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90 Days: Treasury Says Debt Has Been Frozen at $18,112,975,000,000

Posted by $ Your_Name_Goes_Here 9 years, 5 months ago to Government
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Can someone economically literate please help us understand how this is possible? Our Dear Leader has doubled the total debt of all of his predecessors combined (yes, I'm giving the $1T under GW Bush to Obama as Obama asked him to authorize it before taking office), and while tax receipts are up we are still running a deficit.

Is the Treasury or the Fed playing games here?
SOURCE URL: http://cnsnews.com/news/article/terence-p-jeffrey/90-days-treasury-says-debt-has-been-frozen-18112975000000


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  • Posted by LarryHeart 9 years, 5 months ago
    "the Treasury redeems maturing debt held by the public and issues new debt held by the public"

    The Treasury is redeeming higher interest bonds with lower interest bonds.

    Who buys the lower interest bonds? The FED. The government spends the money to keep afloat. Then the FED asks the Treasury to print up Federal Reserve Notes in the amount of the bonds purchased, and lends them to the banks at no interest, which the banks release as loans up to 10 times the amount of the original bond (Only required to keep a 10% reserve) which dilutes the value of our currency, effectively stealing cents from every dollar holder to fund the Fed's purchase and garner interest on loans for the bank. Those cents add up to the amount you would have invested in savings accounts if interest rates were governed by the market.

    The banks get a free loan of your savings to them, they pay you no interest and never give back the money. Theft.
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    • Posted by $ 9 years, 5 months ago
      The part I still don't understand is why the money supply (M1) is not materially changing if the Federal Treasury is printing more legal tender to the magnitude required to cover this up. This presumes that the reporting of M1 is accurate I suppose, but something smells to high heaven if our Dear Leader's administration is so overtly cooking the books... Not that it would surprise me.

      http://www.federalreserve.gov/releases/h...
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      • Posted by LarryHeart 9 years, 5 months ago
        You need to look at M3 which includes some of investments in wall street. The rest of investments, bysiness and personal Assets like your house, property, goods etc are not included in the money supply.
        That's where the currency inflation hides.
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        • Posted by $ 9 years, 5 months ago
          Larry I think you are onto it... Shame on me, I knew about M1 and M2, but didn't realize there was an M3 until your comment. It seems to be the measure of what the "big boys" are doing with currency. Conveniently, this metric is no longer published.
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      • Posted by $ MichaelAarethun 9 years, 5 months ago
        Because the value of the money falls as the money supply is inflated. Inflation, Devaluation and at some point debt repudiation.

        Crystal Ball - Barring Obeyme going postal there will be no overt tax increases in the run up to the street theater election especially when the best writers of Hollywood are having trouble building a legacy out of an 18 trillion dollar debt.

        Crystal Ball - He will cancel his portion by executive order as part of the cycle. One NEW dollar bill wil equal one dime. One NEW 100 dollar bill wil lequal one old ten dollar bill. Worked for the French.

        Someone; will finally ask what is the debt as a percentage of NET Domestic Product.

        The Treasury Department will be arrested as domestic terrorists and replaced by Goldman Sachs.

        On a serious note and AFTER the election with legacy assured I see much hand wringing and then a combination of increased fees and raising the retirement age for full benefits, more debt repudiation etc. etc. etc. along with serious attempts at the following.

        Invoke Benita Pelosillyni's idea of adding an overall Value Subtracted Tax on top of all the embedded Value Subtracted taxes in the production chain of anything and everything. She calls it Value Added Tax or VAT but I fail to see any increase in value just an increase in price. They will stoop to to their smarmy definitions.

        I see a five percent minimum on that idea and no more than a 55% max on the top income tax brackets with the usual pay nothings remaining at zero and getting a refund for their trouble.

        Federal tax on marijuana.

        See how many whoppers you can come up with? The last three were serious serous the first four were fundamentally possibilities in a notional sense.
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        • Posted by $ 9 years, 5 months ago
          The Treasury reports the money supply in outstanding currency regardless of its "value". If the Treasury prints an additional dollar, M1 should increase by a dollar.
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          • Posted by $ MichaelAarethun 9 years, 5 months ago
            That is a mystery. Do they go down one if money is turned in and destroyed but not replaced? I really don't know but it is of interest. I remember the Susan B. Anthony's are reportedly in some vault and still carried on the books maybe she'll have better luck on the new ten dollar bills. Another quirk the ounces of gold the US has is valued far below market value. (wouldn't do any good to make it par it's still not enough to make dent in the debt or effect the dollars credit rating) but the why of it is another mystery.
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            • Posted by $ 9 years, 5 months ago
              In short, yes. When currency is taken out of circulation (e.g. worn out bills, damaged bills, etc) it is subtracted from the money supply.

              Don't believe the Susan B. Anthony urban legend. Go to your local bank and you can get them all day long.
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              • Posted by $ MichaelAarethun 9 years, 5 months ago
                But what would you do with them?
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                • Posted by $ 9 years, 5 months ago
                  Two words: Vending Machines.

                  In all seriousness, I'm not sure why we have such an issue with dollar coins. Canadians have both a $2 and $1 coin and it works fine. Production of metal coins is less expensive than producing paper, so there is a financial incentive in doing so as well.
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                  • Posted by Madanthonywayne 9 years, 5 months ago
                    You've got that exactly backwards. Metal coins, being metal, of course cost more to produce than paper. The savings comes due to the fact that coins generally last longer. However, the U.S. dollar is made to be so durable that it lasts much longer than the paper money of most countries; so we actually save money by sticking with paper dollar bills
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  • Posted by $ CBJ 9 years, 5 months ago
    Is there a generally accepted Objectivist viewpoint on whether taxpayers have a moral obligation to pay off debts incurred by their government? More specifically, if a group of Objectivists were somehow elected to run the country, what would be their proper course of action regarding the existing national debt?
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    • Posted by $ MichaelAarethun 9 years, 4 months ago
      Yes. Government should have the moral responsibility to repay the money the borrowed from the taxpayer and the decency to refund the money the stole from the taxpayer. But they possess neither moral values nor decency.
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  • Posted by $ MichaelAarethun 9 years, 5 months ago
    Of course they are playing games. It's another way of saying inflate, devalue and repudiate the debt meaning refuse to acknowledge the debt which means if you invested in T Bills or something more near and dear like a retirement fund you are so royally screwed.

    Still want to vote for the Government Party? Either half? Still like the greater or lesser of evils?

    TANSTAAFL! Someone has to pay and i this system it's retirees and old folks.
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  • Posted by $ jbrenner 9 years, 5 months ago
    Does A = A anymore? Not if you believe the debt clock. When I see this story about the debt clock being stopped, I can't help but think of Francisco D'Anconia's banner "Brother, You Asked For It!"
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  • Posted by $ sjatkins 9 years, 5 months ago
    I am not fully aware on this subject. What does "the portion of the federal debt that is subject to a legal limit.." really mean? What part of the federal debt is NOT subject to a legal limit and how big is that and how fast is it growing?
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    • Posted by $ MichaelAarethun 9 years, 5 months ago
      unless it's the part the government routinely repudiates (refuses to honor) I don't know but hopefully some of our more financially trained posters can help out. A good question! Thumbs up to that.
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  • Posted by wiggys 9 years, 5 months ago
    Of course they are. To use a not to long ago comment about another subject but it fits here "what difference does it make"!
    Life will go on regardless of the amount of debt that our wonderful government chooses to incur.
    welcome to the new america!
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  • Posted by gcarl615 9 years, 5 months ago
    If the accountant decide to move all deficit spending and subsequent bond sales to some mysterious slush funds or directly to the Feds books then it won't show up. Mobsters have used this type of fraudulent accounting for generations. The only difference between the Mafia and the looters in Washington is that the looters got elected.
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  • Posted by $ MichaelAarethun 9 years, 5 months ago
    One possibility is zero interest rate T Bills. People parking their money for three weeks or so while waiting somewhere else to develop. Why? If the bank folds it's $250,000.00 maximum. If the inflation rate goes up and you lose 30% buying power you still have 70% of the total. For people like Ted Turner, George Soros, and the other heavy hitters it's preferable to lose some than all. As was explained to me the government only needs to crank up the printing press or int his case issue a pay off equal to the amount of the deposit electronically. But they got to count the value for the time period at one hundred percent. When you think about it it makes sense. The other way is to buy foreign currency with the money physically transferred offshore. If it's tax paid or it's certain kinds of investments theres loopholes that allow this. For example in 2006 a 100 thousand dollar purchase of Australian currency would give you. $125,000 Australian. After the US went bankrupt in 2008 (I call it what it is) Australian went par. At some point buy back to US Currency $125,000 US but keep it in the Australian account. This does two things besides keep it safe from Sam. It covers the 30% loss of buying power or whatever it was.So there's a lot less loss. The account itself stays the same though since a. any profit is subject to Aussie tax and then US tax. no profit no tax. It used to be a real estate swap loophole but it still I think can be just a currency swap of sorts. I get a bit fuzzy on this part. Your money is in an Australian Account and is used as collateral for a loan which is invested in something profitable. Let's suppose for argument a chain of espresso shop franchises. Usually major cash cows. Pay off the loan the collateral is freed up at zero percent earnings. but you own a number of store fronts espresso shops. That is handled separately by their version of an LLC. At present the Oz dollar is once again arouond eighty cents us. the account shows one hundred thousand US Dollars. No pain no foul. if you wish to move it again. But there is a position in the other investment.and an additional $25,000 to put into another franchise. Again shoe no profit. just keep purchasing franchises until there is enough the Australian bite doesn't hurt. if you are so inclined and made enough purchase instant citizenship. Available in most countries for around a million dollars. If not the offshore LLC is churning out investable income a re-invested. in whatever. That's the bare bones of it and the rules change to suit the heavy hitters but if you can find out what loophole is opening next which any friend of any congressional can do... etc. I didn't do a good job on this but for those who understand this sort of finance including the sweetheart deals with congress - like retirement homes in Ireland have at it.

    Remember what they say and what it really means is always two different things. No homeowner lost his house from the housing crash only home buyers and those with big time mortgages. Government never shuts down no matter how much they threaten it's a big time fib. they never cut spending only the amount requested for the next budget. Figures can lie and liars can figure and the gullible pay the freight.
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  • Posted by InfamousEric 9 years, 5 months ago
    I'm not an economist, but I think it has to do with the fact that the inflation rate is higher than the debt interest.

    So the value of the owed dollars, is dropping faster than the debt is being added to.
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