quite likely be the end game to our massive economic unwinding.

War creates both industry and profit!

T Z said...

Randy, my post was of course in jest.

But the following is not: US, for many decades, have NEVER repaid its sovereign debt. So it doesn't matter that debt is $1T or $50T. In this sense, Cheney's remarks that 'debt and deficit' doesn't matter is not just his opinion.

Because US simply prints up more money when it's Treasury matured. Not only that, US also prints up the interest payments.

Which is why the dollar has lost its value some 95% compared to about a century ago. All is 'well' as long as one inflates the economy and the currency. The job of the trillion-dollar US military is to ensure the country can continue to print dollars without adverse repercussions. Like, when Poland demanded Hitler Germany to repay its WW1 debt, Hitler made sure he has built up its military mighty enough to teach Poland a lesson about collecting debt from a country armed to the teeth. US strategy is to build up its military far far bigger than necessary, so that the treat of military action is credible without actually doing the nasty work.

But sometimes it is necessary to fight for the dollar (and Wall Street). As when Saddam dared to demand oil payments from non-dollar!

All empires need tributes. And the US empire tribute is foreigners' dollar holding.