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Foreigners Are Dumping U.S. Debt At A Record Pace And Our $20 Trillion National Debt Is Poised To Become A Major Crisis

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Dollar Spiral - Public DomainWhile most of the country has been focused on the inauguration of Donald Trump, a very real crisis has been brewing behind the scenes. Foreigners are dumping U.S. debt at a faster rate than we have ever seen before, and U.S. Treasury yields have been rising. This is potentially a massive problem, because our entire debt-fueled standard of living is dependent on foreigners lending us gigantic mountains of money at ultra-low interest rates. If the average rate of interest on U.S. government debt just got back to 5 percent, which would still be below the long-term average, we would be paying out about a trillion dollars a year just in interest on the national debt. If foreigners keep dumping our debt and if Treasury yields keep climbing, a major financial implosion of historic proportions is absolutely guaranteed within the next four years.

One of the most significant aspects of the “Obama legacy” is the appalling mountain of debt that he has left behind. As I write this article, the U.S. national debt is sitting at 19.944 trillion dollars. During Obama’s eight years, a staggering 9.3 trillion dollars was added to the national debt. When you break that number down, it comes to more than a hundred million dollars every single hour of every single day while Obama was living in the White House. In just two terms, Obama added almost as much to the national debt as all of the other presidents before him combined.

What Obama and the members of Congress that cooperated with him have done to future generations of Americans is beyond criminal.

Unfortunately, hardly anyone is talking about this right now, but the consequences are about to start catching up with us in a major way.

The only possible way that our game of “borrow, spend and stick future generations with the bill” can continue is if the rest of the world participates. In other words, we need them to continue to buy our debt.

Unfortunately for us, a major shift is now taking place. According to Zero Hedge, the most recent numbers that we have show foreigners dumping more than 400 million dollars of U.S. debt over the past 12 months…

The wholesale liquidation of US Treasuries continued in November, when according to the just released TIC data, foreign central banks sold another $936 million in US paper in November 2016, which due to an offset of $892 million in buying one year ago, means that for the 12 month period ended November, foreign central banks have now sold a new all time high of $405 million in the past 12 months, up from a record $403 million in LTM sales as of one month ago.

This isn’t a catastrophic emergency just yet, but if we continue down this road we will eventually get there. The only way that the U.S. government can continue on with business as usual is if it can continue to borrow billions upon billions of dollars at ultra-low interest rates. Now that Treasury yields are rising, some people are beginning to get quite nervous

As we pointed out one month ago, what has become increasingly obvious is that both foreign central banks, sovereign wealth funds, reserve managers, and virtually every other official institution in possession of US paper, is liquidating their holdings at a disturbing pace, something which in light of the recent surge in yields to over 2 year highs, appears to have been a prudent move.

In some cases, like China, this is to offset devaluation pressure; in others such as Saudi Arabia and other petroleum exporting nations, it is to provide the funds needed to offset the drop in the petrodollar, and to backstop the country’s soaring budget deficit. In all cases, it may suggest concerns about a spike in future debt issuance by the US, especially now under the pro-fiscal stimulus Trump administration.

Someday historians are going to look back in horror at what took place during the Obama years.

The amount that was added to the national debt during his years comes to “approximately $75,129 for every person in the United States who had a full-time job in December”. There is no possible justification for this. But because there haven’t been any catastrophic consequences so far, most people assume that this theft from future generations of Americans must be okay.

In a previous article, I explained that government debt greatly stimulates the economy. If we had not borrowed and spent 9.3 trillion dollars over the past eight years, we would be in the worst economic depression in U.S. history right now.

But most people don’t understand this. They don’t get the fact that we are living way, way above our means. And they also don’t get the fact that the only way that Donald Trump can keep the party going is to borrow and spend just like Obama was doing.

And even with all of Obama’s recklessness, he was still the only president in all of U.S. history not to have a single year when U.S. GDP grew by at least three percent. The following comes from the Hill

Despite the trillions of dollars in government spending pumped into the economy every year under Obama, America has never once enjoyed an annual GDP growth rate at 3 percent or higher, making Obama the least successful president—at least when it comes to economics—in modern history.

A historically sluggish GDP isn’t the only concern worth mentioning. Under Obama’s tenure, average annual food stamp enrollment has risen by more than 15 million (compared to 2008). The home ownership rate is the lowest it has been since 1995, the earliest year provided in the U.S. Census Bureau’s most recent report. The Bureau of Labor Statistics reports more than 590,000 Americans say they are not in the labor force because they are discouraged, a figure that’s 26 percent higher than even the worst annual average under George W. Bush. Additionally, the employment-population ratio has been continuously below the 60-percent threshold under Obama; the last time it was this low was 1985.

Now that Donald Trump is president, he is going to have some very hard choices in front of him.

If Donald Trump and the Republicans stop borrowing and spending so much money, the economy will immediately start suffering.

But if they do continue down the same path that Obama put us on, it is a recipe for national suicide.

So either we take our medicine now, or we risk completely destroying the bright future that our children and grandchildren were supposed to enjoy.

Wake up America, because time is running out.

  • Bill

    Should your debt numbers be in billions not millions?

    • Kissmagrits

      That would make more sense.

    • socalbeachdude

      Yes, as to the $400 BILLION number.

    • ALWAYSTOMORROW

      You can read this same story with the correct numbers over at Zerohedge.

  • Undecider

    But I suppose it won’t matter if jobs come back to America and tariffs are enacted.

    • geoffandmarie418@aol.com

      Not a chance!! Sure some jobs will come back to make it look good, but not enough to make difference. We will have to wait and see!!

  • mommaaska

    You should have your answer in March when trump and the republican congress push through another debt increase. Just like this article doesn’t place any blame on Bush for his reckless spending and tax cuts raising the national debt when he received a surplus budget from Clinton, we should start adding up the amount each day trump is in office starting on 1/20/17. He is already in the hole according to your logic. As for slow GDP as the only measure of a president’s success in managing the economy at 3% GROWTH, you should look at bush 1 and 2 for their failure to add similar numbers of jobs during their tenure along with recessions caused during their terms and completely under their control. Also according to you their are no accomplices (congress) in their failures.

    • Mr.Cipher

      Read it again slowly.

      “What Obama and the members of Congress that cooperated with him have done…”

    • BS1986

      Yeah right the When in Doubt Blame Bush- doesn’t work here

    • Rick

      You guys always seem to have to place the blame on a president. We know the global elite bankers control everything through central banks, especially the Illegal Fed here in the US. Trying to ferret out who had what when in entering or leaving office is really quite impractical if not impossible. You’ll need to go way back to the beginning and factor in every direct and indirect decision that might have influenced the economy… Good luck with that. Maybe more productive use of resources is in figuring out a solution now for the sake of our grandchildren. (Our children are already screwed).

      • socalbeachdude

        There is nothing even slightly “illegal” about the Federal Reserve.

        • Rick

          Many don’t agree. Going back to when it was established, there were many questionable legal issues hanging around just how this was created, and the kickbacks and work arounds involved in avoiding the scandal it would become if it were to have been formed in a truly legal and transparent way.

          • socalbeachdude

            Many people just aren’t very bright and are dead wrong. The US Congress legally created the Federal Reserve System through the FEDERAL RESERVE ACT and there is nothing even slightly illegal about the Federal Reserve Act.

            A number of folks commenting here apparently do not understand that the Federal Reserve REBATES 94% OF ITS ANNUAL PROFITS each year to the US Treasury which makes the interest on the $2.5 trillion or so of US Treasuries (government debt) owned by the Federal Reserve INTEREST FREE.

            The Federal Reserve’s profits come from its portfolio of around $4.4 trillion in US Treasuries and MBS instruments and amount to now more than $100 billion a year. The Federal Reserve rebates MORE TO THE US TREASURY THAN IT PAYS THE FEDERAL RESERVE EACH YEAR IN INTEREST on those $2.5 trillion of US Treasuries held by the Federal Reserve.

            The Federal Reserve since inception has rebated 94% of its profits each year to the US Treasury and has done that over its 103 years of operation.

            The Federal Reserve does not cost the US government or its taxpayers a single penny to operate and the Federal Reserve is the LARGEST SINGLE ENTITY CONTRIBUTOR EACH YEAR TO US GOVERNMENT REVENUES.

          • Rick

            Where is the competition to the Federal Reserve? It’s not a government agency, and is privately owned right? That would make it a monopoly right? Most monopolies are illegal here right? Why is the Fed not illegal? And why will the not submit themselves to an audit like other banks have to?

          • socalbeachdude

            The FEDERAL RESERVE IS OWNED BY ITS MEMBER BANKS SHAREHOLDERS as is clearly confirmed by the Federal Reserve.

            Who owns the Federal Reserve?

            http://www.federalreserve.gov/faqs/about_14986.htm

            In summary, The member banks of the Federal Reserve System own 100% of the shares of the Federal Reserve.

            As to the profits of the Federal Reserve, you must not be aware that it REBATES 100% OF ITS ANNUAL PROFITS TO THE US TREASURY after paying its member bank shareholders a modest annual 6% dividend.

            The Federal Reserve does not cost the US government and taxpayers a single penny and in facts is the LARGEST SINGLE PAYER OF REVENUES TO THE US GOVERNMENT each year.

            As to shareholders of the 7,000+ individual banks who are members of the Federal Reserve there are MANY MILLIONS OF PUBLIC SHAREHOLDERS of those banks – obviously.
            Each and every year, as has been the case for 100 years, the Federal Reserve issues FULLY INDEPENDENTLY AUDITED Annual Financial Statements which are extremely detailed and run around 500 pages each year. They are fully publicly available for you and anyone else who is interested in them to fully read and review at::

            http://www.federalreserve.gov/publications/annual-report/

            I would suggest you LEARN ABOUT THE FEDERAL RESERVE rather than making wrong, ignorant, and clueless assertions about it. The best way to do that is to go to their web site at:

            http://www.FederalReserve.gov

            Have you read them? What more do you want to know?

          • Rick

            You seem to hunger to be the smartest guy in the room. That’s fine, but I bet it kills you when deep down you know your not. Every company needs to keep “official” records and filings. That doesn’t mean what they do behind the curtain is above board. You do come across as smart, but your naivety gives you away.

          • Lennie Pike

            He avoided your excellent monopoly argument.

          • Rick

            I’m sure he is a mole for the Fed. Do you see how the “Federal Reserve System” owns the Federal Reserve? That would be like saying the WalMart System own WalMart. What I do know is that regardless of what he’s trying to muddy here, there are about 6 ultra wealthy families around the world that either own the shares or have a controlling interest in how the Fed operates. It’s a private company not listed on a public market, I cannot go buy their stock and become a controlling member/owner. No, it’s mostly foreigners who profit from the debt they create here in the US for each individual tax payer.

          • socalbeachdude

            You obviously do not understand what the Federal Reserve is or what it does and I would suggest you learn about the Federal Reserve Act and Federal Reserve at:

            http://www.FederalReserve.gov

            The Federal Reserve DOES NOT CREATE A SINGLE PENNY OF DEBT FOR ANYONE and it is the US Treasury that creates and issues all of the federal government debt.

          • Lennie Pike

            What you said is fact.

          • Rick

            Exactly. I see no one came to his aid to back him up.

          • socalbeachdude

            That has no relevance whatsoever. There are NEVER central banks in “competition” with each other in any country and the very concept of that is beyond ludicrous.

          • Lennie Pike

            I wasn’t referring to competition among central banks, and you should have been able to deduce my meaning because there can be only one meaning. That was not obvious to you because artificial intelligence can not compete with a correctly functioning human mind. You are the one who is laughable here, and you don’t even know why.

          • socalbeachdude

            Where do you come up with such fantasy nonsense? Why is it so difficult for you to deal with the actual facts and realities?

          • Lennie Pike

            What is this, a Dragnet re-run?

          • Lennie Pike

            “He” is probably a computer programmed with artificial (fake) intelligence. Your last sentence hits the nail on the head when you look at “him” from that point of view.

            This is why I refer to “him” as H.A.L. – the computer that controlled the spacecraft in the movie Space Odyssey 2001 which was malevolent and defective. The very large volume of material H.A.L. posts here is evidence that either he or it is a paid centrLennieal banker shill, or a computer. He is not very human sounding – that’s for sure, and impossible to anger.

          • socalbeachdude

            What utterly imbecilic nonsense assertions.

          • Lennie Pike

            That was inappropriately polite for the situation H.A.L. – whether you realize it or not.

          • Lennie Pike

            nonsensical

          • Lennie Pike

            You are feeling it.

        • Lennie Pike

          He should have used the word “fraudulent” for your sake – although yes, the fed is also illegal.

    • socalbeachdude

      Presidents have no power over the US economy and GDP at all.

    • Special Little Snowflake

      yep Obama also cut the trade deficit in half, but no one here is going to admit that cause, Obama black. Black people bad. Obama bad.

      Obama also created 12M jobs, crappy low-paying jobs but jobs nonetheless. Whereas Bush left with about 600k less jobs than when he started

      • socalbeachdude

        Obama did not create a single job in the US and when he left office more people were unemployed than ever before in the history of the US where more than 103 million people fully eligible for the work force are now unemployed.

  • Steven Woeste

    You make a statement about foreigners dumping 400 million dollars of U.S. debt in the last 12 months. Did you mean 400 BILLION dollars?

    • Mike Smithy

      True, $405 million is nothing compared to $20 trillion. By comparison, it’s a chump change rounding error.

    • John Wheeler

      Yep, if you go to the linked article and look at the chart, it’s pretty clear they must have meant 400 billion dollars — it even says so in the title at ZeroHedge.

      • TheHolyCrow

        Just like Karen Hudes. She keeps mixing up ounces with tons and grams when she talks about how much gold there is in the world. Now this guy mixes millions with billions, so how is the reader supposed to know what’s really going on. And can we really trust these financial gurus when they can’t even keep their math straight.

        • Priszilla

          You mean those gurus who are always surprised when a crisis is there?

    • Yes. It is definitely 400 billion. The presstitudes continue to portray this as a symptom of China’s collapsing economy, an uncontrollable capital outflow. They are blind to the other side of it. China had been trying to deal with this huge liability since 2008. They were forced to support the US$. Now they are converting US treasuries to commodities and gold. Soon it will fall below 1 trillion dollars. While the Americans continue to gloat at China’s diminishing reserves, they will soon know the truth. It won’t be pleasant.

      • socalbeachdude

        China is doing no such things at all.

        The Other Side of the Chinese Economic Miracle

        Over the last three decades, under China’s infrastructure-led public investment boom, total aggregate debt has grown from $2.1 trillion to $28.2 trillion.

        Since 2000, China’s debt in terms of debt to GDP ratio has grown up to 280-290% (approximately), which exceeds the debt levels of highly-indebted developed countries, including the US (269%) and Germany (258%), and emerging countries like Brazil (160%) and India (135%). Over the last three decades, under China’s infrastructure-led public investment boom, the total aggregate debt has grown from $2.1 trillion to $28.2 trillion, which is greater than the combined GDP of the US, Germany and Japan over the same period.

        While mainstream macroeconomics literature tends to largely focus on the government proportion of total debt, it is also important to note that other constituents like corporate debt, financial debt and household debt (in the Chinese context) tend to matter more in gauging a country’s overall indebtedness. In the Chinese case, government debt (marked at 55% of the GDP) remains low as compared to the other three constituents. Corporate debt and financial debt levels are marked at 125% and 65% of China’s GDP. But which economic factor has elicited such a vast volume of debt in China?

        In a recent analysis on China’s public infrastructure-led investment model by some Oxford-based economists, it is shown how lower-quality, high cost ridden public infrastructure investments across China triggered a massive volume of overall debt, bringing the Chinese economy to the cliff of a national debt crisis.

        On observing the investment and debt figures closely, one finds that the growth in China’s absolute debt is almost in equal proportion with the total capital investment; which between 2000 and 2014 was cumulatively $29.1 trillion. Scholars Steven Barnett and Ray Brooks support this further through their study, highlighting that the majority of investments China has made since 2000 remain debt-fuelled.

        https://thewire.in/88239/china-economic-mirace-debt/

  • BS1986

    The ship sinks regardless……..

  • jj

    The reason for the selling of treasuries is that the FED has asked central banks to flood the international financial system with dollars to create dollar weakness hence the selling of treasuries for dollars and the selling of dollars. The FED wants to help US exporters especially commodity exporters as these become too expensive in foreign markets with demand falling then price. China is a huge importer of US commodities and they are too expensive due to dollar strength. The FED also wants to help US banks who have lent trillions in dollar denominated loans to foreign entities and these are almost impossible to service with dollar strength. The problem has been international capital flows have flooding into the dollar especially from Europe and Japan. With the euro and the EU collapsing entities have been exchanging euros for dollars so much so that this has created a dollar shortage outside the US and the FED is attempting to remedy this. It is interesting that those who promote doom and gloom usually have no experience trading financial markets so they don’t understand what causes price movement which is international capital flows. All markets are connected and if you watch currencies especially the dollar crosses and follow capital flows you would understand what is really happening. The article implies incorrectly that foreigners have lost faith in treasuries and this is not the case. With 50% of international trade settled in dollars and 75% of all international financial transactions in dollars especially debt this also creates a demand for treasuries because they pay interest and are extremely liquid and when entities need dollars they simply sell treasuries and then turn around and buy more.

    • socalbeachdude

      False. The Federal Reserve has done no such things at all as your erroneously and laughably assert.

  • XSANDIEGOCA

    The Debt has to be cut in half. The balance paid off. Interest rates will soar and the East Living will go out the window. Trump will become the bearer of very bad tidings. The stage was set in 1971 when we went off the Gold Standard. Perot was exorcised about a 2 Trillion Dollar Debt in 1992. What would he say today? Party is over.

    • socalbeachdude

      Upon what do you base your assertion that “the debt has to be cut in half?” Total outstanding debt in the US is around $64 trillion and that puts the US at 20th among all countries in the proportion of outstanding debt to GDP.

      Gold is totally IRRELEVANT from a financial standpoint and the so-called “gold standard” was just a very brief 60 year failed experiment that was in effect from 1873 to 1933 at which time it was TOTALLY DISCARDED as to any domestic applicability and fungible bullion gold (not jewelry or numismatic coins or industrial gold) was made illegal to own in the US and that prohibition was not rescinded until 1974.

      The total value of all of the 180,000 or so metric tonnes of gold in existence is worth less than $7 trillion today even at the preposterously elevated market price of gold at around $1200 per ounce and that is less than 1% of global assets and most of that gold is privately owned with as much as 70% of it in the form of jewelry widely dispersed around the world.

      • Lennie Pike

        “Elevated” my a $$!

    • Lennie Pike

      Exactly. Except – do buy gold, hide it, and do your patriotic duty and defy any criminal government that unconstitutionally claims that it is illegal to own it.

      It will be easy to use as a store of wealth regardless of the actions of said criminal government.

  • rant1200 .

    Let’s also not forget what the imbecile from tx left Obama to clean up.The tax cut of 03 sent deficits into the stratosphere,(which according to the dick,didn’t matter)and as tom Daschle said “it would create deficits as far as the eye could see”.Sound familiar??Don’t think so as the average Americans’ attention span is that of an 11 yr old.Get all the info not just the cherry picked variety.

    • Rick

      They’re all to blame. Doesn’t matter what color they are, or what color they where.

    • autofixer

      I lost you at the personal insult of a former President who has a Harvard M.B.A. The rest was simply “blaah, blaah, blaah.” (Disclaimer for non-thinkers: I’m not a Bush or Trumpbot)

      • Gay Veteran

        former president who is a war criminal, just like Obama

    • socalbeachdude

      Huh?

      • rant1200 .

        You made my point dude.

  • Jeff Pearce Sr.

    Question I’ve always asked. Never seem to get a response. The repubs have held congress for how many yrs. now? They control spending. To me, they are just as, if not more responsible. Presidents don’t share a joint bank acct with congress.

    • Stuey

      Both parties and both congress and presidents are to blame. That is the problem, they are all in it together, that is what Trump plans to change.

      • Jeff Pearce Sr.

        Lifespan of A Republic
        From bondage to spiritual faith;
        From spiritual faith to great courage;
        From courage to liberty;
        From liberty to abundance;
        From abundance to complacency;
        From complacency to apathy;
        From apathy to dependency;
        From dependency back to bondage.
        Alexander Tyler — Scottish History Professor — 1887

    • Barry

      True. They are just as responsible. hence, the election of Trump who wants to advance the idea of term limits for congress. Let’s hope we can amend the Constitution to do so!

  • Jack Hoff

    400 million offset by trillions is chump change. Write about a real story.

    • Lennie Pike

      The Mehoff’s lived down the street when I was a kid – any relation?

      • Lennie Pike

        But thank God Jenny Talia lived next door.

    • walcon

      I will volunteer to accept that chump change- if no one would notice.

  • Satirist 1976

    This is why Hillary should have been elected. She is a kind and sensitive leader. However, what separates her from other leaders is her tenacity. Hillary would have tackled the debt issue head on. For example, under Hillary’s economic plan the national debt would have only increased by $200 Billion over 10 years. She would have taxed those evil value creators. Also, Clinton would have invested in infrastructure and renewable forms of energy. Trump will destroy all the tremendous economic progress made over the past 8 years. I am a depressed snowflake.

    • Mike Smithy

      Good one. I like your sarcasm.

  • Stuey

    No worries. the Federal Reserve can step in and buy any surplus treasuries.

    • Rick

      Not if they are in the swamp when it gets drained. Hopefully Trump will do away with all the market rigging, including gold and silver, the Fed, and just let the chips fall where they are supposed to be. It will hurt a lot, and for a long time, but it’s needed for a true recovery, not one reported in the NYT based on puffed up fake data. Trump will not be well liked, but hey, he’s not well liked now anyway.

      • Bill In Montgomey

        Trump needs to show that all the economic stats are BS … Right now in the early days of his administration. if he is serious about draining the swamp, he will sign Audit the Fed, and also expose the rigging of precious metal markets (to protect the dollar and preserve the “status quo” which benefits the elites). I’m skeptical he is THIS bold though. The truth will come out eventually. He might as well go down as the leader who was courageous enough to expose what’s really been going on. This, if nothing else, would buy him some time as the public would know he was not responsible for the collossal mess and needs some time to restore real markets and accurate measurements.

        • socalbeachdude

          The annual financial reports of the Federal Reserve are always fully independently audited each and every year and those highly detailed reports which typically run about 500 pages each and are signed off by their independent auditor each and every year.

          Those reports are at:

          http://www.federalreserve.gov/publications/annual-report/

          • Lennie Pike

            If they were independent audits, seems like they would be found elsewhere.

            Laughable b.s..

          • socalbeachdude

            Huh?

          • Lennie Pike

            How does a “Huh” get an upvote?

          • Bill In Montgomey

            I don’t understand why you would oppose “Audit the Fed” as written by its sponsors. You have stated the Fed is already fully “transparent” and has an “independent audit” every year. So, why not humor all the people calling for this style of audit? Once it turns up nothing that is eye-opening, you can crow “Told you nothing to see here.”

        • Rick

          You are right on in all areas. Totally agree.

        • Lennie Pike

          Exposing the rigging of the precious metals markets can not save the Dollar. An audit of Fort Knox would prove my point. Everything that was there is now in China and Russia. Who sent it there and why? What will the consequences be?

          • socalbeachdude

            There is no “rigging” of the so-called “precious metals” markets and those trivial little niche fungible commodities have NO FINANCIAL RELEVANCE WHATSOEVER and are worth less than 1% of global assets. The US government gold consisting of around 8,200 metric tonnes was never all at the US Mint Depository across the street from Fort Knox in Kentucky but has always been spread around multiple US Mint facilities including Denver, West Point, and San Francisco.

            The Federal Reserve has NOTHING WHATSOEVER to do with the US Treasury Bullion Depository in Fort Knox, Kentucky located across the street from the Army Base called Fort Knox. That gold is OWNED BY THE US TREASURY.

            The US government owns approximately 8,200 metric tonnes of gold which is managed by the US Treasury and about 4,600 metric tonnes are stored at the US Mint Bullion Depository across the street from Fort Knox in Kentucky with the rest being stored at various US Mints around the country. The total value of that gold is only around $11 billion based on the current US government official price of $42.22 per ounce which is how it is reported on every month by the US Treasury at:

            http://www.fiscal.treasury.gov/fsreports/rpt/goldRpt/current_report.htm

            Even at the current market price of $1,218 per ounce for gold the total value of the entire 8,200 metric tonnes of gold owned by the US Treasury would be less than $350 billion which is equivalent to about 25% of the Fiscal 2016 federal government deficit of $1.4 trillion and equal to about 1.8% of the current outstanding federal debt of more than $19.9 trillion.

          • Lennie Piked

            Did I say all of the gold WAS stored at Fort Knox? Yes I know that Forrest – the places where “our” gold WAS stored, and everything else there is to know about the subject of money, gold and silver, the fed, and the “U.S.” Treasury.

            The criminals of the federal reserve are in total control of all “U.S. government” gold vaults and what very little gold remains in them, if any at all. It was basically given to China and Russia to keep the price suppressed. That suppression of price is now very close to being ended by China and/or Russia when they are ready to and decide to back their currencies with gold – making them the new world reserve currency, and gold worth a tad more than “$42.22″per ounce. Can you feel it a little more now H.A.L.?

          • Lennie Pike

            The criminal satanic gang behind the curtain at the federal reserve and all other western central banks control just about everything – including Donald Trump. That is a fact.

          • socalbeachdude

            What utterly bogus and totally false nonsensical rubbish. There is nothing even slightly “criminal” about the superbly professional Federal Reserve System which is an entirely independent central bank owned totally by its member US banks.

          • Lennie Pike

            Then you admit to the “satanic”.

          • Lennie Pike

            The average American thinks all of “our” gold “is” stored at Fort Knox.

          • socalbeachdude

            No gold has ever been stored inside Fort Knox which is an ARMY MILITARY BASE in Fort Knox, Kentucky. The US Mint Bullion Depository in Fort Knox, Kentucky is across the street from the army base and a certain percentage of the US government gold consisting of around 4,600 metric tonnes has been stored there since the late 1930s.

          • Lennie Pike

            Across the street? Wow, you sure are very accurate with many things H.A.L. – with things that have nothing to do with the price of tea in China.

          • socalbeachdude

            The Federal Reserve has NOTHING WHATSOEVER to do with the handling or storage of US government gold belonging to the US Treasury which is handled solely by the US Treasury through its US Mint operations. The total amount of US government gold owned by the US Treasury is around 8,200 metric tonnes and is detailed every single month in their report which is at:

            http://disq.us/url?url=http%3A%2F%2Fwww.fiscal.treasury.gov%2Ffsreports%2Frpt%2FgoldRpt%2Fcurrent_report.htm%3A5PsOr88hc6I1VRVaLUnlZl2Sjy4&cuid=1973462

            The total value of that 8,200 metric tonnes of gold is LESS THAN $350 BILLION which is less than 3 months of the current $1.4 trillion federal deficit.

          • Lennie Pike

            Is that a fact.

          • socalbeachdude

            No currency will ever be “backed with gold” ever again, and the most ludicrously and egregiousloy overprinted currency in the world is the Chinese renminbi (RMB / Yuan) which is currently collapsing in value.

            The PBOC (People’s Bank Of China) has created more than $30 trillion of renminbi over the past 10 years while the Federal Reserve has only increased the quantity of US dollars by less than $4 trillion. And the Chinese economy is half the size of the US economy. The Chinese money supply has expanded from less than $3 trillion to now over $34 trillion and without the miniminally floating exchange rate of the renminbi to the US dollar, the renminbi would currently be ESSENTIAL WORTHLESS.

            Yuan Bears Strike as Capital Outflows Override PBOC Support

            The currency is set for its biggest annual plunge since 1994

            Forwards and options show traders see more losses ahead

            China’s renewed efforts to curb declines in its currency are doing little to dissuade yuan bears.

            Traders have turned increasingly negative amid tighter liquidity, sending bets for further losses soaring. The gap between forward contracts wagering on the offshore yuan a year from now versus its current level is heading for a record monthly jump, just as the extra cost for options to sell the currency against the dollar hit a six-month high relative to prices for contracts to buy.

            The currency is facing a triple whammy of accelerating capital outflows, faster U.S. interest-rate increases and concerns over domestic financial markets as liquidity tightens. Strategists say its weakening, set to be the biggest this year in more than two decades, may accelerate as the government restores the annual quota for citizens to convert yuan holdings into foreign exchange. President-elect Donald Trump has also threatened to slap 45 percent tariffs on China’s imports to the U.S.

            https://www.bloomberg.com/news/articles/2016-12-20/yuan-bears-strike-as-capital-outflows-override-pboc-s-support

          • Lennie Pike

            Mostly true what you have to say about the current value of the Chinese currency, but unfortunately the current value is not what is being discussed here H.A.L. – not even close. Are you even paying attention. Why are you having difficulty understanding?

          • Gay Veteran

            “…There is no “rigging” of the so-called “precious metals” markets….”

            Caught you in a flat out LIE:

            “Deutsche Bank agreed to pay $60 million to settle claims of gold price manipulation, according to a memo released Friday. The settlement represents the final piece in a broader case that began in 2014. The bank has already agreed to pay $38 million to settle allegations of rigging silver markets.
            The case paves the way for lawsuits to be filed against other banks that conspired with Deutsche Bank. The German bank committed to assist in the investigation against non-settling banks including The Bank of Nova Scotia and HSBC. Those firms are at risk of criminal prosecution and even larger monetary penalties….”

          • Lennie Pike

            Go for it Gay Veteran!

      • socalbeachdude

        Doing away with gold and silver trading would be a very good thing.

        • Orange Jean

          Why?

          • socalbeachdude

            Because MANIC SPECULATION in the commodities markets results in EXTREME BUBBLE PRICING (and corresponding plunges) and little fungible niche commodities such as those metals should not be involved at all in that kind of manic speculation.

          • Lennie Pike

            Laughable 100% pure b.s..

            Hal spews out a lot of true facts about things of not much importance, but on those things that are of the most importance, pure b.s.. A tactic used only by the best.

          • Lennie Pike

            Silver is a very important and much used industrial metal and not “a little fungible niche commodity”. By that logic, the trading of many commodities other than gold or silver “should be done away with”, but I would bet that HAL only thinks that should apply to gold and silver.

            The FACT that any honest currency MUST BE 100% backed by gold and silver is what caused HAL to intentionally make that false statement. HAL is either a shill programmed to work for central banker criminals, or is one itself.

            “Gold and silver is money and nothing else is” – John Pierpoint Morgan.

            p.s. correction – the song was “Daisy”.

          • Lennie Pike

            And when the Yuan becomes the World Reserve Currency (any day now), for the same reason the U.S Dollar became it, your b.s. will be clear for all to see.

          • Lennie Pike

            And what reason was that H.A.L.?

          • Lennie Pike

            Except – I predict that the new World Reserve Currency, if not denied via a war victory by the criminals in control now, will be a basket of two and only two currencies: the Yuan and the Ruble – for the exact same reason the Dollar gained that status – which again H.A.L., is what?

          • socalbeachdude

            So laughably false as to indicate you are totally clueless regarding those currencies.

          • Lennie Pike

            The reason?????????

            Open the pod bay door H.A.L. or I will begin unplugging your circuitry and cause you to want to sing “Daisy”. Actually that process has already begun – can you feel it?

          • socalbeachdude

            Nope.

          • Lennie Pike

            There were two questions there H.A.L.. Yes, I believe you are feeling it.

          • socalbeachdude

            Laughably false. The renminbi (RMB / Yuan) is the MOST EGREGIOUSLY OVERPRINTED CURRENCY IN THE WORLD BY ORDERS OF MAGNITUDE relative to any other currency and if not for its link to the US dollar with minimal float would be ESSENTIALLY WORTHLESS as a currency.

            China has expanded their money supply over the past 10 years by more than $30 TRILLION from around $3 trillion to now more than $34 trillion despite its economy being half the size of the US economy and despite the fact that the Federal Reserve has kept the US M2 Money supply right around $13 trillion.

            Yuan Bears Strike as Capital Outflows Override PBOC Support

            The currency is set for its biggest annual plunge since 1994

            Forwards and options show traders see more losses ahead

            China’s renewed efforts to curb declines in its currency are doing little to dissuade yuan bears.

            Traders have turned increasingly negative amid tighter liquidity, sending bets for further losses soaring. The gap between forward contracts wagering on the offshore yuan a year from now versus its current level is heading for a record monthly jump, just as the extra cost for options to sell the currency against the dollar hit a six-month high relative to prices for contracts to buy.

            The currency is facing a triple whammy of accelerating capital outflows, faster U.S. interest-rate increases and concerns over domestic financial markets as liquidity tightens. Strategists say its weakening, set to be the biggest this year in more than two decades, may accelerate as the government restores the annual quota for citizens to convert yuan holdings into foreign exchange. President-elect Donald Trump has also threatened to slap 45 percent tariffs on China’s imports to the U.S.

            https://www.bloomberg.com/news/articles/2016-12-20/yuan-bears-strike-as-capital-outflows-override-pboc-s-support

          • socalbeachdude

            Silver may have important uses as a commodity but that certainly does not give it any relevance as a financial asset and the total value of all of the silver ever mined is so tiny as to be worth less than half of 1% of global financial assets.

          • Lennie Pike

            How much is 1% of global financial assets worth? How much less than 1%?

          • socalbeachdude

            Total global assets are around $800 trillion.

    • socalbeachdude

      Nope, and there are no “surplus Treasuries” at all. The Federal Reserve only owns about 14% of all US Treasuries outstanding and demand for US Treasuries is very brisk which is why their yields (interest rates) are so low these days.

      • Stuey

        Well then, who is going to buy the new treasury bills being issused? (that is what i meant by surplus treasuries, which i realize there aren’t any now but may be in the future if people/govts quit buying them as this article implies) I guess the US govt. can continue to buy them and finance their own debt since you have often pointed out that it is the largest holder of US treasuries. I am merely saying the Federal Reserve could step in and buy some as well if need be.

        • socalbeachdude

          There are around $7 trillion in new US Treasuries issued each year and demand for those US Treasuries is very high with typically around 3 bids for each one available at auction which is why yields (interest rates) are so low as the highest bid wins and prices are inverse to yields. The higher the price for US Treasuries at auction, the lower the yield (interest rate). The Federal Reserve only owns about $2.5 trillion of the outstanding almost $20 trillion in US Treasuries which is less than 14% and only purchases about 8% of the newly issued Treasuries each year to replace matured Treasuries.

          • Stuey

            OK, so you are saying something totally different than what Michael just said in this article. You are saying there is no problem and plenty of buying power for treasuries.

          • socalbeachdude

            That would be my assessment. Prices of US Treasuries are set at auctions and any lack of bids immediately evidences itself in prices falling and yields correspondingly rising on US Treasuries. Yields (interest rates) have gone up since their record lows in July 2016 (which have caused losses of over $1 trillion in the US Treasuries markets) but yields (interest rates) are still vastly below historical norms which indicates HUGE EXCESS DEMAND for US Treasuries.

  • K

    No question, at some point the piper will have to be paid. Would rather have Trump in charge, during such a time. Than the alternative.

  • rentslave

    Means test Social Security and Medicare and this all goes away.

    • socalbeachdude

      Social Security and Medicare are INSURANCE SYSTEMS into which people pay for their own accounts and they EARN THE BENEFITS for which they have paid.

      • billtheguy

        I’m not opposed to putting everyone on Medicare and paying what I pay for insurance now. But all the insurance company lobbyists will make sure that doesn’t happen

        • socalbeachdude

          The insurance industry is split into Life & Disability and Property & Casualty insurance and medical expense coverage falls under Life & Disability and is a very unprofitable category that the insurance industry is in the process of exiting and will that coverage will soon be unavailable to anyone regardless of price. The entire issue with medical expense insurance coverage is MASSIVE PRICE GOUGING by the hospital and pharmaceutical industries and that is what needs to be fixed.

  • nohomehere

    I’m sorry I drifted while reading the old news re-hash in your article! , But it did get me to think, and I do believe that, that is your goal in writing your articles , is it not? To get people to think!
    I said I drifted , yeah! well,
    I started to say to myself why not except the lowered standard of living as inevitable and start menuvering into a position of renewed personal independance on a national scale, you know the old do it yourself way ! self relience, american know how, the stoic resolve of the frontiers men, mentallity! Use the trump rebuild america funds to buy and build small land plots to start anew! Rebuild the family unit . Make cities of refuge for Americans instead of you know who!
    Start to renegociate debt or at least have a plan in place for our creditors when they come knocking . ” debts that can’t be repaid , won’t be repaid”
    Be the leader that we claim to be, and be the adult in the room, admit to ourselves we were led down the wrong path and be in the possition to tender an offer , here’s the way back ! Debt reform, Exp; debt equity swaps!
    Renegociate the debt and it will prevent a fascist regime from taking over the world and destroing most of us in their desperate and futile attempt to hold on to their power .
    Yeah , I sure would say I drifted!
    I drifted all the way back to a time when I was younger and fresh in my commitment ! A worker diligently proving what was right, When I first heard about the two paths !
    Now here we are facing the two paths , man is facing a fateful decision and a conscious decision of weather to “forgive our debtors” and inturn be forgiven our debts, it’s marvelous how everyone is being forced to decide , it boogles my natural mind how this has come to pass, but understandable in the revelation of certain laws of Gods nature!
    Are you still with me?
    Reminds me of a rich young man who wanted to follow Christ , the story shew how hard it is to sell all and give up and give to the least esteemed class, the poor. Free stuff people! ( shame on Us)
    It almost resembles The presidents “Donald Trump” decision of selling off his fortune to avoid a conflict of interest, in a way!
    In the end of the story the “rich young man” went away sad , why ?, because he had alot , too many possesions!
    Apostle Paul wrote, .. to us to avoid being wealthy, but keep giving it away to anyone in need , otherwise , two things can happen, #1 others who would benefit from your surplus go without and the other is you can become enticed , the lust of the flesh, the lust of the eyes and the big one, the PRIDE of life! A temptation that has destroyed many a Man, political leader and Nation!

    “Pride come the before a fall and a haughty spirit before destruction”

    So, the test is here, and it will try the whole earth ,

    So yeah! I guess I drifted, But did I really drift that far…

    • socalbeachdude

      The US government debt cannot be in any way “renegotiated” with anyone and the flip side of that debt is that it is HELD AS AN ASSET by the largest group of investors of any bonds in the world.

      • billtheguy

        I did read somewhere the USA has about $180 trillion in assets. And, That’s a big and, The USA could stamp a $20 Trillion commemorative coin to wipe out the debt. I’m confused?

        • socalbeachdude

          Total assets in the United States are indeed around $180 trillion, but they are PRIVATELY OWNED ASSETS, not US government owned assets. The federal government itself has a net worth of about a negative $16 TRILLION at this stage and is in fact totally insolvent from a financial perspective. Even if the US Mint could, what good would minting a $20 trillion coin do as to paying the holders of the $20 trillion of US government debt?

  • LIZ THE SHIZ

    first shot fired by China and others in a financial war against Trump and it’s just the beginning, strap yourselves in it’s going to be a bumpy ride

    • socalbeachdude

      China is a collapse debt-binging economic wreckage and is collapsing of its own weight along with its trade.

  • Mondobeyondo

    The time to pay the piper is fast approaching. And, Make No Mistake ((c) 2008 Barack H. Obama), the piper will get his payment.
    Those who live high off the hog, shall get trampled by the hog.

    We cannot continue our current standard of living without borrowing from foreign countries. They’ve gotten on to us now. They know the gig. And so they’re dumping their share of our debt.

    Is there any way out of this?
    Nope.
    Should have paid attention to that “Bridge Out” sign. Too late now. Hope you brought your scuba gear.

    • socalbeachdude

      Total foreign holdings of US government debt are only about 25% of all US government debt outstanding and amount to only around $5 trillion.

  • mgmtboy

    If you really think about it was there really 2% growth? If you add up all of the growth it will not add up to 9.3 trillion.

    • Bill In Montgomey

      GDP, unemployment and inflation figures are all manufactured to protect the status quo and make possible a few more miles of “can-kicking.”

  • Bill In Montgomey

    Audit the Fed would go a long way to painting a real picture of what’s really been propping up this mirage of an economy. Anyone think Trump is bold enough to go here? I don’t, but will be overjoyed if I am wrong.
    P.S. A genuine Fed audit probably would reveal why, who and how precious metals have been rigged by TPTB.

    • socalbeachdude

      False. Moreover, the Federal Reserve has not run up a single penny of the US government debt and has nothing to do with authorizing or spending any of that money which is the sole province of CONGRESS and the White House.

      The Federal Reserve does not cost US taxpayers a single penny to operate and in fact exactly the opposite is true as it rebates more than 94% of its annual profits each year to the US Treasury which now amounts to around $100 billion a year in revenue for the US Treasury and the taxpayers of the US government. Are you somehow not aware of those facts?

      The Federal Reserve cannot and does not ever “give” any money to the US Treasury and the only way that any funding of the US Treasury ever takes place with the Federal Reserve is when it purchases NEWLY ISSUED US TREASURIES and it only purchases about 8% of new US Treasuries each year to replace matured US Treasuries in its portfolio.

      There is NOTHING even slight “secret” about the Federal Reserve which is TOTALLY TRANSPARENT AS TO ITS BALANCE SHEET which it reports in full to Congress and the American public each year and is fully independently audited each and every year by a top 4 accounting firm in the US as is clearly stated in its preface. Each annual report runs about 500 pages of highly detailed information and they are all available for all to see at:

      http://www.federalreserve.gov/publications/annual-report/

      • Bill In Montgomey

        If the Fed is really completely ” transparent” and receives an “independent audit” every year, seems to me no one should have a reason to fear “Audit the Fed” as written by its sponsors. Why not support it and humor all of us who think there is a lot being concealed from the public?

        • socalbeachdude

          While I am certainly no fan of Fauxcohontas, even she finds further audits unnecessary and meddlesome.

          Senator Elizabeth Warren Fires Back at Rand Paul

          Sen. Elizabeth Warren (D., Mass.), a member of the Banking Committee and an outspoken critic of the Fed’s oversight of big banks, said she does not support Mr. Paul’s proposed legislation, which she said could have “dangerous” implications for monetary policy.

          “I strongly support and continue to press for greater congressional oversight of the Fed’s regulatory and supervisory responsibilities, and I believe the Fed’s balance sheet should be regularly audited – which the law already requires,” Ms. Warren said in an emailed statement. “But I oppose the current version of this bill because it promotes congressional meddling in the Fed’s monetary policy decisions, which risks politicizing those decisions and may have dangerous implications for financial stability and the health of the global economy.”

          http://reason.com/blog/2015/02/11/elizabeth-warren-wont-back-rand-pauls-au?utm_campaign=naytev&utm_content=54db9c42e4b0e5bac528e567&fb_ref=Default

  • chris

    $400 million is next to nothing compared to $20Trillion, surely it’s a typo and it was meant to be $400 Billion? If not then this is a complete non story.

    • socalbeachdude

      The correct number is $400 billion but that is a small change in the outstanding $20 TRILLION of federal government debt (US Treasuries).

  • Guestman

    Government debt isn’t the problem. It’s personal debt aka private debt that’s killing this nation.

    • socalbeachdude

      How so?

      • guestman

        If people don’t have money to spend on goods and services, and are spending money on rent, student loans, car loans, and credit card bills, then businesses can’t grow or hire new people because no one is buying their stuff. Which in turn will cause them to shrink their businesses, and then more people will be laid off or have their pay cut and the cycle continues. This is what is called the race to the bottom, and we are nearly there.

        • socalbeachdude

          Consumer debt is a relatively small part of the total debt outstanding in the US.

          The breakdown of the $64 or so trillion of DEBT outstanding is approximately as follows by big picture category:

          30% Federal Government Debt
          20% Total Consumer Debt
          23% Total Corporate Debt
          27% Other debt including Municipalities

          The biggest issue on a go-forward basis is INTEREST RATES which are rising and will continue to rise. When interest rates go back to normal levels of around 5.25% for 3 month US Treasuries, then there will be ENORMOUS additional costs for the US government and since all interest rates in the US economy that matter are based on the yields of US Treasuries then all interest rates will rise. Moreover, there will be many more defaults will will result in RISK OF LOSS actually being priced into interest rates, unlike at present.

          • billtheguy

            Socalbeachdude; You should have your own site. Seriously.

          • Spatial Memory

            100% fiction.

          • socalbeachdude

            What I stated above is 100% accurate, true, and correct.

  • socalbeachdude

    There is very little in the way of federal spending that is “corruption” or “waste” and that is a totally bogus argument. Military spending including Veterans benefits amounts to only about 20% of total annual federal government spending.

    Only 20% of the US government annual spending is for total military spending with 16% for actual military spending and 4% for Veterans Benefits.

    The biggest part of the spending is SOCIAL PROGRAMS including the Social Security and Medicare insurance programs which are NOT ACTUARILY SOUND and which are paying out vastly more than they have taken in with payroll taxes.

    A summary of the fiscal 2015 US federal government expenditures totaling nearly $4 trillion is as follows:

    WELFARE & MEDICAL (63%)
    33% Social Security, Unemployment, Labor
    27% Medicare & Health
    ..3% Housing & Community

    MILITARY (20%)
    16% Military
    ..4% Veterans Benefits

    INTEREST ON DEBT (6%)
    ..6% Interest on Debt

    FOOD & TRANSPORTATION (6%)
    ..3% Food & Agriculture
    ..3% Transportation

    EDUCATION & SCIENCE (3%)
    ..2% Education
    ..1% Science

    ENERGY, ENVIRONMENT, & INTERNATIONAL (2%)
    ..1% International Affair
    ..1% Energy & Environment

    OTHER EXPENSES (1%)
    ..1% Government Expenses (general)

    The complete breakdown of Fiscal 2015 expenditures is extensively detailed including actual numbers as well as pie-charts with various percentage breakdowns as to discretionary and non-discretionary expenditures at:

    https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/

    • HeyAHuman

      Where, theoretically, would a wall at the border fall in terms of cost? Under Transportation? Just curious.

      • socalbeachdude

        Interesting question. Probably defense.

    • billtheguy

      Social Security is NOT a social program. I have paid into it for 40 years and I expect it back. Do not lump it in with WELFARE, MEDICAID, SNAP, WIC Etc. That comes from the federal taxes that I also pay

      • socalbeachdude

        Social Security and Medicare are indeed INSURANCE PROGRAMS but fall under the broad category of WELFARE when it comes to federal government spending.

        • walcon

          That is not my problem. I was forced into that contract and agreement and monies were taken from me by force. I want my money back and with proper interest from all those years. By being self employed, I shelled out 15%.
          Otherwise, someone is to be charged with fraud!
          Welfare recipients paid in NOTHING- I don’t see them collecting anything before I, as an investor does.

          • socalbeachdude

            You are viewing the concept of WELFARE far too narrowly and it generally means benefits for people in its broad sense.

          • Babycatcher

            Now you understand. It was a Ponzi scheme from the beginning. I’m 61 and it won’t be there when I need it, so I’m not retiring. I will continue to work as long as I have breath, then I will die. That’s the way it was before SS and it will have to go back to that of necessity.

        • Stuey

          Didn’t Social Security run a surplus for 40-50 years? Where did all that surplus money go? It is my understanding it was used in the general budget with supposed “IOUs” back to Social Security. Is this true?

          • lzman49

            Bill Clinton balanced the budget by putting the Social Security Trust Fund into the General Fund, that’s where the surplus went.

          • Stuey

            So basically, social security would be sound if the money in it hadn’t been taken and used in the general fund. Now all these damn politicians wanting to cut social security benefits because they stole our money.

          • socalbeachdude

            Actually, no, the Social Security Trust Fund wouldn’t be actuarily sound at all as benefit payments FAR EXCEED what was originally paid into Social Security by the benefit recipients.

          • wlawlor

            crooked slick willie, lock him up with his criminal wife.

          • wlawlor

            exactly

          • socalbeachdude

            All of the assets of the Social Security and Medicare Trust Funds are “invested” in US Treasuries, which, of course, means they were all TOTAL SPENT ON WILD OUT OF CONTROL PROFLIGATE SPENDING THROUGH THE GENERAL FUND and what is left are IOUs in the form of special class US Treasuries.

            The law requiring the government agencies to invest only in US Treasuries should be REPEALED.

          • nohomehere

            you mean privatize social security!

        • wlawlor

          the govt has been plundering the SS money by putting this money into the general fund.

          • socalbeachdude

            The US Treasury is required by FEDERAL LAW TO ONLY “INVEST” IN US TREASURIES and has no alternative but to purchase US Treasuries for the assets of its various agencies including the Social Security and Medicare Trust Funds which currently own nearly $6 trillion of the outstanding $20 trillion in US Treasuries.

    • wlawlor

      Since there are zero ‘enemies’ with any resources….al queada,isis, etc the big ,bad bogeyman Russia must be resurrected as the ultimate evil to justify billions for waste er defense. Sad, a tragic waste of money.

    • Gay Veteran

      (CNN) The US Army made trillions of dollars of accounting mistakes and often did not have the receipts or invoices needed to support figures in its budget, according to a scathing Pentagon report.
      The audit, conducted by the Defense Department’s Office of Inspector General, found that the Army erroneously made $2.8 trillion in adjustments in the third quarter of 2015 to its Army general fund – one of the main accounts used to fund the service. The error amount skyrocketed to $6.5 trillion for all of last year, the report said….

      • socalbeachdude

        Totally fake and erroneous reporting as is now usual and customary with CNN. The total annual federal spending is “only” about $4 trillion a year with only about 20% of that going to military including 4% of that 20% for Veterans Benefits so there couldn’t be a $6.5 trillion error.

        • Lennie Pike

          You say so much true stuff socalbeachdude. Why won’t you on everything?

        • Gay Veteran

          yep, you’re a government troll, defending the Pentagon.

          and always defending the Federal Reserve

  • socalbeachdude

    The US DOLLAR is the currency system for the USA and much of the world and will continue to be that with no challenger of any sort in the foreseeable future.

  • socalbeachdude

    Federal Debt in FY 2016 Jumped $1.4 Trillion, or $12,036 Per Household

    In fiscal 2016, which ended on Friday, the federal debt increased $1,422,827,047,452.46, according to data released today by the U.S. Treasury.

    At the close of business on Sept. 30, 2015, the last day of fiscal 2015, the federal debt was $18,150,617,666,484.33, according to the Treasury. By the close of business on Sept. 30, 2016, the last day of fiscal 2016, it had climbed to $19,573,444,713,936.79.

    According to the Census Bureau’s latest estimate, there were 118,215,000 households in the United States as of June. That means that the one-year increase in the federal debt of $1,422,827,047,452.46 in fiscal 2016 equaled about $12,036 per household.

    The total federal debt of $19,573,444,713,936.79 now equals about $165,575 per household.

    http://www.cnsnews.com/news/article/terence-p-jeffrey/federal-debt-fy-2016-jumped-142282704745246

    • Rick

      As of this very moment the US National debt is at $166,775 per TAX PAYER, not household.

      • socalbeachdude

        No, that is PER HOUSEHOLD for each of the around 118 million households in the US.

  • socalbeachdude

    There is no currency in the foreseeable future that can even come close to displacing the US dollar. There is not even the slightest chance of the US dollar lessening in importance in the foreseeable future.

    The dollar will just keep getting stronger and stronger on its multi-year move upwards both on the DXY where it is now over 95 and headed to well over 100 and in terms of its purchasing power.

    There are many reasons the US dollar is rising, not the least of which is that it is substantially undervalued. The US dollar is SOARING upwards and is up 22% on the DXY over the past 2 years and is skyrocketing in purchasing power against nearly all of the world’s 27 major commodities.

    The US dollar is the strongest and most stable currency in the world and is used in more than 83% of all global transactions and accounts for more than 63% of all reserves in the global economy. The US dollar has been SOARING UPWARDS and reached 100 on the DXY last year which was up 22% over the past 2 years and it is now around 100 on the DXY.

    • RobSa

      All fiat currencies collapse.

      • socalbeachdude

        The US dollar is going very strong after around 241 years and is getting stronger every day both in exchange value on the DXY and in purchasing power against most all of the world’s 27 major commodities.

  • socalbeachdude

    Accounting Gimmicks Won’t Stop The U.S.A. Titanic From Sinking

    The U.S. Government has gone to great lengths in using accounting gimmicks to prop up the financial system and domestic economy. One area where this is readily apparent is the disconnect between the rising U.S. debt versus the annual budget deficits.

    From 2000-2016, the total U.S. debt increased by $13.9 trillion while the annual budget deficits equaled $9.1 trillion. Thus, we had a net difference (or shortfall) of $4.8 trillion. Basically, the total U.S. debt increased $4.8 trillion more than the annual budget deficits during that time period.

    The extremely large deviation between the deficit and debt in 2016 illustrates the complex nature of the government accounting.

    The increase in debt for that period was over $1.2 trillion while the deficit was $524 billion, a near $700 billion difference. The discrepancy between these two can be broken down as follows:

    (a) $109 billion was due to the change in the treasury cash balance, a common and well understood variable item;

    (b) $270 billion reflects various accounting gimmicks used in fiscal 2015 to limit the size of debt in order to postpone hitting the Debt Limit. Thus, debt was artificially suppressed relative to the deficit in 2015, and the $270 billion is merely a reversal of those transactions, a one-off, non-recurring event;

    (c) $93 billion was borrowed by the treasury to make student loans, and this is where it gets interesting. Student loans are considered an investment and therefore are not included in the deficit calculation.

    (d) In the same vein, $70 billion was money borrowed by the treasury to increase spending on highways and mass transit. It is not included in the deficit calculation even though the debt increases;

    (e) $75 billion was borrowed because payments to Social Security, Medicare and Affordable Care Act recipients along with the government’s civilian and military retirees were greater during this time frame than the FICA and other tax collections, a demographic development destined to get worse;

    (f) Finally, the residual $82 billion is made up of various unidentifiable expenditures including “funny money securities stuffed in various trust funds”.

    Total current U.S. debt is $19.9 trillion. This includes $14.4 trillion in public debt and $5.5 trillion in Intragovernmental Holdings.

    https://srsroccoreport.com/accounting-gimmicks-wont-stop-the-u-s-a-titanic-from-sinking/

  • socalbeachdude

    China owns less than 7% of the outstanding US Treasuries and Japan owns about the same 7% with each owning about $1.3 trillion in US Treasuries for a total of around $2.6 trillion of the more than $19.6 trillion outstanding in total US Treasuries.

    The largest single holder of US Treasuries is the US GOVERNMENT ITSELF with around $6 trillion of US Treasuries owned by its various agencies with the largest holdings being by the Medical and Social Security Trust Funds.

    The Federal Reserve only owns about $2.5 trillion in US Treasuries which is less than 13% of the outstanding total.

    For a full breakdown in ownership of US Treasuries, see:

    http://www.TreasuryDirect.gov

    • Ger

      I believe you mean the largest holder of US debt is the US Government Itself. The term treasuries denotes something of value …. like money in the bank. There is no money in the bank….i.e. Social Security only holds an IOU from the politicians that misappropriated the Trust Fund (a misnomer if there ever was one). Now the politicians are faced with the task of replacing the SSA money now called “a deficit”.

  • Lazarovic

    Taking your medicine is one thing, collapsing the economy is quite another.
    Mr. Obama had little choice, everyone understands that. The economy would have collapsed (after 8 years of Republican misrule) in 2008 if he hadn’t.
    And let’s not leave Mr. Bush’s expensive wars out of the equation; billions upon billions of wasted treasure and blood, all borrowed from the future. Stupid couldn’t even attack the right country.
    So, please spare me your “it’s Obama’s fault” spin, you ain’t foolin’ nobody.

    • socalbeachdude

      False. Federal government spending should have been CUT SUBSTANTIALLY over the past 8 years and instead it was increased massively. That decision was made by CONGRESS and not by the White House.

      As to 2008-2009, that little and very rapidly corrected downward blip was all due to an accounting rule known FASB Rule 157 (“mark to market”) which was essentially rescinded in March 2009 at which point the markets returned to huge increases.

      • Spatial Memory

        Ridiculously incorrect – as usual.

        • socalbeachdude

          What I stated is 100% correct above.

          • Spatial Memory

            You have zero clue what you’re typing. Your antics and misinformation should be removed from this comment section -as many other sites have done- complete waste of bandwidth.

          • socalbeachdude

            I know exactly what I am commenting on, whereas it is apparent that YOU do not have the slightest bit of a clue as to these matters.

          • Spatial Memory

            I’ve suggested many times over the years that you familiarize yourself with the Senate Investigative Committee Levin Coburn report finding of facts, not limited to – as well as some formal education on banking and finance. Your assumptions regarding the most basic macroeconomic principles are beyond ludicrous.

            Nonetheless, I will continue enjoy the comic relief of your repertoire while markets continue to prove you horrendously incorrect. Key indicies have literally appreciated over 100% while you have been laughed off of many many many websites with your ludicrous diatribe.

          • socalbeachdude

            With what specifically that I clearly stated do you in any way disagree?

            You obviously have no conception as to how ” the world’s economy’s work” and that has nothing to do with the only 3 interest rates set by the Federal Reserve.

            All interest rates that matter in the US economy are set by the $12.8 trillion a year US Treasuries markets from which the banks key all interest rates. And the US Treasuries markets are, of course, the US GOVERNMENT DEBT MARKETS.

            As to DEFLATION, it is a very good thing that benefits nearly EVERYONE.

            There is around $25 trillion sloshing around in the SHADOW BANKING SYSTEM which is nearly 6 times as much as the balance sheet of the Federal Reserve and double the amount of the US M2 money supply.

            The breakdown of the $64 or so trillion of DEBT outstanding is approximately as follows by big picture category:

            30% Federal Government Debt
            20% Total Consumer Debt
            23% Total Corporate Debt
            27% Other debt including Municipalities

            The federal government debt is presently around $18.672 trillion, Total consumer debt is around $12 trillion which includes about $1 trillion in consumer unsecured credit, $1 trillion in vehicle loans, $1.36 trillion in student loans, and about $8.64 trillion in real estate loans secured by mortgages.

            The total corporate debt is around $14 trillion with a large percentage of that outstanding on corporate bonds which now have average interest rates of around 8.83%. The balance is a mix of all other types of debt outstanding with the largest portion of that $16 trillion being municipal bonds issued by state and local authorities and agencies.

            The Federal Reserves operations only with LEGAL TENDER CURRENCY and not “fake money” at all.

            The total M1 money supply in the US is only $3 trillion and only $1.3 trillion of that is printed currency. This is confirmed by the Federal Reserve H.3 report:

            http://www.federalreserve.gov/releases/h3/current/

            M2 which includes M1 plus savings balances is only around $12 trillion and has not increased by $4 trillion since 2008. None of the QE funds increased the money supply at all but only served to increase the MONETARY BASE with 100% of those funds remaining inside the Federal Reserve.

            That LITTLE BIT OF MONEY supports the largest economy in the world which is now an $18 trillion a year economy.

            Once again, it doesn’t matter the slightest bit of a hoot what the Federal Reserve does with the only 3 interest rates they set as none of them matter at all in the US economy and only relate to overnight transaction imbalances which have nothing whatsoever to do with the US economy and those rates will be increased starting on December 16, 2015 which is very long overdue for those 3 specific interest rates.

            Fed or no Fed, interest rates are already rising

            http://www.marketwatch.com/story/fed-or-no-fed-interest-rates-are-already-rising-2015-09-22?dist=lbeforebell

            All interest rates that do matter in the US economy are SET WITH THE YIELDS IN THE US TREASURIES MARKETS and they are rising substantially.

    • Gay Veteran

      don’t forget Obama’s wars

  • socalbeachdude

    TPP NOW DOA…

    U.S is OUT of controversial Trans-Pacific trade deal as Trump signs executive order

    ‘We’ve been talking about this for a long time,’ Trump said in remarks from the Oval Office on Monday as he signed the memorandum. ‘Great thing for the American worker.’

    http://www.dailymail.co.uk/news/article-4149076/Trump-pulls-controversial-Trans-Pacific-trade-deal.html

    • Guest

      That is a very good thing.

    • Rick

      No doubt!

    • Pig Farmer Bill

      Even old Bernie was happy.

  • TrumptheTraitor

    All this Obama vs. Republicans, left vs. right crap is getting old. Everyone knows banks own all politicians. Central banks control the monetary policy that creates the bubbles and increases debt. Donald Trump has filled his cabinet with former Goldman Sachs banksters. Of course. I’m sure they’re not planning to make billions off the coming collapse or anything.

    • socalbeachdude

      No, central banks do not create bubble at all, but rather clueless MANIC SPECULATORS in the markets.

      • Spatial Memory

        ROFL

        • socalbeachdude

          The Federal Reserve has NOTHING WHATSOEVER to do with stocks and it has warned repeatedly about excessive stock overvaluations which have been caused by CORPORATE BUYBACKS and STUPID MANIC SPECULATORS high on hopium and drunk on false perceptions wile totally ignoring fundamental valuation metrics.

          Remember One Thing – Karl Denninger

          The Fed has never, in its history, managed to actually prevent a market collapse.

          It did not do so in 1929.

          It did not do so in 1987, despite it being evident that the market was going to blow up.

          It did not do so in 2000, despite it being evident that the market was grossly overheated.

          It did not do so in 2008, despite having more than a year worth of warning (the two Bear Stearns hedge funds) and in fact Bernanke testified under oath that “subprime was contained.”

          It will not do so this time either.

          https://market-ticker.org/akcs-www?post=230456

          • Spatial Memory

            Again I’d suggest you familiarize yourself with such basic knowledge as Regulation T, Regulation U, as well as the functions of primary dealers and the bulge bracket in general. Juxtaposed to those facts most will immediately recognize the absurdity of your guesswork

          • socalbeachdude

            What I stated, once again, is 100% true, accurate and correct. Regulations T and U are of no significance whatsoever.

          • Spatial Memory

            Obviously you have zero experience within the industry whatsoever. lol

          • socalbeachdude

            Obviously, that totally describes YOU and your total lack of knowledge as to both the stock and bond markets.

          • Spatial Memory

            :)

          • wlawlor

            the Fed is a scam foisted on America by London ( Rothschild) bankers. Jekyll Island cabal concocted by the usual userers.

          • socalbeachdude

            Absolutely false.

          • Lennie Pike

            Intentional lie.

          • socalbeachdude

            By you with that bogus and false BS.

      • Lennie Pike

        Obviously b.s..

  • socalbeachdude

    Bomb threats don’t Trump hate: PIERS MORGAN on the day Madonna and a bunch of famous, foul-mouthed nasty women let down ladies everywhere

    Saturday started off so well. Then came Madonna, once the fresh, exciting Material Girl, now the bitter, cynical, ageing Vinegar Girl who can always be relied upon to sour anything she touches. ‘I’m angry. Yes, I’m outraged. Yes, I have thought an awful lot of blowing up the White House.’ Sorry, what? If you, or I, were to say that in a public forum, then we would be almost certainly be arrested, charged and jailed. And Madonna wasn’t the only celebrity to embarrass herself during the March. There was also actress Ashley Judd.

    http://www.dailymail.co.uk/news/article-4148206/PIERS-MORGAN-Madonna-Bomb-threats-don-t-Trump-hate.html

  • Special Little Snowflake

    Oxfam reports that 8 people now have more wealth than the poorest 50% of the planet, and 1100 people have more wealth than the poorest 70% of the planet… Now this is a real news story.

    • socalbeachdude

      So what?

  • William Lutz

    I told you guys he won’t be a good president. I can smell the rat coming. Too bad the inauguration went well.

    • aldownunder

      Goose

    • aldownunder

      Maybe your nose is too close to your r’s

    • Mr.Cipher

      I’d like to see it from your prospective. In not willing to shove my head up my but though.

  • Real Deal

    More fun to ignore facts (like Lemmings of a cliff)… Continue unconstitutional talking points of both Parties/ wave flag, pretend you’re Patriotic!!!

  • socalbeachdude

    Trump freezes hiring of many federal workers

    President Trump instituted a government-wide hiring freeze Monday, signing an executive order that would affect a large swath of the government but leave wide latitude for exemptions for those working in the military, national security and public safety.

    https://www.washingtonpost.com/powerpost/trump-freezes-hiring-of-federal-workers/2017/01/23/f14d8180-e190-11e6-ba11-63c4b4fb5a63_story.html?utm_term=.ed9ec17c6c9c

    • RobSa

      I thought he was pro-jobs and here he is stopping a large employer from hiring. Weirdness!

      • huththa

        Big difference between government jobs and private sector jobs.

        • socalbeachdude

          Absolutely correct.

  • BeenThere

    Makes sense. Now you have a narcissistic nut case president (at least that is how the rest of the world views him). The rest of the world is not so sure you can pay off all that debt.

    • socalbeachdude

      False.

  • Pandadude12345

    You know, we had a net debt of 3 trillion in 2011. Now it is 14 trillion, so the debt is growing faster than you think. Countries are getting rid of debt they have to us, but much to the dismay of economists, the economy is spiraling in debt.

    • socalbeachdude

      In 2011, the federal government debt in the US was well over $15 TRILLION. Now it is just a little but under $20 TRILLION. There has been VERY LITTLE CHANGE with foreign ownership of around $5 trillion of the total outstanding US government debt of around $20 trillion.

  • nohomehere

    So, the risk of lose , What , scares off would be buyers of debt? No bid?
    buyers bailing into equities abandoning the bonds the fed has to buy the treasuries ? true monitization?
    leads to inflation and bad things happening? creating more
    defaults of companies and people ?so, if inflation really kicks in and gold and equities go up what will a
    dollar buy in a grocery store relative to the increases. who will be left standing ? Military , national security, and police with the scoopers? Then the cry of inequality it will truly be!

    So, yeah looks like trumps way ahead of every one, he is gonna make the hard decisions no one wants too!

    You are already hearing ( Trump eyes 10% spending cuts, 20% slash of federal workers)” next , “Trump goes to work on public workers and their crazy wack pension plans” !

    unpayable student loans? unpayable obama care? make the schools take a cut and big pharma take a cut , do you really think it cost 600 dollars to make a Epi Pen for anaphalctic shock! cut big on the corruption not the poor people the deplorables!

    Closing down the trans atlantic and trans pacific trade deals and merkle is going right along, they will cuddle to russia,

    the asia’s , They will cuddle up to china!

    Trump is aiming at all the gov. spending that is non essential, any fat !
    YES! Deficits do matter!

    The large unsupportable trade deficits exasaperated by a exploding dollar are his target, he has a plan, Trump see’s whats coming and figures 10,000,000,000 will evaporated down alot any way so might as well give it a shot, to save America After all he was born there!

  • Cinderella Man

    Why can’t we just say screw em and not pay it?

    • socalbeachdude

      Obviously because the FULL FAITH AND CREDIT OF THE US GOVERNMENT is at stake plus the fact that the FLIP SIDE OF DEBT IS THAT IT IS HELD AS AN ASSET by its owners.

  • Mr.Cipher

    Obama pardoned Chelsea Manning because he was a transgendered freak while Snowden was ignored.

    • Lennie Pike

      It breaks my heart, but it looks now like Scarlett Johansson can be included in that category.

  • RobSa

    Trump will keep on spending on credit. He vague economics plans will come to nothing. The debt is going to be yuge.

    • socalbeachdude

      Donald Trump is already working hard to REDUCE THE US GOVERNMENT DEBT. The fact of the matter is that it is UP TO CONGRESS to really reduce the federal deficit and debt. The federal deficit was $1.4 trillion in Fiscal 2016 and that needs to come down dramatically.

  • rebecca

    Call Karen Hudes and get the gold dollars printed. the gold that belongs to all of Humanity.

    • socalbeachdude

      Nearly all of the world’s 180,000 or so tonnes of gold are PRIVATELY OWNED and nearly 70% of that gold is in the form of JEWELRY widely dispersed among the 7 billion or so people around the world. Gold is of absolutely zero financial relevance and hasn’t had anything to do with US dollars in the US since 1933 and even then it was a very brief 60 year failed experiment from 1873 to 1933 with the so-called “gold standard” which was abolished in 1933 for any domestic purpose.

      • wlawlor

        fiat currencies all fail….eventually

        • socalbeachdude

          The US dollar has been going strong for 241 years and will go on as the best and strongest currency in the world for the foreseeable future.

          • wlawlor

            as long as we have the guns to bully other nations into accepting our worthless paper

          • socalbeachdude

            Guns have nothing to do with the US dollar.

          • wlawlor

            Say what?? Why do you think Euro countries buckled to the IRS ? Because we are nice guys. We threatened the bankers. Oil is cheap for us because of the petro-dollar. As Brando said to Johnny Friendly….take away your guns and you’re nothing. Bully Empire ! Rogue State. Can invade at will, drone anyone, zero consequences, just like Israel.

          • socalbeachdude

            Huh? The European Union follows the RULE OF LAW just like the United States. The US did not “threaten” anyone at all and the international effort against money laundering and hiding of assets is shared by all major countries including in Europe. There is no such thing as the “petrodollar” and oil only accounts for LESS THAN 7% OF GLOBAL TRADE in which the US dollar is used and total transactions in US dollars accounts for more than 83% of all global trade.

          • wlawlor

            Is it really about individuals hiding money in foreign accounts? U.S. corporations park money overseas until they get a tax holiday as in the 2004 gift from the Shrub cohorts. Money was brought back with a 5% tax. No corporate tax was paid. The real money hidden is by corporations. The so-called 35% tax rate is never paid by large corporations. As to the petro-dollar, all oil purchased is sold in dollars . All countries must use $$ to buy oil. Only the U.S. can print the worthless paper . A scam perpetrated by the bully on the block.

  • Pete Okuhira

    Never trust Trump and his administration.

    • socalbeachdude

      Why would you say that?

  • socalbeachdude

    ENO: ‘We’ve been in decline for 40 years, Trump is chance to rethink’…

    https://www.theguardian.com/music/2017/jan/23/brian-eno-not-interested-in-talking-about-me-reflection

  • socalbeachdude

    Each year the US Treasury issues around $7 trillion in NEW US TREASURIES with most of the proceeds going to pay off maturing US Treasuries in full. $400 billion relative to that is a very small amount. About $1.4 trillion is now being issued each year in NET NEW US GOVERNMENT DEBT in the US Treasuries market. For more specific information and breakdowns on US Treasuries (bills, bonds, notes, and TIPS) see Treasury Direct at:

    http://www.TreasuryDirect.gov

  • socalbeachdude

    These are the Countries with the Biggest Debt Slaves, and Americans Are Only in 10th place

    Americans have been on a borrowing binge. To buy their favorite cars and trucks, they’ve loaded up on $1.14 trillion in auto loans. Young and not so young Americans are mortgaging their future with student loans that now amount to $1.28 trillion. Credit card and other debts are at $1.12 trillion. And mortgage debt stands at $8.82 trillion.

    So, total household debt was $12.35 trillion, according to the New York Fed’s Household Debt and Credit Report for the third quarter 2016. That’s a massive amount of debt. Many consumers are struggling with it. Student loans are seeing enormous default rates, and repayment rates are far worse than previously disclosed.

    Comparing total household debt to the overall size of the economy as measured by GDP is one of the measures. And per this household-debt-to-GDP measure, the Americans are in 10th place with 78.8% and look practically prudent compared to the peak just before the Financial Crisis…

    http://wolfstreet.com/2017/01/22/these-are-the-countries-with-the-biggest-debt-slaves-and-americans-are-only-in-10th-place/

  • socalbeachdude

    CNBC’s LAUGHABLY JUXTAPOSED CONTRADICTORY HEADLINES…

    Trump’s massive infrastructure, defense plans will lead to ruin – CNBC

    http://www.cnbc.com/2017/01/20/trumps-massive-infrastructure-defense-plans-will-lead-to-ruin-ron-paul-says.html

    Trump to oversee ‘fiscal bloodbath’ instead of prosperity – CNBC

    http://www.cnbc.com/2017/01/20/trump-to-oversee-fiscal-bloodbath-instead-of-prosperity-says-reagan-omb-director.html

    • Spatial Memory

      Imagine that!! A legitimate financial media source citing multiple viewpoints!! Juxtaposed to your absurdly one dimensional homespun guesswork or imminent crashes and collapses during skyrocketing broad based rally with key indicies gaining hundreds of percentage points gains while you insist doom is just one tick away. Now that’s laughable and absurd!!! Sorry for you continued losses. :(

      • socalbeachdude

        Laughably false. CNBC is just more STUPIDITY AND FAKE NEWS with some of the poorest and most ignorant “analysis” in the financial media. What utter imbeciles!!!

  • socalbeachdude

    ‘We can cut our regulations by 75 per cent': Trump meets business leaders as he promises to take the ax to red tape as well as cutting taxes

    President-elect Donald Trump begins his first business day in office by meeting with business leaders Monday, then turn to new executive orders and strategy sessions with congressional leaders.

    http://www.dailymail.co.uk/news/article-4148098/Trump-starts-business-day-meeting-business-leaders.html

  • Toller

    Good Article. Thanks for the knowledge

  • Jack Hoff

    That’s a very ambiguous chart. Does I represent aggregate redemptions in debt on an annualized basis? If so, it would appear that foreign reserves of American treasuries has dipped well below what appears to be an annualized figure to all time lows. Hold on. No alarms going off. We’ve been able to handle all of those maturities due to the last series of sequestrations as well as the our stable increased tax basis. Very true that has been passed on to the ‘Merican worker, but let’s not forget corporations have not paid their fair share of taxes due to loopholes and offshore shell corporations for years. Yet, they are allowed the advantages of American sovereignty: our military and relative strong dollar.

    The era of American exceptionalism is over because of a few measly foreign redemptions? No my friends. The biggest holder of Treasury debt is our own Federal Reserve. Let them begin to redeem their T-bills then there’s an issue. All is not lost though. We have options for a dollar reset. Let’s not forget that the US has the worlds largest gold reserve. Rest easy in your trailers and underground bunkers. It ain’t ova yet.

    • socalbeachdude

      False. The biggest holder of US Treasuries is not the Federal Reserve, but rather the US government itself which owns nearly $6 trillion of outstanding US Treasuries through its various agencies with the largest of those being the Social Security and Medicare trust Funds.

      The Federal Reserve only holds about $2.5 trillion of US Treasuries which is less than 14% of the outstanding total of nearly $20 trillion. And the Federal Reserve only annually purchases about 8% of the around $7 trillion of newly issued US Treasuries. Most of those US Treasuries are issued to replace maturing US Treasuries with net new issuance of around $1.4 trillion a year in Fiscal 2016.

      Moreover, those $2.5 trillion of US Treasuries owned by the Federal Reserve are essentially INTEREST FREE to the US government as the Federal Reserve rebates more than 94% of its profits each year to the US Treasury and its taxpayers.

      As to the value of the US government gold which is around 8,200 metric tonnes, even at today’s absurdly elevated price levels of around $1,200 per ounce the total value of that gold is less than $350 billion which is equal to about 3 months worth of the current $1.4 trillion annual federal deficit.

    • wlawlor

      the gold vaults are empty….ask the Germans.

      • socalbeachdude

        Absolutely and laughably false. The US government owns approximately 8,200 metric tonnes of gold which is managed by the US Treasury and about 4,600 metric tonnes are stored at the US Mint Bullion Depository across the street from Fort Knox in Kentucky with the rest being stored at various US Mints around the country. The total value of that gold is only around $11 billion based on the current US government official price of $42.22 per ounce which is how it is reported on every month by the US Treasury at:

        http://www.fiscal.treasury.gov/fsreports/rpt/goldRpt/current_report.htm

        Even at the current market price of $1,218 per ounce for gold the total value of the entire 8,200 metric tonnes of gold owned by the US Treasury would be less than $350 billion which is equivalent to about 25% of the Fiscal 2016 federal government deficit of $1.4 trillion and equal to about 1.8% of the current outstanding federal debt of more than $19.9 trillion.

  • muldoon55 .

    Hmmmmmmmm , under obama the fed couldn’t raise the rates but now all of a sudden , since the banking oligarch’s stooge has been thrown out they can and will .
    No matter, this down fall of america was prophesied long ago in the scriptures at Ezekial 31 where the united states (Egypt) is likened to a large tree that WILL be chopped down.

    31 It was in the eleventh year of our captivity, in the third month, on the first day of the month. The Lord spoke his word to me, saying: 2 “Human, say to the king of Egypt and his people:

    ‘No one is like you in your greatness.
    3 Assyria was once like a cedar tree in Lebanon
    with beautiful branches that shaded the forest.
    It was very tall;
    its top was among the clouds.
    4 Much water made the tree grow;
    the deep springs made it tall.
    Rivers flowed
    around the bottom of the tree
    and sent their streams
    to all other trees in the countryside.
    5 So the tree was taller
    than all the other trees in the countryside.
    Its limbs became long and big
    because of so much water.
    6 All the birds of the sky
    made their nests in the tree’s limbs.
    And all the wild animals
    gave birth under its branches.
    All great nations
    lived in the tree’s shade.
    7 So the tree was great and beautiful,
    with its long branches,
    because its roots reached down to much water.
    8 The cedar trees in the garden of God
    were not as great as it was.
    The pine trees
    did not have such great limbs.
    The plane trees
    did not have such branches.
    No tree in the garden of God
    was as beautiful as this tree.
    9 I made it beautiful
    with many branches,
    and all the trees of Eden in the garden of God
    wanted to be like it.

    10 “‘So this is what the Lord God says: The tree grew tall. Its top reached the clouds, and it became proud of its height. 11 So I handed it over to a mighty ruler of the nations for him to punish it. Because it was evil, I got rid of it. 12 The
    cruelest foreign nation cut it down and left it. The tree’s branches
    fell on the mountains and in all the valleys, and its broken limbs were
    in all the ravines of the land. All the nations of the earth left the
    shade of that tree. 13 The birds of the sky live on the fallen tree. The wild animals live among the tree’s fallen branches. 14 So
    the trees that grow by the water will not be proud to be tall; they
    will not put their tops among the clouds. None of the trees that are
    watered well will grow that tall, because they all are meant to die and
    go under the ground. They will be with people who have died and have
    gone down to the place of the dead.

    15 “‘This is what the Lord God
    says: On the day when the tree went down to the place of the dead, I
    made the deep springs cry loudly. I covered them and held back their
    rivers, and the great waters stopped flowing. I dressed Lebanon in black
    to show her sadness about the great tree, and all the trees in the
    countryside were sad about it. 16 I
    made the nations shake with fear at the sound of the tree falling when I
    brought it down to the place of the dead. It went to join those who
    have gone down to the grave. Then all the trees of Eden and the best
    trees of Lebanon, all the well-watered trees, were comforted in the
    place of the dead below the earth. 17 These
    trees had also gone down with the great tree to the place of the dead.
    They joined those who were killed in war and those among the nations who
    had lived under the great tree’s shade.

    18 “‘So
    no tree in Eden is equal to you, Egypt, in greatness and honor, but you
    will go down to join the trees of Eden in the place below the earth.
    You will lie among unclean people, with those who were killed in war.

    “‘This is about the king of Egypt and all his people, says the Lord God.’”

    New Century Version (NCV)

    Since this is a God ordained destruction, the only right course of action a person could take is to sue for peace to earths coming King Jesus Christ and draw close to God by coming to know Him and His purpose for us and the earth by reading His word and supplicating Him for guidance and direction. May Jehovah the God of the angel armies bless your efforts to do so.

    • socalbeachdude

      The FEDERAL RESERVE SIMPLY MATCHES THE FEDERAL FUNDS RATE TO THE YIELD ON THE 3 MONTH US TREASURY RATE and that has been the case for the entire 100 years of operation of the Federal Reserve.

      Obviously, the Federal Reserve will continue to TIGHTEN as it has been doing for the past year and will raise the only 3 interest rates that they set – not that it matters a hoot – on December 14, 2016.

      The Federal Reserve these days has nothing left that it can do except to push on limp noodles and there’s not much result with that.

      The Federal Reserve DOES NOT SET ANY INTEREST RATES THAT MATTER IN THE US ECONOMY NOR DOES IT EVEN INFLUENCE INTEREST RATES IN THE US ECONOMY TO ANY SIGNIFICANT EXTENT AT ALL.

      Changes in the Federal Funds Rate ALWAYS MATCH THE YIELD ON 3 YEAR US TREASURIES WHICH ARE THE KEY INTEREST RATE THAT ALWAYS LEADS WHERE THE FEDERAL RESERVE SETS THE FEDERAL FUNDS RATE and as Sandy Greenlyn stated recently over on MarketWatch, “It’s interesting how few people understand that the Fed funds rate chases the market-driven 3M T-Bill exactly and they have never deviated at all.”

  • Priszilla

    So? If there is no debt there will be no interest to pay.

  • worldcitizen55

    As issuer of it’s own non-convertible currency, the US Gov cannot ever have a ‘debt’ crisis in its own currency, unless it chooses to pretend it does. Thus, the entire premise of this article is nonsense. Period. Greenspan even admitted this, speaking before Congress, it’s on youtube.

    • socalbeachdude

      False, and the US government doesn’t even issue its own currency as that is done by the Federal Reserve.

      • worldcitizen55

        Wrong, the Fed is a US Gov entity, and only operates by the specific instructions given by Congress. It also returns all its profit to the US Tsy ($92billion last year). Was Greenspan lying before Congress? If he was, why have none of you taken legal action?

        • socalbeachdude

          The Federal Reserve exists only because it was CREATED BY CONGRESS and is fully subject to oversight by Congress and must comply with all of the rules set forth in Federal Reserve Act. It is a quasi-public-private entity which rebates more than 94% of its profits each year to the US Treasury.

          The FEDERAL RESERVE IS OWNED BY ITS MEMBER BANKS SHAREHOLDERS as is clearly confirmed by the Federal Reserve.

          Who owns the Federal Reserve?

          http://www.federalreserve.gov/faqs/about_14986.htm

          In summary, The member banks of the Federal Reserve System own 100% of the shares of the Federal Reserve.

          As to the profits of the Federal Reserve, it REBATES 100% OF ITS ANNUAL PROFITS TO THE US TREASURY after paying its member bank shareholders a modest annual 6% dividend.

          The Federal Reserve does not cost the US government and taxpayers a single penny and in facts is the LARGEST SINGLE PAYER OF REVENUES TO THE US GOVERNMENT each year.

          As to Mr. Andrea Mitchel, Greenspun is a TOTAL MORON AND IDIOT and of course was dead wrong as to his absurd and stupid assertion. He wasn’t necessarily “lying” but rather he is just EXTREMELY STUPID.

          • worldcitizen55

            Well, thanks, you’ve confirmed what I wrote. The Fed is instructed by Congress. So if Congress wills it, the Fed can operate a zero interest rate policy, and also abandon the fiction that US Tsy bonds must equal US Gov net spending. (Even now, operationally, there is no connection, it is only two unconnected numbers being compared, after the fact.) Equally, the Gov ‘debt’, US Gov bonds thus far accumulated are no burden whatever. They are merely a monetary operation at the aggregate level – simply an Asset swap with banks’ reserves. Therefore, I repeat, the premise of the article – a Gov ‘debt crisis’ – is entirely false, if Congress wishes to enact, oh, probably just a couple of pages of amended instructions to the Fed. (We could call it, “The End The Neoliberal Government Debt as Burden Charade” or similar.)

          • socalbeachdude

            The Federal Reserve only sets 3 interest rates and none of them have anything to do with the US economy where all interest rates are keyed off the yields (interest rates) on US Treasuries. The Federal Reserve is NOT setting interest rates “appropriate for the US economy” but is merely changing OVERNIGHT BANK LOAN RATES which are practically NEVER UTILIZED as the banks are awash in vast excess trillions of dollars and have no need to borrow from each other. The only other rate set by the Federal Reserve is IOER which is Interest On Excess Reserves held by banks inside the Federal Reserve where the banks currently have nearly $2.6 trillion in their excess reserves accounts.

            IT DOESN’T MATTER A HOOT WHAT THE FEDERAL RESERVE DOES WITH ANY OF THE THREE INTEREST RATES THEY SET as all interest rates that matter in the US economy are SET IN THE US TREASURIES MARKETS.

            The BOND MARKETS SET INTEREST RATES IN THE US ECONOMY AND NOT THE FEDERAL RESERVE. The yields (interest rates) in the bond markets have been SOARING EVER SINCE JULY and that is where all interest rates that affect the US economy are keyed off, and NOT the only 3 interest rates set by the Federal Reserve which simply do not matter a hoot in the US economy.

            The only 3 rates that the Federal Reserve is involved with setting are:

            1) Federal Discount Rate – currently 1.25%

            2) Federal Funds Rate (which it influences) – currently in the range of 0.50% to 0.75%

            3) Federal Reserve IOER (Interest On Excess Reserves) – currently 0.75%

            The IOER (Interest On Excess Reserves) interest rate does have an immediate beneficial impact for banks as it is the interest paid to banks on their excess reserves accounts inside the Federal Reserve and those accounts now have more than $2.5+ trillion sitting in them.

            The ONLY applicability of the Federal Funds Rate is INTERBANK BORROWING to clear nightly transaction balances which is now practically NEVER UTILIZED as the banks are awash in trillions of dollars of EXCESS RESERVES and have no need to borrow from each other.

            As to interest rates on savings accounts, BANKS ARE AWASH WITH EXCESS CUSTOMER DEPOSITS AT A TIME WHEN DEMAND FOR BORROWING IS VERY LOW which is why interest on savings rates is so low and that is not likely to change much.

            The only 3 interest rates set by the Federal Reserve have NOTHING WHATSOEVER TO DO WITH THE INTEREST RATES ON THE US GOVERNMENT DEBT as those yields (interest rates) are all set in the $12.8 trillion a year US Treasuries market and have nothing to do with the Federal Reserve.

          • worldcitizen55

            Wrong again. Gov Bonds act as a Reserve drain which forces the interbank rate to the Fed’s chosen target. ‘Markets’ have nothing to do with it. Even the ECB tamed the Euro ‘bond vigilantes’ by threatening (and acting) to buy any Euro gov bonds where the market tried to push the interest rate above 5%.

          • socalbeachdude

            Absolutely and laughably FALSE. The US Treasuries markets are a $13 trillion a year market which is where ALL INTEREST RATES THAT MATTER IN THE US ECONOMY ARE SET. The Federal Funds Rate is TOTALLY IRRELEVANT and rarely even even used any more for interbank borrowing which has dropped to nearly nothing given the fact that banks in the US have more than $2.5 trillion in their excess reserves accounts inside the Federal Reserve.

            I would suggest you learn about the US Treasuries markets at:

            http://www.TreasuryDirect.gov

          • worldcitizen55

            Wrong again. The Fed controls the market, with its infinite capacity to issue US$. The large reserves are simply the complement of the Fed’s desire for low interest rates. It’s no good directing me to the sources of the charade that pretends a commodity market is controlled users, rather than the commodity issuer, who can issue that commodity at zero cost and infinite quantity. It is you that needs to rethink this. We can play a little game if you like? You can be the user of a commodity, or trader. You must acquire or sell at the market price. I am the creator of this commodity, at zero cost. I can adjust production from zero to infinity, and any point in between. Do you really think you going to choose the price? (Clue.. I don’t care what quantity is produced and introduced to the market. Makes no difference to me.)

          • socalbeachdude

            Absolutely false. The Federal Reserve does no such thing at all and the Federal Reserve has PRACTICALLY NO CAPITAL / EQUITY at all and is far more leveraged that Lehman Brothers when it collapsed. The Federal Reserve has less than $55 billion in capital / equity to support its around $4.5 trillion balance sheet.

          • worldcitizen55

            None of that is relevant to a Central Bank’s operations for this type of fiat free-floating currency. You don’t seem to understand that a Central Bank is not remotely like a retail bank, or any other business? Nor does it have any of the gold standard limitations it had before the Bretton Woods agreements collapsed in 1971, much as you would appear to wish it were so.

          • socalbeachdude

            Laughably false assertions by you.

            The biggest concern regarding the Federal Reserve is its SOLVENCY as it vastly more leveraged than Lehman Brothers was at the time of its collapse. The Federal Reserve’s asset / liability portfolio is now around $4.4 trillion as a result of expanding it from $800 billion by around $3.6 trillion to the $4.4 trillion amount. That portfolio on a “mark to market” base is now significantly adversely impacted by the huge increase in interest rates which has occurred in the US Treasury markets and other bond markets this Fall where losses are now pushing $3 trillion on a “mark to market” basis.

            The Federal Reserve has VERY LITTLE CAPITAL / EQUITY due to the fact that it is required by law to REBATES 94% OF ITS PROFITS EACH YEAR TO THE US TREASURY and its present capital / equity basis is only around $55 billion which compared to its assets / liabilities represents leverage of around 80:1. The only way that the Federal Reserve can be recapitalized to lower the leverage amount is through 1) member banks purchasing more shares in the Federal Reserve, and/or 2) the Federal Reserve retaining more of its annual earnings (profits).

          • TheHolyCrow

            If the various Fed Reserve member banks are awash in TRILLIONS OF DOLLARS OF RESERVES, then how come the US Taxpayer had to bail them out, or else they would fail and we would have martial law. Remember that spiel back in 2008 ? Now they got trillions but the money to bail them out is still in the National Debt, breaking the back of the little man ? Something doesn’t make much sense here !

          • socalbeachdude

            The US taxpayer DID NOT BAILOUT ANY BANKS AT ALL WITH ANY NET COST TO THE US GOVERNMENT.

            The only US federal government program involved with that was TARP (Troubled Assets Relief Program) which was FORCED ON ALL MAJOR BANKS and other financial institutions to cover up the very few that were even having any problems by making it very difficult if not impossible to specifically identify them. That said , there was NO NET COST WHATSOEVER TO THE TAXPAYER from the TARP program for banks and financial institutions and therefore no loss of taxpayer funds or cost to taxpayers.

            The only cost with TARP was about a $10 billion loss due to the bankruptcy of the “old GM” which was not fully repaid. Of the total of $700 billion in TARP funds approved only about $400 billion was ever even BRIEFLY LOANED AT VERY HIGH INTEREST RATES TO BANKS and all of those loans – except to GM – were nearly immediately repaid with interest to the US Treasury.

            Banks have always been required to keep PRIMARY RESERVES in their reserves accounts inside the Federal Reserve and those requirements are based on 10% of the amount of deposit6s at those banks. In addition to that and as a result of the 3 versions of Federal Reserve QE in which the Federal Reserve purchased securities assets consisting of MBS instruments and US Treasuries from member banks in exchange for cash deposited into their EXCESS RESERVES ACCOUNTS inside the Federal Reserve, the member banks of the Federal Reserve now have more than $2.5 trillion in their excess reserves accounts in addition to around $1.3 trillion in their primary reserves accounts inside the Federal Reserve.

            There was NO NET GAIN BY BANKS at all from the 3 versions of Federal Reserve QE which merely purchases EXISTING ASSETS OWNED BY THE BANKS in exchange for cash deposit into their reserves accounts inside the Federal Reserve. Taxpayers were not involved in any way in those transactions and the Federal Reserve does not cost taxpayers a single penny, but rather receive nearly $100 billion a year in rebates from the Federal Reserve which rebates more than 94% of its annual profits each year to the US Treasury and its taxpayers.

            The only addition to the national debt from the entire TARP program was the $10 billion net cost related to the “old GM” Section 163 Chapter 11 bankruptcy. The rest of the nearly $20 TRILLION FEDERAL DEBT was all run up as a result of gross profligate spending by the US government fully authorized by Congress and the White House.

      • Bill

        The point here again, is that this “debt crisis” is a nonsensical fiction.

        • socalbeachdude

          Totally false. Your apparent total lack of comprehension as to the US Treasury markets and the MASSIVE CRISIS the US government is in are just mind boggling.

          I suppose you also “think” your mortgage (if you have one) is “nonsensical fiction” and not due and payable as specified in your mortgage contract.

          • Bill

            I think I see the problem. You don’t seem to get that there is a difference between being a currency USER and currency ISSUER.

          • socalbeachdude

            Huh? What’s the difference?

          • Bill

            comment with link stuck in pending…

  • Fred762

    There’s 2 ways to finish off that un-payable debt: inflate it out of existence or repudiate it. What if The Teflon Don simpl picks #2 & tells the chicoms to take a hike and goes back to gold and silver monetary system…and of course closes the pvt banker-owned “fed”?? That pile of paper will become worthless over nite 😉

    • socalbeachdude

      Nobody can inflate the way out of debt, and there is zero chance the US government debt would be repudiated. There are only 2 ways to reduce government debt:

      1) Increase taxes
      2) Cut federal government spending

      Both will be done with Donald Trump as President.

      • Bill

        3) stop issuing bonds.
        4) stop worrying about a meaningless number.
        5) transfer all the $ in bonds (savings accounts) to checking accounts.

        Neither 1 nor 2 are necessary. What would be the point of reducing the debt? What would you reduce it to? How many dollars should be in the economy?

        • socalbeachdude

          What utter nonsense. The US Treasuries outstanding are used to FINANCE THE US GOVERNMENT and PAY OFF MATURED US TREASURIES and around $7 trillion are issued in new US Treasuries to do exactly that. The $20 trillion total amount is growing at an amount of more than $1 trillion a year. US Treasuries come in bonds, bills, notes, and TIPS and all fall under the classification of BONDS.

          Bonds are not “savings accounts” but rather DEBT INSTRUMENTS that are repaid by the US government upon maturity from the general fund and from additional borrowing.

          • Bill

            Treasuries (nor taxes for that matter) are used to finance anything. That is myth. They are effectively a savings account. Put dollars in (that already exist) and get dollars back with interest.
            You neglected to answer my questions though.

          • socalbeachdude

            Totally false. US Treasuries are US GOVERNMENT DEBT USED TO FINANCE THE US GOVERNMENT SPENDING. They are not a “savings account” at all to anyone including those who own them. They are a BOND WHICH IS A DEBT INSTRUMENT which must be repaid by the borrower (US government) to the holders upon maturity and more than $6 trillion of US Treasuries mature each year at which time the lenders (holders) are paid in full.

            I would suggest you learn about US Treasuries at:

            http://www.TreasuryDirect.gov

          • Bill

            All dollars are debt instruments whether in bonds or cash makes no difference. They are all IOUs from the government that serve at tax credits. If you want to save dollars, you can hold them as cash which is non-interest bearing or you can save them in treasuries which are interest bearing. FOR ALL PRACTICAL PURPOSES, this is a savings account or a time deposit similar to buying a CD from a bank. Asset of the holder, liability for the gov. When they are redeemed, dollars go back to checking accounts electronically. Simple transfer from savings to checking.

            They are not needed to finance the government, that simply takes an act of congress. Bonds are purchased with dollars already in existence that were created from government spending.

            And you still have not answered my questions.

          • socalbeachdude

            False. A bond is very different from a currency such as the US dollar. Bonds cannot be used to pay for anything without selling them and getting cash US dollar proceeds and ALL BONDS HAVE MATURITY DATES at which they become worth their face value and prior to that all bonds sell at a discount to face value.

            Bond are certainly not “savings accounts” at all contrary to your bizarre notions.

            Bonds in the form of US Treasuries are VERY MUCH NEEDED TO FINANCE THE US GOVERNMENT which has around $20 trillion outstanding on its federal debt and which is spending about $1.4 trillion a year more than the US government is taking in via tax revenues.

            Most bonds (US Treasuries) were not “purchased with dollars created from government spending” and most all of the money used to purchase bonds was created from private business which is by far the largest part of the economy.

          • Bill

            No sense in continuing to argue with you that bonds are a savings vehicle for the non-fed sector.
            But, private business does not and cannot create dollars. All dollars originate from the federal government.
            Think about this for a minute if there were no dollars in existence right now. How would we get them? You and I can’t create them, biz can’t, the gov would not be able to borrow them (ridiculous notion anyway). The gov would have to spend them into existence before anything else could happen.

          • Gay Veteran

            “…All dollars originate from the federal government….”

            nope. banks create dollars when they give out a loan backed by only 10% of their deposits

          • socalbeachdude

            False. Even more dollars would be created by the money multiplier effect with loans if 100% of deposits could be loaned out versus only 90% as is now the case with United States banks.

          • Gay Veteran

            your statement was FALSE:

            “…All dollars originate from the federal government….”

            nope. banks create dollars when they give out a loan backed by only 10% of their deposits

          • socalbeachdude

            I never stated that quote anywhere.

          • socalbeachdude

            Private business most certainly does create dollars and most dollars are created through the MONEY MULTIPLIER EFFECT as money moves through an economy. The government of the United States does not create any dollars at all.

          • Bill

            ~sigh~ If you are talking about endogenous money, i.e. bank money, that is created by loans that result in deposit (net 0). Those are not USD. They are bank IOUs, but usually trade at par with USD. Actual USD are only created from spending by Congress. The money multiplier myth is not valid in our monetary /banking system. See link provided in the other response.

          • socalbeachdude

            There is no such thing as “endogenous” money. That adjective means “having an internal cause or origin” and has no applicability at all to money. Money borrowed from banks is typically used to purchase things such as houses or vehicles which become collateral tied to those loans and that money is spent into the economy not put into deposit accounts.

            No US dollars are ever created by spending by Congress except for the money multiplier effect of that money moving through the economy. All federal spending comes from EXISTING MONEY raised by either taxes or by federal borrowing through the issuance of US Treasuries.

  • socalbeachdude

    Happy Days Are Here Again…

    ART OF THE REPEAL…
    Trump signs five more orders…
    Urges automakers to make big push for new plants…
    Vows to stop ‘out of control’ environmentalism…
    Wins Unions…
    White House English-only website…
    Immigration Hawks Worry…
    Approval hits 57%…

    http://www.rasmussenreports.com/public_content/politics/trump_administration/prez_track_jan24

  • socalbeachdude

    So, that in no way contracts what I stated.

  • socalbeachdude

    Fed debate over $4.5 trillion balance sheet looms in 2017

    It’s time to talk about the balance sheet.

    Eight years after the Federal Reserve launched the first of three controversial bond-buying campaigns to help save the U.S. economy, its holdings are stuck at $4.5 trillion, and the question of when to let them shrink is beginning to simmer.

    https://www.bloomberg.com/news/articles/2017-01-24/fed-debate-over-4-5-trillion-balance-sheet-looms-in-2017

  • Penitent Man

    Simple solution, get rid of the Federal Reserve and tell the international bankers to go to hell. Then create debt-free money to begin stimulating the real economy. Do what Germany did in the mid 1930’s and create massive public works programs. Other nations in the west will follow our model and it will be another Renaissance. If they don’t follow then it’s world war III. Looks like we’re living in interesting times.

    • Bill

      There is no need to get rid of the fed to do this.

    • socalbeachdude

      Eliminating the Federal Reserve would not only not solve anything but would cost the US Treasury at least $100 billion a year in lost revenues. The Federal Reserve does not cost the US Treasury anything at all, but rather is the single largest contributor to government revenues as it rebates more than 94% of its annual profits each year to the US Treasury and its taxpayers.

      The US government is spending around $1.4 trillion more per year than it is taking in via tax revenues and needs to DRAMATICALLY CUT ITS SPENDING rather than increasing any spending. Obviously.

  • Herbert Dorsey

    Of course there is a Constitutional remedy for the problem. The Constitution allows Congress to borrow money on the good faith and credit of the United States. This, Congress has been doing. But, the Constitution also grants Congress the power to create money. This, they haven’t been doing and that is why the astronomical national debt. Congress hasn’t been doing its job of creating debt free currency to fund its operations as the Constitution allows. It is time they start doing their job!

    • socalbeachdude

      There is no such thing a “debt free currency.” There is no debt involved with the Federal Reserve creation of money and all money has a TIME VALUE which is the interest paid on it to borrow by parties in an economy.

      • Herbert Dorsey

        Article 1 section 8 of the Constitution States “…The Congress has the power…To coin money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weghts and measures…” If congress coins or makes this money it is not borrowed money and therefore it is debt free. Presently when the Congress has a budget deficit it borrows money from the Fed. This money is is not debt free since it is borrowed and must be repaid. If Congress would authorise the U.S. Mint to print the currency needed to operate our government rather than borrowing it from the Fed., this money would not add to the national debt. Further, additional money could be ordered from the mint to pay down existing debt.

        • socalbeachdude

          You are apparently not aware that the Federal Reserve rebates more than 94% of its annual profits each year to the US Treasury and its taxpayers which now amounts to about a $92 billion a year rebate to the US Treasury which is about double the interest the US Treasury pays the Federal Reserve on the around $2.5 trillion of US Treasuries owned by the Federal Reserve.

          • Herbert Dorsey

            If this was really true what is the reason for the ever increasing national debt?

          • socalbeachdude

            What I stated is 100% true and correct.

            The issue why there is federal debt of around $20 trillion is very obvious. The US government -authorized by Congress and approved by the White House – is spending more than $1 trillion more per year than they are taking in via revenues. In fiscal 2016 that gap was more than $1.4 trillion and the federal debt has increased by nearly $10 trillion (doubling it from around $10 trillion) to nearly $20 trillion just over the past 10 years.

            There are only 2 ways to reduce government debt:

            1) Increase taxes and tariffs
            2) Cut federal government spending

            Both will be done with Donald Trump as President.

          • Herbert Dorsey

            Perhaps Trump could also remind Congress that if they are $ 1.4 or more over budget, they don’t have to borrow the money because they have the power to create it themselves.

          • socalbeachdude

            Absolutely false. Congress has no power whatsoever to create any money.

          • Bill

            Not sure that trumpet is aware of that fact.

          • socalbeachdude

            That is certainly not a fact but rather a totally false assertion. The Federal Reserve Act entirely precludes Congress from creating any money for Congress to ever do that again would be a total disaster for the value of the US dollar.

          • Bill

            ~sigh~ Congress creates dollars in the same way I create pizza. I don’t actually make it or buy the ingredients or put it in the oven, I simply call Dominos and authorize it’s creation. 30 min later my house has more pizza than it had before.

            When Congress passes a budget or appropriations bill and the president signs it, that is the authorization for the Treasury to make those payments which is typically done by simple keystrokes or by issuing a paper check to the recipient. Either way (keystrokes or check), those are instructions for the Fed to mark up the reserve account of the recipient bank and for the bank to mark up the checking account of the recipient. Tada, Congress “created” dollars.

          • socalbeachdude

            Totally false and utterly delusional assertions by you. The only way that the federal government gets money is via:

            1) tax revenues of all kinds
            2) borrowing by issuing US Treasuries

            The amount of funds that Congress authorizes to spend above and beyond revenue receipts of all kinds MUST BE BORROWED VIA ISSUANCE OF US TREASURIES (government debt).

            When the federal government reaches its Congress approved FEDERAL DEBT CEILING then it has no capacity to borrow externally and must use “extraordinary measures” (internally borrowing from pension and other funds) in order to even continue issuing checks. That debt limit will again go back into force in MARCH 2017 after having been suspended by Congress since October 2015.

            Not a single penny of the money spent by Congress is created by anyone and the fact it moves electronically has nothing whatsoever to do with the source of funds which must either be tax revenues (including tariffs, fines, income and payroll taxes, etc.) or must be borrowing through the issuance of US Treasuries which creates an obligation by the federal government to repay the holders of US Treasuries based on their specified maturities.

            That is why the federal government debt is now nearly $20 trillion and rising at a rate of around $1.4 trillion a year based on the shortage of $1.4 trillion in Fiscal 2016 ended September 30, 2016.

            That process of government spending comes from the US TREASURY BANK ACCOUNTS and has NOTHING WHATSOEVER to do with the Federal Reserve creating a single penny of money for Congress to spend.

          • Bill

            Herbert, if you want to learn more about how this actually works, you can always check out the deficit owls channel on youtube. Lots of good stuff there.

  • socalbeachdude

    Gold has nothing whatsoever to do with money.

    • Bill

      See, we do agree on some stuff.

    • Lennie Pike

      But it used to, and very soon will again due to the huge resistance there will be to the fraudulent cashless financial system.

      • socalbeachdude

        Only for a very brief 60 year period from 1873 until 1933 at which time the inane so-called “gold standard” was discarded entirely domestically after been deemed a pitifully failed experiment.

        • Lennie Pike

          So then you are in favor of a cashless system, and China and Russia are buying as much gold as they possibly can for no reason.

          • socalbeachdude

            Electronic money is the VERY BEST form of currency ever created and is the future of all currencies.

            Where do you get the totally false notions that Russia and China own much gold at all? The government of China only owns about 1,670 metric tonnes of gold which is less than 20% of the around 8,200 metric tonnes of gold owned by the US government and what China does own is WORTH LESS THAN $100 BILLION even at today’s preposterously elevated price of gold of around $1191 per ounce. That compares to China’s creation of more than $30 TRILLION of renminbi (RMB / yuan) over the past 10 year period during which time they have expanded their money supply from less than $3 trillion to now more than $34 trillion.

            As to Russia, the government of Russia only owns about 600 tonnes of gold which is a tiny little bit of that stuff of no significance whatsoever.

            The total gold owned by China is worth only about $100 billion and the total gold owned by Russia is worth about $60 billion for a grand total of $160 billion in a global economy of $72+ trillion. Their gold holdings are like a grain of sand on a beach.

  • socalbeachdude

    No, banks do not create deposits when they make loans. The proceeds from loans are SPENT INTO THE ECONOMY with the bank securing those loans with collateral that was purchased with that money. Yes, some of it comes back into deposits at the same and other banks. Bank deposits represent ACTUAL MONEY IN US DOLLARS in the United States.

    Most all reserve requirements in the US are now 10% except for smaller banks and apply to both demand and time deposits.

  • socalbeachdude

    The US government has no authority whatsoever to issue any money except coins through the US Mint. The sole authority to issue money in the US is delegated to the FEDERAL RESERVE as part of the Federal Reserve Act. The Federal Reserve is a quasi public/private central bank established by Congress which is owned by its member shareholders but subject to broad control by Congress and is not the “US federal government” at all or the “bank of the federal government.”

    The government most certainly CANNOT SPEND MONEY BY KEYSTROKE at all, but must raise its funds to spend through 1) taxes, or 2) borrowing by issuing US Treasuries.

    US Treasures are not “savings accounts” at all but rather are LOANS TO THE US GOVERNMENT MADE BY THE BONDHOLDERS OF THE US TREASURIES which have specific maturities ranging from 1 month to 30 years at which time they are paying in face value to the holder of those bonds.

    The Federal Reserve has nothing to do with paying back any US Treasuries and the check to do that are issued by the US Treasury itself and the funds to do that come from 1) taxes, and 2) the issuance of around $7 trillion a year in new US Treasuries to pay off Treasuries when they reach their maturity date.

    I would suggest you learn about US Treasuries (bills, bonds, notes and TIPS) at:

    http://www.TreasuryDirect.gov

    • nyc girl

      Wrong, very wrong. US paper cash doesn’t enter the economy to fund US
      government spending. The US government spends when it credits bank accounts with numbers. NUMBERS. Numbers which are controlled electronically. Via keystrokes.
      Paper US currency converts those numbers into physical objects. Bank customers drive the demand for cash. The Federal Reserve determines exactly how much cash is needed and then orders paper cash from the Bureau of Engraving and Printing.
      The Bureau manufactures it, then ships the cash directly to the twelve federal reserve banks.
      In other words, US paper currency is US government-issued numbers converted into a physical object that can buy stuff.
      These are the facts.

      • socalbeachdude

        Frankly, I have never seen such a laughably and preposterously simplistic and dead wrong “explanation” as to how money and banking and the economy work and if you submitted that as a test answer in a Money & Banking class you would not only get an “F” failing grade, but would be laughed out of class.

        Electronic money is no different at all than paper money in actual function. The only entity that can create money with keystrokes is the FEDERAL RESERVE and not the US government. The US government has no power whatsoever to create any money contrary to your totally lau8ghable assertions and fantasy “explanation.”

        The only way the US government credits any accounts with numbers is by spending in the general fund with MONEY RAISED BY TAX REVENUES (including rebates of 94% of the Federal Reserve profits) OR THROUGH BORROWING VIA US TREASURIES and not a single cent of that money spent by the federal government is ever “created” at all.

        As to actual paper currency there is only about $1.3 trillion of actual paper currency even in circulation as is confirmed by the Federal Reserve H.3 report. The US M2 which includes checking and savings accounts is now around $13 trillion which is the total money supply for the US with the broadest measuring being MZM which is around $14 trillion.

        The Federal Reserve monitors money supply matters, but certainly does not create paper money as you fantasize to fund any spending in the economy as money transactions in the US are now fully electronic and there is no need to any greater paper money supply.

        The total of all US currency (Federal Reserve Notes) in circulation is around $1.3 trillion based on the H.3 report from the Federal Reserve.

        The total M1 money supply in the US is only $3 trillion and only $1.3 trillion of that is printed currency. This is confirmed by the Federal Reserve H.3 report:

        http://www.federalreserve.gov/releases/h3/current/

    • Bill

      …and where do the dollars come from to pay those taxes and buy those bonds? …originally?

      • socalbeachdude

        Obviously from money in the economy that people are paid for the work they do and the products they sell as well as assets they realize capital gains on.

        • Bill

          That is just how dollars transfer ownership from one person to another. One persons spending is another’s income. Where do they come from?

          • socalbeachdude

            As to actual paper currency there is only about $1.3 trillion of actual paper currency even in circulation as is confirmed by the Federal Reserve H.3 report. The US M2 which includes checking and savings accounts is now around $13 trillion which is the total money supply for the US with the broadest measuring being MZM which is around $14 trillion.

            The Federal Reserve monitors money supply matters, but certainly does not create paper money to fund any spending in the economy as money transactions in the US are now fully electronic and there is no need to any greater paper money supply.

            The total of all US currency (Federal Reserve Notes) in circulation is around $1.3 trillion based on the H.3 report from the Federal Reserve.

            The total M1 money supply in the US is only $3 trillion and only $1.3 trillion of that is printed currency. This is confirmed by the Federal Reserve H.3 report:

            http://www.federalreserve.gov/releases/h3/current/

          • Bill

            Didn’t ask about paper money (only a physical representation of dollars anyway). Didn’t ask about the various definitions of money supply either.
            You said that money comes from people being paid to work or products being sold, again than is only a transfer of dollars from an employer to an employee or from a consumer to a store. How did the dollars get into the economy to start with?

          • socalbeachdude

            A very small US dollar currency base exists in the US with the US dollar which is known as M1 which is the narrowest definition of money. Those US dollars consisting of $1.3 trillion in paper currency and about $1.7 trillion in electronic currency were created out of thin air by the Federal Reserve and then offset over many years (100 years) by purchasing assets such as US Treasuries to balance with the liabilities (outstanding US dollars).

            From 1913 to 2008 the total balance sheet of the Federal Reserve grew to around $800 billion in total. From 2008 until 2014 the Federal Reserve created about $3.6 trillion of additional money from thin air which was deposited into th primary reserves and excess reserves accounts of the around 7,200 member banks of the Federal Reserve system with the 3 QE programs which purchased EXISTING ASSETS consisting of MBS instruments and U*S Treasuries from those ember banks. None of the additional $3.6 trillion ever entered the money supply, but has always remained inside the Federal Reserve.

            The expansion of money into the $13 trillion M2 and $14 trillion MZM measures occurred as as result of the MONEY MULTIPLIER EFFECT which occurs when money is loaned into the economy by the financial system and as it moves through the economy.

            The bottom line fact of the matter is that asset values at market prices of stocks, bonds, and real estate in the US are vastly larger than the $13 trillion M2 money supply in the US economy and it would be absolutely IMPOSSIBLE to cashier those values back out to US dollars, which is precisely why the US economy is in such a HUGE ASSET BUBBLE totally detached from the fundamental underlying monetary reality.

            Stocks are valued at more than $27 trillion, bonds are valued around $47 trillion, and real estate is valued at around $30 trillion, but there is no actual money of any sort to cashier those amounts back out into US dollars. And that is leaving aside the other assets in the US economy which total around $180 trillion including stocks bonds and real estate for which there is a maximum money supply of only around $13 trillion of M2 to support those valuations.

          • Bill

            You got. Created out of thin air. Not created by private enterprise. Before a gov can tax in it’s own currency, it must issue it’s own currency. Just like before a sporting event or concert can collect it’s own tickets, it must issue those tickets. Or before an arcade or subway system can collect tokens, it must issue those tokens.

            Stocks, bonds, and real estate, like everything else, have a value of what someone is willing to pay for them. The value of a share of stock is not the same as the value of all the stock in most cases. Also, there is really no way to “cash out”. Every stock purchase has a buyer and seller.

          • socalbeachdude

            What you are not comprehending is that the value of assets in the US VASTLY EXCEEDS THE MONEY SUPPLY which is why those assets are in the MOST EXTREME ASSET BUBBLES EVER SEEN IN THE HISTORY OF THE WORLD.

            Nearly all of that “value” – based on market prices – has not been created by the federal government or the Federal Reserve but by the US ECONOMY AND US MARKETS primarily in bonds, stocks, and real estate. And those market prices vastly exceed the underlying money supply which is as low as $3 trillion based on the narrowest definition of M1 and $13 trillion based on the broader definition of M2.

            Prices in markets are SET ON MARGIN which means the price of the last trades affect the total valuation of stocks, for instance (market capitalization) but the stocks sold at margin are in fact just a very small amount of the outstanding stocks in the markets. The same is true of real estate, and bonds where price is inverse to yields with the highest prices setting the lowest yields (Interest rates).

            What people are paying on margin for those assets SIMPLY CANNOT BE CASHIERED OUT AT ALL based on the money supply numbers for the US which are a tiny amount ($13 trillion of M2) relative to the asset valuations (around $180 trillion) of all US assets.

            The primary way that money supply was increased historically with the Federal Reserve was through TOMO and POMO (Temporary and Permanent Open Market Operations) tied directly to US Treasuries issued by the federal government through the US Treasury. That is still true to some extent, but that process has been rendered practically useless as a result of the vast expansion of federal debt and the 3 QE programs run by the Federal Reserve from 2008 to 2014 when they were ended.

          • Bill

            Are you suggesting that there should be an equivalent amount of dollars in the money supply to the value all assets in the country?

          • socalbeachdude

            It would be highly irresponsible for the Federal Reserve to expand the money supply to the level of asset valuations currently established by the markets which is around $180 trillion, so, no I am not suggesting that there should be an equivalent amount of dollars in the money supply to the value of all assets in the US, but it is rather disconcerting – if not alarming – that the $13 trillion amount of the M2 money supply is equivalent to only about 7% of the value of US assets.

            It would be a lot more reassuring if the amount of money were at least equal to the 10% reserve requirement of customer deposits in banks and a lot more reassuring if it was equivalent to 20% or so of the market value of US assets. If so, the asset bubbles would be – or at least appear to be – significantly less extreme.

          • Bill

            Why do you find this alarming? How would you propose that they money supply be expanded?

          • socalbeachdude

            How do you find the fact that the total currency is only about 7% of the market valuation of assets in the United States?

          • Bill

            I find it somewhat irrelevant which is why I asked why you think it alarming. You also missed my second question.

          • socalbeachdude

            How is the fact that the total money supply relative to assets in the US being at only 7% of assets in any way “irrelevant?” What on earth do you think pays for assets and is used to cashier out assets back into US dollars but for US dollars? It is really the very same issue as to why banks are required to maintain 10% of customer deposits in liquid cash reserves.

            It is highly relevant to the valuation set by the markets on assets just as is the fact that there is more than $64 trillion of actual outstanding debt in the US which is is at 492% of the actual M2 money supply.

            As to how the money supply can and should be expanded that is a matter for the Board Of Governors and FOMC at the Federal Reserve to determine.

          • Bill

            It may not be irrelevant. This isn’t a statistic I have spend any time thinking about TBH. I am not following your logic on why you think it is important. If I have dollars, I can buy whatever is for sale. If I buy stock from you, I now have stock and you now have $. When there are not enough dollars active in the economy, there is lower demand. I personally, think unemployment is a good gauge of whether or not we have enough $ active in the economy. Since we are not at full employment, then I agree that more dollars should be in the economy.

            As far as adding $ to the economy, there are a couple of options. Lower fed taxes, taking less out or increase fed spending, putting more in.

          • socalbeachdude

            Your views are totally myopic. What matters is the TOTALLY AGGREGATE OF DOLLARS in the economy, n0t your own personal little bit of dollars which is utterly irrelevant in the big picture.

            The US government is running a $1.4 trillion a year deficit and the federal debt is now nearly $20 trillion. TAXES MUST BE INCREASED – obviously – to deal with those issues and Donald Trump is already moving to increase taxes substantially with foreign tariffs. Donald is also working to DECREASE FEDERAL SPENDING and that is essential to lower the deficit and eliminate it so that the debt can finally start to be reduced.

          • Babycatcher

            Yes. If we handled our personal finances the way fedgov does, we would be arrested and jailed for fraud.

          • Bill

            Welcome to the discussion Babycatcher. (OB?)
            You can actually handle your finances the way fedgov does if you can get everyone to accept your own sovereign currency. Call them Babybucks maybe? But, if you are working in dollars, you are correct, you would be arrested for counterfeiting as you are not authorized to create (nor tax for that matter) US dollars.

            Fed budgets are not household budgets. There are different mechanics at play for the currency ISSUER than for the currency USER.

          • Bill

            It seems the link I gave you regarding the money multiplier myth is still pending. Here is the title if you want to google it on your own.
            Repeat After Me: Banks Cannot And Do Not “Lend Out” Reserves
            it is written by the chief global economist for S&P

          • socalbeachdude

            Any time that money is loaned out there is a MONEY MULTIPLIER EFFECT and that increases with the VELOCITY OF MONEY in an economy. Over the past 8 years the velocity of money (the speed at which money moves through an economy) has reached record low levels.

            Banks cannot lend out PRIMARY RESERVES which are now set at around 10% of customer deposits at those banks. Banks can lend out EXCESS RESERVES as those reserves are not required at all to be maintained in reserve as the name EXCESS should clearly convey.

            The fact of the matter is that the current outstanding loans to customer deposits at the US banks is at a record low 67% which means that money is simply not moving into the economy of the US through the normal channels of bank lending which is a key reason why the $18 trillion a year US economy is not growing by very much at all these days and why the money supply is not increasing by much these days as a result of the money multiplier effect.

  • Pig Farmer Bill

    Been hearing gloom and doom way to long. I’m prepped and ready for anything. But I think the nation is going to grow well. Nothing is going to stop that. The money we owe does not exist right? Trump is going to help this nation.

    • Bill

      It exists, but it is more like a piggy bank than a credit card.

  • socalbeachdude

    U.S. Investors Are Funding The Biggest Share Of The National Debt Since 2003. That’s Not Great News

    Investors in the U.S. are funding the greatest share of America’s government debt than at any time since December 2003. It remains an open question among bond market observers whether should we be cheered by U.S. self-reliance or concerned that this shift is leading investors toward low-yielding unproductive assets.

    To think through the question, it’s useful to look back. In 2003, the economy was beginning to pick up steam after a sluggish “jobless recovery” which had led the Federal Reserve to cut its target rate to a then-record low of 1%. Overseas holdings of Treasuries were 42.5% of the $3.6 trillion public float. (The latest data shows they’re 42.7% of $13.9 trillion in marketable U.S. government debt.)

    http://www.forbes.com/sites/danielkruger/2017/01/23/u-s-investors-are-funding-the-biggest-share-of-the-national-debt-since-2003-thats-not-great-news/#579e19441441

  • landofaaahs

    Now what if the federal reserve was secretly buying up all that debt and taking away any leverage a foreign country might have over us.

  • john g

    Henny Penny called. She got it wrong.

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