US Finances and its Consequences for Social Policy and Military Spending

[Strannik]

US Debt: the History (currently:  $31.4 trillions)

[Strannik]

Debt to GDP (useful  for long term analysis)

[Strannik]

Debt Ownership

[Strannik]

Debt Interest Payments: History

[Strannik]

Debt Interest Payments: Projections

INTEREST COSTS WILL EXCEED OTHER IMPORTANT SPENDING PROGRAMS WITHIN THE NEXT 10 YEARS

By 2032, interest costs will triple to more than $3 billion per day and to at least $9,400 per household, on average, according to the foundation. They are on track to become the largest federal budget item, surpassing Social Security and Medicare by the middle of the century.

[FALightFighter]

My war college visit in DC was to the CBO. I'll have to dig up their projections from 2017 and see how well they have born out.

It seems that your last chart shows a significant issue in projections. What changed in the last 9 months to justify such a change in the outcome? I know that small tweaks in assumptions can have large results, but that seems like an issue to me. Maybe I'm missing something.

[Strannik]

And the next three years can be even more fun than the previous year and a half.

 

 

[Strannik]

3 minutes ago, FALightFighter said:

My war college visit in DC was to the CBO. I'll have to dig up their projections from 2017 and see how well they have born out.

It seems that your last chart shows a significant issue in projections. What changed in the last 9 months to justify such a change in the outcome? I know that small tweaks in assumptions can have large results, but that seems like an issue to me. Maybe I'm missing something.

Guessing the projections followed the inflation trend estimates:

As for earlier pronouncements by Yellen and Powell that the U.S. inflation problem was transitory, Yellen allowed, “Both of us could have used a better word than transitory. There's no question that we have huge inflation pressures. Inflation is really our top economic problem at this point.”Jun 7, 2022

Edited April 29, 2023 by Strannik

[Strannik]

U.S. on Track to Add $19 Trillion in New Debt Over 10 Years

https://www.nytimes.com/2023/02/15/business/national-debt-biden.html

[Strannik]

US 2022 Budget and it's Sources

[Strannik]

Servicing Debt is projected to be the third biggest item within 10 yrs (I think that's the best case scenario)

 

[Strannik]

Republicans are attempting to use the regular debt ceiling expansion event as a leverage to push for 

the 10yr limit of the budget's discretionary spending growth: https://www.crfb.org/blogs/archive-whats-limit-save-grow-act

https://www.cbo.gov/publication/59102

 

[Strannik]

(Why the U.S. banking system is near collapse)

 

In August of 1971, President Nixon ended the gold standard, which basically meant we needed a soft default, because having a gold standard limits the amount of currency a sovereign may emit into existence. Then no one wanted to hold dollars.   

Then Henry Kissinger made the petrodollar deal with Saudi Arabia which all oil exports would be invoiced in U.S. dollars.

The dollar got a much-needed lift.    Where the world prior to the petrodollar wanted to hold no dollars, and then in August of 1973, everyone was required to hold dollars.   Now that all global oil trade will be invoiced in renminbi, and dollars will need to be exchanged for yuan currency to acquire oil on the global market.  

Who then sets the exchange rate of dollars to yuan?  

On June 2nd, ’23 after the debt ceiling was lifted, the Treasury through the ON RRP (reverse repo) emitted over $1 trillion dollars into the U.S. economy in 35 days. (SEE CHART BELOW)

The U.S. Treasury is spending money from the reverse repo to finance government expenditures. Janet Yellen is draining all the liquidity from the ON RRP, and the MBS held on the Federal Reserve balance sheet are now in deep negative equity (due to higher interest rates to tame inflation).

What happens when the ON RRP goes to zero (is drained by Yellen) and the banks have no “good” collateral on their (asset side) balance sheet to hedge against all the banks liabilities that were printed out of thin air, because interest rates rising reflects all financial assets including the equity markets are in deep (fill in the blank)?  

The Fed is using the BTFP to lift all the collateral in deep negative equity from the asset side of the bank balance sheet and injecting dollars where SOFR will drive interest rates even higher.  

The banks have no collateral but dollars at a time when bank credit is massively contracting, where they can no longer draw an interest rate compensation from the ON RRP that is actively being drained.

Edited July 13, 2023 by Strannik

[Strannik]

What Xi told the gulf alliance (their leaders):"

We will be invoicing everything (your oil) in renminbi.

You will have surpluses with us, and we will have deficits with you.

We will have surpluses with you and you will have deficits with us.

How we resolve those differences will be through an interstate means. (Coordinated monetary sovereign bond deflation).

What this implies is that you will hold renminbi in our bond market or you will have the means to convert that into gold. 

 

 

 

[Strannik]

US Treasuries 13 mon external ownership dynamic:

Net: -250 blns

 

Edited July 21, 2023 by Strannik

[futon]

The amount held by Japan last year in Jan, Feb 2022 of 1.3 trillion is a high. Before Jan, Feb 2023, the amount was not coming from 1.4 or 1.5 trillion.

Beforehand it was lower like 1.16 trillion, for example in 2019..

https://jp.reuters.com/article/usa-treasury-securities/update-1-japan-private-holdings-of-treasuries-continue-to-rise-in-yield-chase-data-idUKL1N28Q1HC

Or 1.13 trillion in late 2016..

https://www.bloomberg.com/news/articles/2016-12-15/japan-overtakes-china-as-largest-holder-of-u-s-treasuries#xj4y7vzkg

 

Maybe there's a convinently accessible image showing past 20 years of Japan's holdings of US treasuries somewhere. 

But if my memory serves well, the holdings were never higher than 1.40 trillion.

So it's a drop of 200 billion from an uncommon high to a typical average level. 

 

 

China on the otherhand has gone notebly lower to the current 850 billion from the once normal 1.1-1.2 trillion. 

https://ticdata.treasury.gov/Publish/mfh.txt

Edited July 22, 2023 by futon

[Strannik]

Past trends are not applicable anymore.

[Strannik]

Did you know this about US banking system?

 

 

[Josh]

3 minutes ago, Strannik said:

Did you know this about US banking system?

 

 

It would be interesting to know China’s numbers, were they accessible.

Edited July 22, 2023 by Josh

[Strannik]

1 minute ago, Josh said:

It would be interesting to know China’s numbers, were they accessible.

Cash Reserve Ratio in China remained unchanged at 10.75 percent in July

[Strannik]

The next mortgage crisis?

 

 

[rmgill]

On 7/21/2023 at 11:34 PM, Strannik said:

Did you know this about US banking system?

 

 

Wait, I've seen this movie. 

Edited July 24, 2023 by rmgill

[Strannik]

 

[Josh]

37 minutes ago, Strannik said:

 

Americans can always save money by vacationing in Russia after the war. The exchange rate is a ruble to a penny right now.

Edited July 24, 2023 by Josh

[Strannik]

6 hours ago, Josh said:

Americans can always save money by vacationing in Russia after the war. The exchange rate is a ruble to a penny right now.

Right. As soon as they able to save up for a ticket.

40% of Americans never traveled internationally mostly due to affordability.