US Treasury Posts Gigantic $1.16 Trillion Shortfall in Fiscal 2017, Hilariously Points out “Where We Are Headed” — So Budget Deficits Will REALLY Go Vertical – Mnuchin’s Wife Says: Don’t Worry

US Treasury Posts Gigantic $1.16 Trillion Shortfall in Fiscal 2017, Hilariously Points out “Where We Are Headed”:

Just add tax cuts and ballooning expenditures. The media chose to silence the report to death.  

“If a tree fell in a forest and nobody heard it, did it really make a sound?” asks our favorite fiscal gadfly and Director of Research at Truth in Accounting, Bill Bergman, referring to the media coverage that the Treasury Department’s “Fiscal Year 2017 Financial Report of the U.S. Government” has received, which was, at the time he wrote it 24 hours after the February 15 release of the report: “Nothing. Zip. Scratch.”

“Where We Are Headed”

That $1.156 trillion in Net Operating Cost occurred in fiscal 2017. But these are the good times, the boom years, if you will, when shortfalls should shrink into oblivion. So what will happen to the shortfall when the economy slows down or goes into a recession? That was a rhetorical question.

For fiscal 2018 and going forward, the tax cuts will lower revenues by about $150 billion per year on average over the next ten years. And for fiscal 2018 and 2019, Congress passed the two-year budget resolution that will add about $150 billion on average per year to the outlays. Both combined will drive up the deficit by about $300 billion a year on average.

“Where We Are Headed” a chapter heading (pages 9 and 14) says. I can supply my own chart, based US Treasury data, to show exactly “where we are headed” in terms of the US gross national debt:

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Budget Deficits Will Really Go Vertical – Mnuchin’s Wife Says: Don’t Worry:

Authored by MN Gordon via EconomicPrism.com,

United States Secretary of Treasury Steven Mnuchin has a sweet gig.  He writes rubber checks to pay the nation’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, we don’t quite understand.  But Mnuchin gets it.  He knows exactly how full faith and credit works – and he knows plenty more.

In fact, Mnuchin’s wife, Louise Linton, says she admires him because “he understands the economy.”  And Mnuchin, no doubt, admires Linton, a Scottish actress 18 years younger, because “she loves SoulCycle Snapchat filters that make people look like puppies and piglets.”  Naturally, Mnuchin gets the importance of puppy and piglet filters and how this bizarre fad fits into the big picture of the economy.

Unlike Mnuchin, we find the economy, and its infinite and dynamic relationships, to be beyond comprehension.  But that doesn’t deter us from attempting to make some sense of it each week.  When it comes to Snapchat filters we know nothing – and we could care less.  Still, who are we to question Snap Inc.’s $24 billion market capitalization?

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DANGER AHEAD FOR U.S. GOVT: Unable To Service Debt As Interest Rates Surge

DANGER AHEAD FOR U.S. GOVT: Unable To Service Debt As Interest Rates Surge:

The U.S. Government is in serious trouble when interest rates rise.  As interest rates rise, so will the amount of money the U.S. Government will have to pay out to service its rapidly rising debt.  Unfortunately, interest rates don’t have to increase all that much for the government’s interest expense to double.

According to the TreasuryDirect.gov website, which came back online after being down for nearly a month, reported that the average interest rate paid on U.S. Treasury Securities increased from 2.2% in November 2016 to 2.3% in December 2017.  While this does not seem like a significant change, every increase of 0.1% in the average interest rate, the U.S. Government has to pay an additional $20.5 billion in interest expense (based on the $20.5 trillion in total U.S. debt).

H/t reader squodgy:

“Somebody, somewhere knows the truth.
They will have prepared and have a bolthole.
Knowing when is essential.
We irrelevent serfs have no idea generally, but those who read I.U. have had enough pointers and warnings to know what’s going on.”

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Debt Bubble surpasses 300% of Global GDP

Debt Bubble surpasses 300% of Global GDP:

Both developed and developing nations collaborated to achieve a new record of debt, but developed nations are the biggest offenders with 142 billion euros while developing nations added almost 51 billion euros.

The debt of households, companies, banks, and governments worldwide added up to a total of 193 billion euros at the end of 2017.

The figure represents a new record after increasing by 13.7 billion euros in the first nine months of last year, according to data compiled by the International Finance Institute (IIF).

The increase in global debt in absolute figures, in relation to world GDP reached 318% of global GDP, three percentage points below the historical maximum of 321% registered a year before.

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David Stockman Warns “Gold Is The Only Safe Asset Left” – “We Are Heading For A Thundering Collision In The Bond Market” (Video)

– David Stockman Warns “Gold Is The Only Safe Asset Left”:

Via Greg Hunter’s USA Watchdog blog,

Record high stock and bond prices are flashing danger signs to former Reagan White House Budget Director David Stockman.

Stockman contends,

I don’t think we are going to have a liquidity crisis.  I think it’s going to be a value reset.  I think there is going to be a jarring downward price adjustment both in the stock market and in the bond market.

 This phantom or phony wealth that has been created since the last crisis is going to basically evaporate.”

So, what asset is safe? Stockman says gold and goes onto explain,

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David Stockman: The Coming Fiscal Derailment—Why FY 2019 Will Sink The Casino

The Coming Fiscal Derailment—Why FY 2019 Will Sink The Casino:

By David Stockman

Since last November 8th the Russell 2000 has risen by 30% and the net Federal debt has expanded by an astounding $1.0 trillion dollars.

In a rational world operating with honest financial markets those two results would not be found in even remotely the same zip code; and especially not in month #102 of a tired economic expansion and at the inception of an epochal pivot by the Fed to QT (quantitative tightening) on a scale never before imagined.

And we do mean exactly those words. By next April the Fed will be shrinking its balance sheet at $360 billion annual rate and by $600 billion per year as of next October.

Altogether, the Fed’s balance is scheduled to contract by upwards $2 trillion by the end of 2020. And it’s apparently on a path that is so locked-in—-barring a recession—that Janet Yellen affirmed in her swan song that the Fed’s giant bond dumping program (euphemistically called “portfolio runoff”) would no longer even be mentioned in its post-meeting statements.

So the net of it is this: The Fed will sell more bonds in the next 3-4 years than had been accumulated by all of the central banks of the world in all of recorded history as of 1995!

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Peter Schiff Warns Of “Too Big To Pop” Bubble – “Everybody Is Going To Get Wiped Out!”

FYI.

Peter Schiff Warns Of “Too Big To Pop” Bubble – “Everybody Is Going To Get Wiped Out!”:

Money manager Peter Schiff correctly predicted the financial meltdown in 2008.

Now, 10 years later, what does Schiff see today?  Schiff says,

“I predicted a lot more than just the stock market going down back then.  I predicted the financial crisis, but more importantly, I predicted what the government would do as a result of the financial crisis and what the consequences of that would be because that’s where we’re headed. 

The real crash I wrote about in my most recent book is still coming…

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Bank of England warning over debt: Borrowing puts UK at risk of Venezuela-style collapse, official warns

Bank of England warning over debt: borrowing puts UK at risk of Venezuela-style collapse, official warns:

Britain cannot afford to borrow more without jeopardising the country’s financial stability, a senior Bank of England official has warned.

Richard Sharp said the Government had already borrowed an extra £1 trillion since the 2008 financial crisis.

Borrowing more could put the country at risk of suffering from a collapse similar to that experienced by Venezuela, he suggested. Mr Sharp, a member of the Bank’s Financial Stability Committee, spoke just days after Philip Hammond announced a £25 billion spending spree in the Budget and at a time when the Labour Party is advocating borrowing an extra £250 billion.

His comments, which will be seen as a warning to the Chancellor not to loosen the purse strings too far, mark a departure for the Bank, which usually steers clear of commenting on Government finances.

H/t reader squodgy:

“Well, if that isn’t a warning, nothing is.

Obviously the MSM have just been given the nod to start to gently herd us into a pre-collapse pen of propaganda, letting us know incrementally that we are at the precipice.

Other newspapers here are letting us know the range of medicines & treatments available from the once beautiful NHS, is being curtailed and rationed, and care for the elderly is being cut.

Can’t beat selfish, hard skinned Conservatives to show no empathy, nor incompetent Labour/Liberals to waste money faster than a man with ten arms.

No hope!”

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Oxford University To Issue £250 Million Ultra Long 100-Year Bond

Oxford University To Issue £250 Million Ultra Long 100-Year Bond:

Individual Oxford colleges – there are thirty-eight altogether – have issued bonds in the past, but this will be a first for the ancient university as a whole. Timed to perfection for its upcoming bond issue, Moody’s today assigned a “AAA” credit rating with a stable outlook to the 900-year old institution.

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‘The Great Crash of 2018’ will start in bond market – strategist

‘The Great Crash of 2018’ will start in bond market – strategist:

Ten years after the 2008 financial crisis “very little has been really fixed,” and the next bubble is about to burst, says Bill Blain, a strategist at Mint Partners. According to Blain, this time the bond markets will trigger the mayhem.

Global stocks rose in value after the People’s Bank of China poured $47 billion into its financial system. That means “central banks have little to worry about in 2018 – if markets get fractious, just bung a load of money at them,” said Blain.

The 2008 crisis, which was about consumer debt, was triggered by mortgages. We still have consumer debt crisis problems ahead, warns Blain, adding the next financial crisis is likely to be in corporate debt.

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Venezuela, in ‘selective default’, signs debt deal with Russia

Venezuela, in ‘selective default’, signs debt deal with Russia:

Moscow (AFP) – Venezuela signed a debt restructuring deal with major creditor Russia on Wednesday, as ratings agencies declared Caracas in partial default.

The country is seeking to restructure its foreign debts, estimated at around $150 billion, after it was hit hard by tumbling oil prices and American sanctions.

A Venezuelan delegation led by Finance Minister Simon Zerpa signed the deal restructuring $3.15 billion of debt taken out in 2011 to finance the purchase of Russian arms.

H/t reader squodgy:

“Looks like they’re prioritising their debt by re-arranging things with creditors they feel they’ll need in the future.
Rejection of America, who merely rape countries on behalf of bankers, is understandable, but that leaves China, Russia and the odd rebellious European renegade to climb aboard with the know incentive that they will be entitled to be involved in part of the biggest oil reserves in the world.”

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Post-9/11 War Debt Will Cost US $8 Trillion in Interest Alone: Report

Post-9/11 War Debt Will Cost US $8 Trillion in Interest Alone: Report:

(ANTIWAR.COM) — The cost of America’s global war on terror has yet to be reckoned with, and there’s a very good reason for that. By and large, the US has not been paying for all of these wars, but rather has been borrowing to pay for the conflict.

In the long run that’s going to be expensive. Paying off the war is going to mean not only paying the prices of the conflict but the massive interest accrued in borrowing the cost of those wars.

A new report suggests that just the interest on all that debt will, over the course of decades of servicing it, cost an estimated $8 trillion. So far, they say, the US has paid $534 billion in overseas contingency operations interest.

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Inflation could blow multi-billion pound hole in UK finances

Inflation could blow multi-billion pound hole in UK finances:

High inflation could cost the British Government tens of billions of pounds in extra interest payments because so much of its debt is index-linked.

More than one-third of gilts – excluding those bought by the Bank of England – are linked to the retail price index measure of inflation.

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