US Gross National Debt Jumps $723 billion in 12 Weeks, Yellen “Very Worried about Sustainability of US Debt Trajectory”

But only a few lost souls in Congress care.

Even as lawmakers are trying to cobble together a tax-cut bill that would cut revenues by $1.5 trillion over ten years, the gross national debt has spiked $723 billion over the past 12 weeks since Congress suspended the “debt ceiling.” It just hit $20.57 trillion, or 105% of GDP.

Over the past six years, since November 2011, the gross national debt has surged nearly 40%, or by $5.8 trillion. Back in 2011, gross national debt amounted to 95% of GDP. Before the Financial Crisis, it was at 63% of GDP. There are no signs that the relentless rise in the debt is slowing down. On the contrary – the tax cuts are going to steepen the curve:

In the chart above, note the last three debt-ceiling fights – the flat lines in 2013, 2015, and 2017, followed each time by an enormous spike when the debt ceiling was lifted or suspended, and when the “extraordinary measures” with which the Treasury keeps the government afloat were reversed.

And the Fed is getting increasingly nervous about the “sustainability” of this debt.

There are only a few lawmakers left in Congress that have a sense of fiscal responsibility. One of the lost souls is Senator Bob Corker, a Republican from Tennessee, who, to address his anxieties about the deficit and the debt, wants to add a provision to the tax-cut bill that would raise taxes automatically if the economy doesn’t hit certain growth targets in the future. This “trigger” is designed to slow by a smidgen the relentless rise of the national debt. He has come under withering criticism for it from Republican lawmakers and conservative lobbying groups.

Fitch Ratings believes that “under a realistic scenario of tax cuts and macro conditions,” the US gross national debt will balloon to 120% of GDP by 2027. The way things are going right now, that is likely an impossibly rosy scenario.

So on Wednesday, Fed Chair Janet Yellen was telling Congress about the economy, its challenges, and the “disappointingly slow” recovery since the recession. And when she was asked about this “trigger,” she said that it was up to Congress to decide how to confront the fiscal outlook, but added that she was worried about the “sustainability of the US debt trajectory”:

“The idea of triggers is motivated by the concern that some have over the picture we have of debt sustainability now and into the future, and I would simply say I am very worried about the sustainability of the US debt trajectory.”

The future of the deficit and the debt trajectory “should be a very significant concern,” she said.

On Monday, Dallas Fed President Robert Kaplan had chimed in about the unsustainability of the trajectory of the national debt. Further complicating his assessment: In addition to the $25.57 trillion in outright debt, there are also the “unfunded entitlements” with a present value of “approximately $49 trillion,” he said. And he added:

“In my view, the projected path of US government debt to GDP is unlikely to be sustainable – and has been made to appear more manageable due to today’s historically low interest rates.”

Ah yes, the admission: The Fed’s interest rate policy has made the US debt only “appear more manageable” because it brought down the cost of servicing this debt and removed an incentive for Congress to do anything about it. But when rates are rising as they are, at the same time when the debt is ballooning as it is, this debt will start imposing an ever larger burden on the budget, and it will become less and less manageable.

So here you have it. The trajectory of US government debt is “unsustainable,” according to Yellen, Kaplan, and many others. In fact, just about everyone acknowledges this except for the only people that can actually do something about it: the lawmakers in Congress. They don’t even know the meaning of “unsustainable.” It’s not part of their vocabulary. It has been replaced by “fund raising” and “campaign contributions.” And they’re happier than ever to run up the debt, no holds barred.

The Fed is increasingly pointing at “excesses,” “distortions,” and “imbalances” in the markets. Read… Stock Market Lazes Happily on a Powerful Time Bomb, and the Fed Begins to Worry




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  154 comments for “US Gross National Debt Jumps $723 billion in 12 Weeks, Yellen “Very Worried about Sustainability of US Debt Trajectory”

  1. Andrew
    Nov 30, 2017 at 1:03 am

    What about the 20+ Trillion missing after the financial audit of 2 x agencies. They have stolen the money and no congressional oversight

    The tax payer is on the hook for the debt but entitled to no information from the Vampire squid Deep state

    • retired
      Nov 30, 2017 at 8:35 am

      What happens if we are bankrupted but the world doesn’t know it? What if the exporters of the world have no choice.
      We have been trading on vapors instead of real money since 1971 when President Nixon ended the gold system!
      If the global economy is primarily based on the production, export & retail sale of consumer goods & the USA is the last major consumer market still standing after the EU tanks,….where will the exporting nations find alternate mass markets to replace the American markets?
      If the Dollar is no longer acceptable,….what other nation’s currency will they accept for their exports?
      We are beyond the financial frontier in unexplored territory & most of the old financial rules are no longer valid!

      • van_down_by_river
        Nov 30, 2017 at 11:16 am

        New dollar
        New Euro
        New Yen

        Everything will soon be new and improved and central banks will issue their new and improved currencies (now with block chain!!!) but the debt will have accrued in old worthless currencies – default through inflation – problem solved. The Fiat money system is perfect because everyone (except savers) get everything for free – more tanks, more missiles, more infrastructure, more entitlements, more bureaucrats, lower taxes – all of these wonderful things we receive for free thanks to the magic of Fiat currency.

        As Dick Cheney pointed out: “Reagan proved that deficits don’t matter”. After all why care about the national debt when the Fed will provide a bottomless supply of dollars to pay off any debt. I wonder, does Yellen really believe the government would have added $10 trillion to the debt if the Fed had not guaranteed cheap funding with almost zero interest rates?

      • RagnarD
        Nov 30, 2017 at 1:51 pm

        Who will accept their exports? The folks who have been accumulating gold/precious metals/hard assets?
        China, India(???)

        Luke Gromen gave a great interview on China’s attempt to create the petro-yuan, to mitigate against their dollar reserves being inflated away when the USA attempts to make good on its $200T of unfunded liabilities.

        China likely views its dollar reserves in terms of oil, grain and hard asset purchasing power. Thus they need to break the tie the USD which they have no control over printing.

        Its available as a podcast on MacroVoices, too.

        https://www.youtube.com/watch?v=cOQ_RRO8yq8

        • sidney weiner
          Nov 30, 2017 at 2:45 pm

          These nations ,China & India, have very small parts of their populations that can be classified as modern middle class consumers.
          India may have 70 or 80 million people inside of the monetary system who buy commercial consumer products.
          Sounds like a lot of potential customers for domestic consumer products,….Until it is shown that they are only 8% of the total population,
          the other 92% of the Indian population has very little money to spend on anything other then the basics.The same can be said of China,Mexico,Brasil ,Egypt,Pakistan & many other nations with large populations with small consumer markets!
          Without massive consumerism they can’t survive unless they invent a new global economic model & that can’t be done on a fly!

        • RagnarD
          Nov 30, 2017 at 8:22 pm

          @sidney
          Yeah, i don’t disagree. I Been to Brazil, China, and India. I know most Americans opinions of these places are way overestimated as to their living standards/purchasing power, and ability to compete with the USA economically any time soon.

          My comment was more simply regarding the fact that that’s with the gold is, in China and India.

          And if that’s with the gold is, maybe that’s where the purchasing power will come in the future, if the USD is Reduced to toliet paper.

          But, yeah, Having been to India, that seems a flight of fancy, I know

        • d
          Nov 30, 2017 at 9:16 pm

          Indians use gold, like Americans used gold and then diamonds (after FDR made it illegal to hold gold) in the 30’s for the same reasons.

          They dont trust the State Fiat..

        • intosh
          Nov 30, 2017 at 11:37 pm

          Alibaba’s singles shopping day event this year generated $25B in sales. One single website, one single day. How much is total sales during this year’s Black Friday?

        • Dec 4, 2017 at 12:07 am

          @intosh
          The Alibaba singles day sales of $25bn is a joke. Several analysts have raised red flags over Alibaba’s overall revenues, especially as they refuse to provide any granularity to figures. Chinese Enron? Wouldn’t surprise me, that’s for sure.

        • intosh
          Dec 5, 2017 at 10:39 am

          @TheLege

          Many financial analysts are a joke. They have a stakes in the game, directly or indirectly.

          Many companies do not provide revenue granularity: Apple, Microsoft, Amazon, should I go on? Enron 1, 2 and 3?

    • Tom
      Nov 30, 2017 at 8:49 am

      Ugh:looks like big trouble with the old wampum

    • Oliver
      Nov 30, 2017 at 1:35 pm

      In addition, Yellen expressed concern about the Federal Reserve´s ability to monetize debt as quickly as it is being created.

    • mike
      Dec 5, 2017 at 7:05 pm

      Yellen is like the captain of the Titanic, who finally admits to a problem with the huge hole in the side of the ship as it slips beneath the waves. Clearly, she is only reluctantly admitting that the hole is a problem, now, to preserve some credibility. The difference is that she and her cronies will, like all rats, be far away when the U.S ship of state sinks.

      She and her cronies have managed to funnel many billions, maybe even trillions, of U.S. funds to the bankster cartel represented as the “Federal” reserve via ultra low interest rate loans to insolvent banks and commissions on QE treasury purchases, and now, the U.S. taxpayer is on the hook. I see no alternative but for the U.S. to default on its debt: sooner or later, the U.S. government will not be able to pay its current liabilities while still paying for the entitlements, defense costs, etc.

      AFTER THE INEVITABLE COLLAPSE AND DEFAULT: We should amend the constitution to allow recovery from the bankster crooks by congressional vote through bills of attainder, designate them enemy combatants to use all of the espionage tools that they created against them, and then hunt them wherever they hide in the world to recover the funds that they have taken from the U.S. government by clever schemes. I am amazed that Americans, who used to just hang horse thieves and bank robbers, without trial, are letting these banksters get away with financial murder and the effective theft of billions or trillions of dollars from the U.S.

  2. Auld Kodjer
    Nov 30, 2017 at 1:04 am

    And finally, monsieur, a wafer-thin mint.

    • Hg
      Dec 2, 2017 at 12:02 am

      Garçon, a bucket for Monsieur Creosote!

  3. lenert
    Nov 30, 2017 at 1:08 am

    When the government doesn’t tax back everything it spends, the difference piles up on balance sheets.

    We’re used to looking at it from the government’s perspective, so we label it a “deficit.”

    But we could just as easily view it from IBM or Apple’s perspective and call it a “surplus.”

    The debt isn’t evidence of overspending.

    Evidence of overspending is inflation – like a $430M painting or a $20M seat on the supreme court.

    • TroyMcClure
      Nov 30, 2017 at 10:17 am

      Finally some sensible commentary on sovereign debt.

      • Wolfbay
        Nov 30, 2017 at 2:59 pm

        Add in Steve Keen who believes private and corporate debt are even more of a problem and Lawrence Kotlikoff who has realistically run the unfunded liability numbers and no wonder the public is in denial. Politicians don’t dare mention the situation.

        • Nick Kelly
          Nov 30, 2017 at 4:23 pm

          Unfunded liability is overwhelmingly public not private. So if you aren’t worried about the 20+ trillion because it’s public and can be turned into a asset by some creative bookkeeping ( an Enron specialty) but you are worried about unfunded liability. that looks like a contradiction.

          If you want to inhabit that universe, there is no need to worry at all about unfunded liability. It can just be added to the national debt, and cease to be a concern.

          This idea that sovereign debt is somehow benign, qualitatively different than private debt, is a road that has been trod many times for many centuries. The usual condition of kings was bankrupt or near it, because only gold and silver were money.

          This problem was solved by convicted murderer, jail breaker, gambler and financier John Law who introduced paper money to France in the 18th century.
          This enabled sovereign debt to expand without restraint because it was sovereign.

          After a fantastic ride, which near the end saw the King ban gold and silver coins, the whole scheme collapsed.
          It was a key cause of the French Revolution.

        • d
          Nov 30, 2017 at 6:10 pm

          “After a fantastic ride, which near the end saw the King ban gold and silver coins, the whole scheme collapsed.
          It was a key cause of the French Revolution”

          And has been at the root of every revolt and civil war in china since they started money printing thousands of years ago.

          The corruption Nepotism and money printing of the CCP makes the previous, nationalist, emperors and mandarins look like baby’s in nappies.

        • John M
          Nov 30, 2017 at 11:09 pm

          Wolfbay

          I’m not in “Da Nile”. I took my SS pension as soon as possible. It won’t be there for folks who are squeaking by on it right now. Give it 18 months & the $1500/month won’t buy anything..

  4. Realist
    Nov 30, 2017 at 1:18 am

    Soon there will probably be 2 options to somehow fix this mess, the road Weimar did choose or a major war to paper things over …. Regardless of the of the option chosen, Joe Sixpack is going to be thrown under the bus. Say good bye to the hope of a decent retirement for the plebs, kiss the middle class good bye etc. Say goodbye to the hope for decent and decent affordable health care for the plebs. And if education is already expensive, it is not anything compared to what will be waiting.

    • Realist
      Nov 30, 2017 at 1:19 am

      I hate autocorrection …

      • d
        Nov 30, 2017 at 4:37 am

        Then turn it off

    • JR
      Nov 30, 2017 at 1:52 am

      Currency devaluation and default are the historical norms. It continues to be my “guess” that China will move first in the devaluation game. But then the US will be pressured to follow. Just how the race to the bottom works out is a good question. At interest rates of zero – the US can have infinite debt and still make the monthly payments.

      • kevin
        Nov 30, 2017 at 5:26 am

        @JR, you got your ass backwards. It was the Yanks that did the “first move” in the printing game after their orgy of speculative greed on their real estate market, back in mid 2000s till 2008.

        Did you already forget about their sub-prime fiasco so soon?
        Man, your memory is really short. lol.

        USA is, was and always have been the “first mover” on currency devaluation game worldwide.

        • Ron J
          Nov 30, 2017 at 6:08 pm

          Nope -Japan has been doing QE (debt monetization) for at least a decade more than the US.

          Their National Debt is at around 250% of GDP and BoJ’s balance sheet is 100% of GDP. Their bond market is basically dead as BoJ is the only buyer that matters. Now they’re buying Nikkei stock via ETFs.

          This is the direction where America is heading.

          Meaning Fed balance sheet will swell to $20T and reflect 40% of Gross National Debt (bigger than the roughly 20% ratio they currently maintain). Higher % needed to keep interest rates ultra low in that much debt… and probably supplementing with NIRP. National debt at $50T.

          Could the system really handle this???

        • kevin
          Dec 1, 2017 at 2:47 am

          @Ron J, double Nope to your nope.

          If you really wanted to go back to financial history. See this graph here from the American Institute of Economic Research:

          https://www.cashbackforex.com/Portals/0/images/School/Charts/dollar_USD_Purchasing_Power-753629.gif

          USD has been on a devaluation curve starting from early 1900s.

          For Christ sake, where was Japan back then? Still weening themselves off their Shogunate in their Meiji Restoration.

          Well, if you want to go waaaaayyy back into history, you might as well say the Romans started devaluation game by minting their silver coins with other base metals in their late empire stages. That will still be in Europe, not Japan. lol

        • d
          Dec 1, 2017 at 3:15 am

          Meji restoration was over by 1868 Satsum rebellion was 1877.

          Ist Sino Nippon war was Aug 1894 April 1895.

        • JR
          Dec 1, 2017 at 10:22 am

          Cool graph kevin. Thanks for the link! My point is that nobody seems to care that much where the dollar goes, while a little bit of wobbling back in 2015 by China seems to have gotten the market all wobbly. If you google “ritholtz zulauf bloomberg” – you can get one hours worth of my hero – Felix Zulauf – in a podcast. Mr. Zulauf suggests that LiJingPing will pull back a bit to let the China economy / finance ponzi cool down a bit – causing WW slowing in 2018 / 2019. Then he will goose the China economy in a relection bit in 2021 or so. (100 year anniversary for the ChiCOMs party establishment).

        • kevin
          Dec 1, 2017 at 9:04 pm

          @d, does your d stand for “denial” or “determined”?

          If you’re not into old-style libraries, just simply google the Meiji Restoration.

          For your convenience d, Wikipedia link below has a nice timeline of events:
          https://en.wikipedia.org/wiki/Meiji_period

          Read the first sentence that says the Meiji era is from October 23, 1868 to July 30, 1912.

          If your d is “determined” enough, you can go try changing Wikipedia but the library books won’t change historical facts though.

    • davep
      Nov 30, 2017 at 7:41 am

      We have been in a forever war with Islam, illegal drugs, terror, rogue states and each other. Are there any targets left? or is war the panacea we believe?

      • Ricardo
        Dec 1, 2017 at 12:15 am

        Yep. They have yet to play the “alien” card When the terrorism card has played its last hand then they will play the alien one.
        Its all been a set-up. One hand to go.

    • van_down_by_river
      Nov 30, 2017 at 11:34 am

      There are no options. The Weimar path is the only viable outcome. 10 nuclear powered aircraft carriers and military bases in over 100 countries world wide, we Americans love our big bad-ass military and we love our free old age welfare entitlement (yes social security is welfare – start calling it what it is) but we see no reason why we should pay for these things we love so much when mommy and daddy Fed have more than enough money to pay for everything for us.

      • 2GeekRnot2Geek
        Nov 30, 2017 at 6:52 pm

        If Social Security is a welfare entitlement, why has money been deducted from every paycheck I’ve received since I was 15 years old?

        When I had my own business I paid 2X the amount I paid as an employee. That 2X alone should tell you why SS is always in the gun sights, more for Corporate buybacks, less for the workers.

        I believe “welfare” implies that you didn’t put any money in the pot. But I’ll go with entitlement, because I’m entitled to a return on the money that I’ve paid in for 50 years.

        • JR
          Dec 1, 2017 at 10:59 am

          Yeah right me too. But I am suspecting more and more, and “kevin” is right in strongly suggesting, that your “return on the money” is more likely a return “of a partial derivative of” the money you have paid in. This “social security” will be direct deposited in your Geek Credit Unction account. It will be paid in Fiatskis that may not resemble much of the value from days of yore.

  5. Shari
    Nov 30, 2017 at 1:37 am

    And the Koch brothers band plays on. They know that this tax cut package won’t increase revenues through “growth”… but as the debt rises, social safety nets (such as they are) will have to be decimated… Which is their libertarian uber-goal.

    • Nov 30, 2017 at 12:41 pm

      The key observation that explains everything.

    • Dan Romig
      Nov 30, 2017 at 2:57 pm

      My ‘Moderate Libertarian’ goal is to maintain social safety-nets, implement a modified flat tax, reduce corporate taxes to make the accounting tricks Apple and others use less attractive, reduce our hegemonic and expensive Military-Surveillance-Industrial-Complex and pay down the national debt.

      Is that asking too much?

      Thank you Wolf for continuing to address the ever expanding national debt to GDP ratio.

  6. ru82
    Nov 30, 2017 at 4:12 am

    Sort of being a contrarian here and just thinking out loud. I am thinking we need to keep printing because China and Japan are printing. China is printing and providing a lot of their companies capital, via low interest rates, to buy up good assets, companies and intellectual rights

    • d
      Nov 30, 2017 at 4:40 am

      The BIG PRINTERS WILL GO BANG.

      \
      |The small printer’s and the heavily indebted ( as long as their population retains most of the debt, an dthey only owe in their currency.) may survive.

    • kevin
      Nov 30, 2017 at 5:15 am

      @ru82, firstly, you are hardly being a contrarian, if you keep blaming China for anything and everything bad that happens under your own clueless politicians.
      It is like Trump blaming China for this or that….China took our jobs (when he himself outsources to China), China devalues her rmb (but its perfectly ok for great America to devalue her own currency?), China pollutes the environment (but Americans are the worst polluters on a per capita basis for the past 30 years, but lets ignore that, right?)

      When Japan was doing well back in the 80s, Americans thought they will soon buy over all American companies too before the end of the century, but hindsight teaches you how ridiculous that fear-mongering is, or does it?

      Now, the punching bag conveniently shifts to China. Who’s next to be blamed for your own stupidity? You can go down the alphabetical list from Argentina or Zimbabwe.

      Look, I am not a communist Chinaman, and I hope your’re not Russian commie born in 82?, so I’m not defending them. I just like to think there should be more balance in people’s comments.

      Why didn’t anyone blame EU countries, the ECB has been printing till Kingdom come too, right?

      The fact of the matter is, it was clearly the Yanks that started this printing gravy train, after their own Lehman mess and the financial crisis back in 2008 and thereafter. Thence, the rest of the world were the ones who were “forced” to follow the massive printing game started by the Yanks.

      So if you want to assign blame, point your fingers at the originator of the 2007/8 financial excesses that started the ball rolling worldwide. You got it now?

      • Drango
        Nov 30, 2017 at 11:48 am

        Give me a break. Banks in Europe and Asia played a huge if not major role in bringing about the 2008 financial crisis, which is why they’re still in such bad shape now. I’m sure they will continue to play the innocent victim even as they are asking the Fed to bail them out with some dirty American dollars when the next crisis hits.

        • intosh
          Nov 30, 2017 at 11:54 pm

          Ok, I’ll bait. The origin of the 2008 crisis is the banking derelegulation in the US of A.

          Asia? Give me a break.

      • kam
        Nov 30, 2017 at 1:36 pm

        Kevin
        1. Japan was the first serious Printer of the past generation, not the U.S.

        2. “Americans are the worst polluters on a per capita basis for the past 30 years, but lets ignore that, right?” On an aggregate basis, no one matches China, now or in the future- they have a 30 year reprieve from doing anything.

        And as far as Wolf’s article, the Fed, with a $4.5 Trillion dollar balance sheet, is like the local red light district complaining about the neighbors.

        • van_down_by_river
          Nov 30, 2017 at 2:53 pm

          The fact that Japan prints more money does not eliminate the consequences of massive printing of the world’s reserve currency. Also Japan makes and the world takes (they are a net exporter) but the U.S. survives off of printed money. The U.S. is helpless without exports – we can’t even source components for our own weapons without importing them. At any rate it’s pointless to argue about it. Governments around the world are using printed money to fund themselves – it’s only a matter of time before people lose confidence and we are hit with a monetary crisis. It’s not sustainable and crisis will not be preventable.

        • kevin
          Dec 1, 2017 at 3:18 am

          @kam,

          1) See my comment posted above on the graph of US devaluation history to the same point.

          2) On aggregate basis, yes, China is a bad boy on pollution. India is fast catching up too simply because of their larger populations.
          But whats the point here? I’m saying Yankees has no moral ground to point the finger at others when they are equally at fault, and then expect others to fall in line while they happily continue to live their excesses.

          China may have a 30 year reprieve, but USA already had theirs. I suppose thats called having your cake and eating it first? lol.

          Anyway, your local politicians are sure not going to own up, so the easiest path is to assign the blame to some one else, but “van_down_by_river” has a point when he said its pointless to argue over who started this mess. The global consequences will be here with us in this generation or the next.

          As usual, we all hope it will be the next generation that bears the consequences. Again, we get to have our cake and eat it first, because we were here first, right?

          Ahhh….looking at the responses here, I suppose I should have more faith and credit in humanity than our fiat currencies? (perhaps asked with a tinge of sarcarsm… ;)

        • d
          Dec 1, 2017 at 3:37 am

          “I’m saying Yankees has no moral ground to point the finger at others when they are equally at fault, and then expect others to fall in line while they happily continue to live their excesses.”

          When America and Europe started the problem of industrial accelerated global warming and general pollution.

          They did not know they were starting the problem.

          India and china KNEW there was a problem and continued to develop in a DIRT unsustainable way, due simply to greed. Whilst Pointing their finger at the US.

          1st lot are problematic idiots.

          Second lot (India china) are hypocritical environmental criminals.

          As THEY KNEW.

          Before they started.

          Their activity, WOULD make the problem WORSE.

          It is that simple.

        • kevin
          Dec 2, 2017 at 1:42 am

          @d, you said:
          “…(India china) are hypocritical environmental criminals.

          As THEY KNEW.
          Before they started.
          Their activity, WOULD make the problem WORSE.
          It is that simple.”

          My repartee to you is:

          Since USA knew then and STILL Know NOW, that they are also making the problem worse, BUT is USA stopping their extraction of shale oil and other fossil fuels? As far as I know, USA is building a new oil pipeline through Canada. lol

          Who are the “hypocritical environmental criminals” now?
          Yes, it is that simple.

      • d
        Nov 30, 2017 at 5:19 pm

        “The fact of the matter is, it was clearly the Yanks that started this printing gravy train”

        The Soviets (now Russian Federation) and the CCP have been printing on used toilet paper and calling it money since they have existed.

        They have intended to destroy the western system since they existed by destroying its money.

        These current Printing issues are the result of allowing a used toilet paper printers to use. Their printed used toilet paper in the global trading system. Mainly since Nixon and Kissinger brought CCP china the arch Used toilet paper printer into the global trade system.

        If there had of been no US QE There would have been an event that makes 1929 -1947 and the current mess look,like a Sunday school picnic.

        Further GREECE turned a US correction into the GFC not events in America.

        The main reason whe have the current fall out from US QE is that the P 44 administration an dteh ECB would not work in synchronization with the FED.

        Now the ECB is still Printing madly Even though it is proven every day tehy musty print more than yesterday to obtain the same amount of Broad Economic Contraction.

      • John M
        Nov 30, 2017 at 11:17 pm

        Kevin

        Gideon Gono was castigated for doing QE in Zimbabwe when he was “The Central Bankster” there.

        As he said

        “I found myself doing extraordinary things that arent in the textbooks. Then the IMF asked the U.S. to please print money (during the GFC) . The whole world is now practicing what they have been saying I should not. I decided that God had been on my side and had come to vindicate me.”

      • ru82
        Dec 1, 2017 at 3:22 am

        I am not blaming China. I am just stating the facts. Your wrong…..China has printed more and went into overdrive the same time the Yanks did in 2009

        The US M1 was 1.2 Trillion in 2000. Now it is 3.3 Trillion. About a 200% increase

        China M1 was 4.4 Trillion Renminbi and not it is 52 Trillion. That is over 1000%.

        Japan was 237 Trillion Yen in the year 2000 and now it is over 701 Trillion. Just under 200%.

        Euro M1 was 1.9 trillion Euro in the year 2000 and now it is 8 Trillion. That is a 300%.

        I am just saying the U.S. needs to keep up. LOL Besides debt going going up at an alarming rate….so is the money supply.

        No wonder the global stock market are all time highs and bitcoin is going to the moon. All this money has to go somewhere.

        From what I can tell high inflation is around the corner if they cannot control all this money printing via debt and M1.

        This is good if you own stocks or property.

        Also…China debt to GDP increase a lot more than did the U.S.

        • kevin
          Dec 1, 2017 at 11:07 pm

          @ru82, ok, I didn’t fact check your data, but lets assume the data is accurate and grant that China has increased her money supply much more than USA did in % terms over the last decade.

          1) Firstly, we already said everyone is at fault on printing, the USA, China, EU, Japan, (the Swiss and others too) etc. but my earlier contention was that people therefore CANNOT assign the blame all to China or Japan still stands.

          The moral argument is one of actions, not degrees.

          2) Secondly, the degree of printing is arguable and has to be seen in the context of each countries’ population as well as timeframes.

          Note that China has a much large population (approx. 3 times) that of Americans, so of course, one would expect more M1 supply in absolute terms. Same goes for EU which has probably near a Billion residents by now.

          3) It will be better if theres data in terms of normalized purchasing parity and on per-capita basis, since currency rates vary quite widely across countries (and durations)

          I don’t think I have the financial chops here to tease out the complexities of setting a fair baseline of what constitutes “reasonable” levels of printing for each country (if there’s such a “reasonable” thing), and even if financial academics could do it, there will still be lots to argue about.

          However, all the above still does not detract from the fact that no one has the moral ground to accuse others of printing just because they themselves have done it less, by whatever measurement.

          Whether USA prints at XX% less than Japan or China or EU prints XXX% more a difficult comparison but the moot point is that everyone is doing it (hence no one has the moral authority to assign blame to any one else).

          Finally, yes I agree, stocks and real estate will be good vehicles, which is why my guess is they will likely continue to be broadly bullish as long as the risk-free rates are kept low, artificially or otherwise.

          The social perspective is this. If all the lemmings is rushing towards the cliff, I will join them, but only somewhere far from the frontlines and tangentially towards the cliff.

          If a large enough proportion of lemmings survive the fall and finds a new fresh breeding ground, you’d be a fool not to join them. lol. The trick is to know “how much” of them will survive and “when” to join them, if at all.

    • Kent
      Nov 30, 2017 at 6:50 am

      deficits don’t hurt the economy until your spending so much that labor is fully employed and demanding pay increases. Then inflation starts getting out of control. We are a long way from there.

      I care more about the trade deficit and exploding healthcare and higher education costs.

      • Duane Snyder
        Nov 30, 2017 at 11:57 am

        (About the trade deficit)… Amen brother, I too care more about the trade deficit. Ironically, “deficit hawks” like Bob Corker could give two bits about the trade deficit. The trade deficit gets little to no mention on many of these financial forums but correcting it, along with progressive taxation, would probably lead to higher wages and higher tax revenues, which would go a long way towards correcting the deficit problem. But that is not what the oligarchs want, nor the GOP politicians who work for said oligarchs. The want the budget deficit to become such a problem that social programs are forced to get cut. It’s in their DNA.

      • Robert
        Nov 30, 2017 at 1:52 pm

        Deficits don’t hurt the economy? Here’s a little parable from the not so distant past: One day, in 1923, everyone in Germany found himself in the top tax bracket*. Does that say something about debt and inflation?
        * and not just that- he got in the habit of paying for lunch on entering the restaurant, because the price might double before he finished. If you want to see another, look at the Caracas stock exchange- it was up
        17% just yesterday. Last month they knocked three zeros off because it had soared so high- ten times the rate of every other listed exchange. The problem was, the taxable profits were in bolivars

        • Kent
          Nov 30, 2017 at 2:57 pm

          Unlike Weimar Germany, every dollar the federal government prints to pay expenses is reabsorbed through either taxation or the issuance of Treasury bonds. Germany just printed marks and let them float around the real economy causing hyper-inflation. That’s not possible in the American system.

          Again, though, you can get inflation if the government overspends to the degree that everyone is employed and start demanding (and receiving) wage increases. So there is a fine line.

        • Nov 30, 2017 at 5:10 pm

          Kent, we already have huge inflation: asset price inflation. Consumer price inflation has been moderate. And wage inflation has been low and in some years negative (deflation). But asset price inflation is booming. That’s what Ben said he wanted to accomplish with QE and ZIRP, and he did. But now the Fed has trouble reining it in.

        • d
          Nov 30, 2017 at 5:59 pm

          “The problem was, the taxable profits were in bolivars”

          The BIGGER problem is, that bolivars, are effectively convertible, in to nothing, today.

          Just like owning 1 freehold house. No matter row much property values rise you still only own 1 freehold house.

        • Kent
          Nov 30, 2017 at 7:12 pm

          @Wolf and Alistair,

          This is a great conversation. Yes all of that is inflation. Even to some degree hyperinflation, especially health and higher education. But neither is the result of “budget deficits”. All of that is the result of money creation by banks (asset inflation: stocks, real estate, higher education) and the monopolistic behavior of healthcare.

          None of the horror story aspects of the economy are the results of government borrowing. Government borrowing is the result of the horror stories. But the American people don’t have the information necessary to understand that. And, as someone who works for the government, I can assure you that our elected officials do not have the sophistication to connect those dots.

      • Alistair McLaughlin
        Nov 30, 2017 at 4:48 pm

        “…exploding healthcare and higher education costs.”

        Wouldn’t “exploding” prices qualify as inflation getting out of control?

        • John M
          Nov 30, 2017 at 11:21 pm

          Alistair

          Wouldn’t “exploding” prices qualify as inflation getting out of control?

          Nope the way the BLS and FED calculate inflation has morphed over the last decades so food and energy are not included. I don’t know anyone who doesn’t drive a car or eat at least a hamburger. So the numbers given by the BLS are BS not BLS..

    • James Levy
      Nov 30, 2017 at 7:15 am

      I think the model you are approximating here is the leveraged buyout. Take on a massive amount of debt, grab and asset, then strip mine the whole to extract the nugget and cast way the chaff (or, to borrow from Willie Loman’s great soliloquy, the peel). My opinion, and it’s only an opinion, is that such a course will destroy the broader economy and leave you worthless nuggets in the long run. Economies are ecosystems and prone to collapse when overgrazed for quick profits.

    • van_down_by_river
      Nov 30, 2017 at 11:47 am

      Actually we need to print because… WE NEED TO KEEP PRINTING. To do otherwise would mean government spending would be paid for by taxing the people – that would never fly in a modern democracy.

      We need to print for the same reason everyone else needs to print – it’s the only viable source of funding. Don’t own currencies, there is no sound money.

      $11,000 bitcoin (a huge sum to pay for nothing but electronic bits) is an obvious sign of panic and a rush to exit fiat currencies. The currency crisis has begun.

      • Robert
        Nov 30, 2017 at 1:55 pm

        If that’s the case you might as well write Congress and suggest eliminating the IRS, because they don’t need it anymore

        • van_down_by_river
          Nov 30, 2017 at 4:06 pm

          Weimar Germany also raised taxes to pay for some of their outlays. Raising enough taxes to pay for only some of your government and borrowing the rest is not sustainable. The U.S. is running deficits equal to 5% of GDP ($1 trillion per year) and now the whores in congress are cutting taxes – why not just stop paying taxes altogether? That’s the direction we are headed, let’s just do it and get it over with.

          Lobbyists have told senators they will throw them out of office if they don’t vote yes – it’s that certain that voters will vote for whichever candidate (whore) receives the most money from lobbyists.

  7. R Davis
    Nov 30, 2017 at 6:21 am

    Q:
    What if it’s not about delivering tax cuts.
    What if the actual goal is to deliberately & substantially deplete the US economy ?
    And then why would … “ANYONE (?)” in their right mind want to do this ?
    What eventuality would it achieve ?

    • van_down_by_river
      Nov 30, 2017 at 12:01 pm

      It’s about telling the electorate they can have government and entitlements for free. Elected officials have discovered voters like getting free stuff. We’re #1 and Americans love to watch their war planes flying above. The F35 fighter program has now pushed well past $1 trillion in spending but not a penny raised in taxes to pay for it (instead we get tax cuts!). Does anyone really believe the U.S. will not pay back the dollars they owe – I think we will always manage to get all the dollars we need. Would Janet really allow us to default – I don’t think so – we have a bottomless supply of dollars.

  8. Rob
    Nov 30, 2017 at 6:56 am

    If the US CA deficit went from -$400bn a year to plus $400bn a year, with an extra $800bn of domestic activity and a tax base of 35% of GDP, you just found $280bn of extra taxes.
    Plus reduced benefits costs and indirect economic benefits from increased activity. If transfer payments reduced 10% that is another $200bn.
    I wonder if any economist could comment on this.

    • walter map
      Nov 30, 2017 at 8:58 am

      US economic policy is already adequately suicidal. There’s no real need to ramp it up unless you’re concerned the general population might catch on.

    • Nov 30, 2017 at 9:01 am

      Rob,

      I agree that the US Current Account (CA) deficit is a big problem for the US economy, and reducing it would be helpful for the US economy and would increase tax revenues. Beyond that, it gets more complicated. And I don’t think the tax impact would be as large as you suggest.

      In terms of corporate taxes: the trade portions of the US CA balance are based on revenues not profits. But taxes are applied to taxable profits.

      The shift you depict would indicate a huge trade surplus with the rest of the world. This would come in two ways: higher US exports and much lower US imports (assuming you can do this without the world going into recession). This would change the profit picture for US companies and thus the taxes they pay to the US government. But not all in one direction…

      US corporations are profit driven. They import because it’s cheaper than buying from local manufacturers. So the big importers (GM, Ford, Wal-Mart, GE, Apple, etc.) would make less taxable income in the US if they bought locally. But their US-based suppliers would make more money. So it’s not a straight line.

      Increasing US production by these US-based suppliers would have all kinds of beneficial effects on the US economy, as you point out, including higher government tax receipts. But I don’t think it would be as big a number as you indicate:

      The $19 trillion US economy generated $2.1 trillion in federal government tax receipts in 2016. So that’s about 11%. If the shift that you depict generates $800 billion in additional economic activity in the US, perhaps the additional tax receipts might be closer to $88 billion, not $280 billion as you suggested.

      • Rob
        Nov 30, 2017 at 1:15 pm

        US government spending is about 35% of GDP, and a lot of that is coming from wages/ payroll tax and the spending of those wages (sales tax, real estate tax etc etc). In the UK 4% of GDP is real estate taxes alone. Sales tax/ VAT is 20% etc

        A strong, balanced economy with strong terms of trade should have a tradesurplus like Germany, and they should export high value goods to EM who in turn export low value goods like food back, and the surplus in turn is recycled into investments into the poor countries.

        Thats how it should work but since 1997 the exact opposite has happened. Thats why I say 1997 was the start of the 3rd turning and we havent finished the 3rd turning yet. The fourth turning is the reset and we are near, the end of this credit cycle, replaced by a wage-inflation-investment cycle is the start of the fourth turning in my view. It will see a reinvigoration of manufacturing in the double deficit countries and a painful adjustment for Germany and China. China is already on that with the belt and road initiative and the Renminbi becoming a reserve currency for EM. I would not be surprised to see PdVSA issue CNH bonds… The Germans on the otherhand are farting into their seats and demanding a Brexit bill.

      • kam
        Nov 30, 2017 at 1:50 pm

        Wolf
        I’d like to add that a country is not a business. That a U.S. business can import goods into the U.S. and sell them at a greater profit than manufacturing in the U.S. is only a short term tactic. The jobless American can only purchase those imported goods by going into debt, on a personal or national basis. That is what we are facing today.

        Without value added and only debt added, the recipe is a slow acting poison, but a poison it is.

      • Nov 30, 2017 at 2:52 pm

        We can improve the CA by becoming a net exporter of energy, and by reducing consumer consumption of imported goods, but then we would look like a third world economy.

        • Kent
          Nov 30, 2017 at 7:20 pm

          There are many parts of the USA that are absolutely third world. Most of us just never venture into those areas. The problem is that the proportion of the country becoming 3rd world is increasing, not decreasing.

    • kam
      Nov 30, 2017 at 1:42 pm

      Taking a person off welfare and putting them to work in the Private Sector (not government, directly or indirectly) is the biggest factor in reducing government deficits. You increase government revenue while decreasing government handouts. Nothing else even comes close.

  9. James Levy
    Nov 30, 2017 at 7:18 am

    For Republicans, the only time debt matters is when you generate some to help poor or sick people.

    • kam
      Nov 30, 2017 at 1:53 pm

      The 2-party system is purely theater. Too bad you don’t grasp that.
      Helping poor people is creating jobs. Helping the truly sick is in the heart of most people irrespective of politics.

      • James Levy
        Nov 30, 2017 at 2:08 pm

        I grasp the concept of the duopoly just fine. I just find the Republicans particularly dishonest when they bitch and moan about the deficit until they get a chance to gut taxes on the rich and corporations and run it up a few trillion, at which point they could give a rat’s ass about it. Democrats are just dishonest in other ways, like pretending that they give a damn about the wretched of the earth and that they “feel your pain.”

  10. Mike Ra
    Nov 30, 2017 at 8:12 am

    “In addition to the $25.57 trillion in outright debt…”

    Where did this number come from?

    • Dan Romig
      Nov 30, 2017 at 9:07 am

      I would assume that this is mortgage, auto, student loans, credit cards and corporate debt???

  11. Petedivine
    Nov 30, 2017 at 8:15 am

    If you are paying attention then it’s obvious the Dollar hasn’t held its value for a long time. We’re now discussing degrees of worthlessness. I suggest converting your currency into something tangible, fungible, and universally accepted. I’ve seen this movie before. It ends poorly for those that don’t position themselves properly.

    • Kent
      Nov 30, 2017 at 10:09 am

      Where I live (Florida), the dollar is the only thing that is universally accepted. I can literally buy anything with it.

    • Anon1970
      Nov 30, 2017 at 10:20 am

      As economically irresponsible as our Congress and Presidents have been for much of the past century, especially in the past half century, many other countries did a lot worse in maintaining the value of their currencies. e.g. Britain, France, Italy, Germany (1923), Hungary (1946), USSR (1990’s), Mexico and even Canada.

      The #1 goal of Congress critters is to be re-elected. Very few are concerned about how their votes on tax reform or health care will affect Americans 10 or 20 years later. And in the country at large, very few voters care about what they can do for their country. They want more free stuff and have someone else pay for it. We need to stop thinking of ourselves as exceptional or that the US is a shining city on a hill.

      Now that I have reached the magical age of 70, I am not especially worried about the future. It is a little late for Yellen (age 71) and her fellow economists to shed crocodile tears over the the national debt. And as far as the public at large is concerned, I think many of them made the wrong choices at the ballot box in the last 15-20 years and now they and their children/grandchildren will have to suffer the consequences.

      • kam
        Nov 30, 2017 at 1:57 pm

        “their children/grandchildren will have to suffer the consequences.”

        But, but, but, food, clothing and shelter are made by the Internet.

    • Tom T
      Nov 30, 2017 at 2:08 pm

      Might I ask you Petedivine and Wolf, what do you think a scared small time investor seeking economic survival should do? Specifically, is it time to buy physical gold and/or silver? Thank you for your good advice.

      • Petedivine
        Nov 30, 2017 at 7:34 pm

        Unfortunately, I can’t tell you what the future holds. All I know is what I’ve seen in countries whose currencies were destroyed / reset. (Guatemala, Brazil, Ecuador, and now Venezuela) Debt got inflated away. So, the burden of paying for your home initially declines. However, if you need to move, people selling their homes will want something other then the local currency in return. Therefore, most houses increase in currency terms but decrease in real value. Food, imports, cars, gasoline, technology, get expensive. Credit availability is limited. The average person lived day to day. Lawlessness sky rockets. Gangs from the government and other groups abound looking for targets. Infrastructure doesn’t get repaired and declines. I was never educated in wealth. Gold and silver were never explained. If they had value I didn’t know it. While I was in S.A. most wealthy people purchased assets elsewhere..like Miami or Spain. They may have had buckets of cash, gold, and silver, but I didn’t know about it. In the countries I lived in..the Dollar was the anchor from which wealthy people protected their purchasing power. In this case I’m saying the anchor is not to be trusted. In S.A. wealthy people almost always derived their wealth from a monopoly on something. A monopoly on rice, liquor imports, farm equipment, cars, etc..government officials picked the winners and losers…via business licenses and favors..etc.. My thoughts…get a good vehicle capable of traversing bad roads and ingesting inferior fuels. Nothing fancy. Live somewhere that is secure in such an environment. As for silver and gold, in the long run I feel they will retain value or increase in value simply because the credit required for big mining operations won’t be around, so whatever is above ground will have more value. Also after a monetary decline, I’d expect skilled labor and commerce will want tangible wealth or equal service. Think about and plan for such a world. Don’t go hog wild. The day does not turn into night with the flip of a switch. Ask yourself what time it is and prepare accordingly. Trust yourself..no one cares more about you..then you.

  12. michael Engel
    Nov 30, 2017 at 8:35 am

    The Fed will raise rates to fight inflation.
    That will choke the economy and start a recession.
    In recession the Fed cut interest rates sharply.
    Leading the downhill charge will be the 3M and below.
    The PCE & CPI will also fall, but moderately.
    If the Fed will be able to keep the short duration under the CPI, the US govt cont to get a huge discount on debt.
    If the discount will average only 1% per year, on $20 Trillions, in the
    next 10 years, the acc value of this discount is :
    20T x 0.01 x 10 = $2 Trillions in real value. To sum it up :
    For many years the US govt was paying dividends much above the
    PCE & CPI. The US govt paid too much to finance itself.
    Only during recessions, the short duration touched the CPI.
    When the recession was over, rates moved higher to a lower high.
    It took decades, but since 2008 the 3M was hugging the zero line
    for almost 10 years, until Sept 2015.
    Finally, after a lot of effort, and many insults from “experts”, the
    Fed was able to help the US govt to control the annual cost of debt.
    Recently, all the short duration are rising, but still the CPI > $UST2Y.
    The Fed rates are in a delicate equilibrium.
    The short duration are under the CPI, while the longer duration are
    above.

    • van_down_by_river
      Nov 30, 2017 at 6:08 pm

      Rates will never be raised above a trivial percentage again. Soon central banks will be the only ones buying government debt because inflation will guarantee huge loses as rates are kept pegged far below the rate of inflation. Bonds are currency >>> currency is confetti >>> bonds are confetti.

      Start to panic now and avoid the rush.

      It will be interesting to read these comments five years later when the Fed rate is still below 1.5% and inflation is running in the triple digits.

      • John M
        Dec 1, 2017 at 1:33 pm

        Van_Down

        If inflation on the CPI number kicks off then bonds get sold and there you have your risen yield. You can get overnight money at low rates but the long end of the curve would be uncontrollable. So your perception that we’ve inflation running in triple digits and Fed Rate of 1.5% may well be wishful thinking..

        • van_down_by_river
          Dec 1, 2017 at 6:10 pm

          The Fed will come running to prevent bond yields from rising at the slightest hint of trouble – central banks have proven to be a relentless bid preventing yields from rising.

          Governments have borrowed way more than their citizens can pay back. That debt must be monetized and inflated away with inflated currency. If you believe there is another way out of the debt problem I would love to hear it. Do you really think the debt will be paid back with hard work and taxes – not a chance.

      • Nick Kelly
        Dec 1, 2017 at 9:04 pm

        You can look forward and wonder what could happen or look past and see what did happen. When US inflation took off in 1979-81 the Fed raised its rate to 18 percent. Bumps of 1 percent at a time were not unusual.
        The Fed knows how to deal with inflation.

        The Fed chairman who brought the hammer down was Paul Volcker, a revered figure within the Fed.

        Even at the current pace with another .25 coming in December, we’ll already be at 1.5 not below it. There are probably 3 more bumps to come in 2018, as the Fed inches back to normality, between 2.5 and 3.5.

        If there is one mistake Fed watchers make it is underestimating its sense of itself as a vital independent institution that will be judged by history. It knows its job, as one chairman put it, is to take away the punch bowl just as the party really gets rolling.

        Allan Greenspan has admitted he didn’t do this, and that his continual lowering of rates at the mere hint of a recession was a mistake.

  13. walter map
    Nov 30, 2017 at 8:39 am

    A single ‘tax bill’, finely-tuned to maximize rapacity, and the place can at long last be stripped out of existence, the culmination of years of successful policy aimed at enriching the obscenely hyperwealthy billionaire class to the destruction of the country.

    Americans should enjoy the good times while they can, because they’re about to end rather abruptly.

  14. DK
    Nov 30, 2017 at 9:42 am

    Isn’t Japans national debt at about 3 times yearly GDP?

    • lenert
      Nov 30, 2017 at 10:42 am

      The typical Japanese citizen, like the typical American citizen, does not know nor care about their national debt. But unlike the US, in Japan everyone has universal, affordable healthcare.

      • Rates
        Nov 30, 2017 at 1:09 pm

        I’ve been to Japan twice. And my opinion is …. at least they have something to show for the debt. World class transport system, incredible service, universal healthcare, etc, etc.

        In Murica. Zero nada. You pay all the income tax and you are never sure how that translates to anything. I live in SF and the local transport system i.e. Muni is shit. Service? HAHAHAHAHA have you ever been to the local DMV?

        • lenert
          Nov 30, 2017 at 2:22 pm

          Hey now not fair – we have our GWOT.

        • van_down_by_river
          Nov 30, 2017 at 6:21 pm

          The U.S. has a real bitchin military and the average American would rather have really cool military hardware than high speed trains and sidewalks. Also, every 10 years or so the news cycle gets boring and we enjoy vanquishing some tin pot country with our enormous military – Geraldo Rivera may enjoy video of MOABs blowing stuff up but those antics are not cheap. I think the government spends money on things Americans want. We like “being the world’s only superpower” (Russia could turn the U.S. into a flattened, radioactive wasteland but somehow that does not qualify them as a superpower)

    • Nov 30, 2017 at 1:37 pm

      250%. The Bank of Japan is in the process of buying most of the debt outstanding to keep it under control. The market for these securities is essentially dead. This is how they keep control of it. A risky strategy. But Japan’s debt binge is too far down the road, and they really don’t have a lot of other options at this point. It has worked so far because Japan has some things the US doesn’t have: a huge trade surplus and a large pile of foreign exchange. For now, they’re better equipped to deal with the consequences of monetizing debt than the US would be.

      • kam
        Nov 30, 2017 at 2:02 pm

        Wolf:
        And Japan has an obedient society and their Military Protection is paid by the American taxpayer.
        K

        • James Levy
          Nov 30, 2017 at 5:02 pm

          Japan spending a bit more than 1% of her GDP on defense provides quite adequate forces to defend that nation. No one could realistically invade it. The US could probably blockade it at a heavy initial price. And Japan could have nuclear weapons in a matter of weeks if they really thought they needed them. If the American taxpayer was actually just paying for the defense of these United States, we’d easily cut the military budget in half and have nothing to fear.

      • Tom
        Nov 30, 2017 at 3:17 pm

        Japan is financing its deficits internally, and a lot of retirees will eventually have a rude awakening when they realize that their super safe AAA JGBs that their retirement and pension plans are holding have been silently inflated away.

        As for the US, the deficits are financed externally because everyone else is trying to keep their currencies weak to not have their export economies implode. So in the end foreigners have to buy treasuries at ridiculously low interest even if the FED doubles the money supply every couple of years. So isn’t the US actually in a much better position to monetize than anyone else?

        Now that is as long as this competitive devaluation pattern continues, but even when one day it will stop, I doubt that any future reset is going to be pleasant for those countries which have to realize that all of their balance sheet assets are pure fantasy.

        To state it slightly differently: In a world for which we know that debt imbalances will reset at some point in the future, who is going to be the winner of the zero sum game: The ones working hard to own debt, or the ones issuing debt to have others work for them?

      • d
        Nov 30, 2017 at 5:46 pm

        “Japan has some things the US doesn’t have: a huge trade surplus and a large pile of foreign exchange. ”

        Combined with a level of corporate and citizen national loyalty, surpassed by almost no other nation.

        P45 wants to see more American cars in Japan.

        He dosent understand the Japaneses (Outside the Yakuza) have no interest in the “Gas gobbling Junkers” from the US, and never will.

        • Nick Kelly
          Dec 1, 2017 at 9:27 pm

          Years ago some US politico wondered to a US auto exec why US cars didn’t sell well in Japan, while their cars sold well in the US. Apart from narrow streets and gas prices, he said, the Japanese move the steering wheel to the left for cars going to the US, we don’t move ours to the right for them.

          BTW: the ability to import right- hand drive cars into Canada may be in question. They are involved in significantly more accidents.

        • d
          Dec 1, 2017 at 10:24 pm

          Any Self respecting Yakuza of any rank.

          Will not be seen dead in a right hand drive car.

          Today the Majority driven in LHD Euros as they have more respectability.

          A Dwindling few, still retain their BIG, Noisy, old, BLACK, Fleet-woods and Lincolns, as size and noise = power. Thats the only reason they brought US vehicles in the first place.

          Any normal Japanese, comparing a full option Cadillac, to a Crown/lexsus, Or even a Nissan Brougham, will buy the Japanese Product. No contest.

        • Dec 1, 2017 at 10:30 pm

          Ford and GM both offer right-drive versions of their vehicles for markets where they drive on the left side (Australia, UK, the Indian subcontinent, southern Africa, and others). Includes right-drive Mustang. This steering-wheel quote is apocryphal. I keep hearing it, but it makes no sense.

        • Nick Kelly
          Dec 2, 2017 at 4:39 pm

          ‘But as AN notes, only two cars, the Sonic and Captiva SUV, are right-hand drive to suit the preferences of Japanese consumers.

          GM has factories in right-hand-drive countries, but their vehicles often don’t fit Japan. Australia’s passenger cars are too big; South Africa churns out mostly trucks; England’s small cars find it hard to compete in Japan’s crowded small-car market. India’s operations are just getting started.

          […] It’s a chicken-and-egg problem. It’s often not worthwhile to introduce a right-hand-drive version because sales are so low. And sales are so low in part because there are no right-handers.’

          The site’s name is Jalopnik, meaning what I have no idea.

          My quote from an auto exec to a Us politician is old, early 80’s when the US first began to resent Japanese cars. This led to quotas.
          At that time and for most of the time since there has been no mass production of right hand drive passenger cars in the US. The US owned plants in right hand drive countries built them, but as the quote says they were often unsuitable in other ways.
          Production in other countries was not good enough for the politician.

          The right- hand drive Mustang is of very recent origin (2015) and is of course also unsuitable to Japanese other than perhaps Yakuza.

        • Nick Kelly
          Dec 2, 2017 at 8:12 pm

          But I will admit that the lack of demand for US cars in Japan had next to nothing to do with left hand steering. Maybe the auto exec thought it was more polite than other explanations.

          Who knows what US drivers wanted with Grenada, LTD, Cadillac, etc. of that era. let alone the rest of the world.

        • d
          Dec 2, 2017 at 11:33 pm

  15. walter map
    Nov 30, 2017 at 9:52 am

    “US Gross National Debt Jumps $723 billion in 12 Weeks”

    The US didn’t have these problems before it tripled the giveaways to voracious military profiteers and stopped taxing obscenely hyperrich billionaires. Before that, the US could almost balance its budget.

    “$25.57 trillion in outright debt”

    The hyperrich want you to believe it’s all the fault of ‘overpaid teachers and firefighters’, but really, they’ve piled up all that plunder for themselves in offshore tax havens. It’s their favorite sport, really.

    They keep promising you that ‘tax cuts for the rich’ will produce millions of high-paying jobs, knowing that Americans are complete kneebiters who can be suckered with the same blatant lies generation after generation.

    • Kent
      Nov 30, 2017 at 10:16 am

      I’ve always been somewhat of a fan of the idea that you have to raise taxes on the rich to get them to create high-paying jobs. When taxes are low, you can get by with less income, so you can invest your money in safe, low-return investment like treasury bonds.

      When taxes are high, to get a decent return you have to invest in risky, high-return businesses that make things and employ people.

      But, based upon the chain emails I get sent from some of my family, “kneebiters” seems apt.

    • DANL
      Nov 30, 2017 at 1:02 pm

      Nailed it!!

  16. timbers
    Nov 30, 2017 at 10:34 am

    “Yellen ‘Very Worried about Sustainability of US Debt Trajectory’ ”

    No she’s not.

    Has Yellen been worried about debt trajectory she would have been calling for massive tax increases on corporations and the ultra rich, calling for massive cuts is war spending and aggression spending, and ending massive welfare programs to rich gigantic corporations.

    • Mr. Knoss
      Nov 30, 2017 at 11:47 am

      “Yellen ‘Very Worried about Sustainability of US Debt Trajectory’ ”

      “No she’s not.”

      If she was, she would not have been buying Treasury Debt at no bid actions for her entire term as Fed President.

      • van_down_by_river
        Nov 30, 2017 at 6:35 pm

        You hit the nail on the head. She need only look in the mirror to see the person responsible for allowing the U.S. government to run up $10 trillion in eight years. The Fed provided the government unlimited funds at near zero rates – did Janet really think the government would turn down the free money.

  17. Bobber
    Nov 30, 2017 at 10:42 am

    Awful time for a tax cut. Only a dimwit would vote for one of the two major political parties. It’s a sure sign of ignorance or apathy. I’d rather write in Barney Rubble, or declare my independence from these rulers.

  18. Rates
    Nov 30, 2017 at 10:45 am

    I think Wolf is wrong on this one. Yelled is worried alright …. she is worried that the trajectory is not fast enough LOL. If only it looks like the trajectory of the stock market squared, she would be very satisfied.

    Neil Kashkari yesterday had the temerity to say that he’s not worried about investors and stock market crashing. Then my challenge is a 1% raise next month.

    The Fed monkeys can’t be trusted.

  19. Memento mori
    Nov 30, 2017 at 11:26 am

    Look to Japan for our future, there is a very long way to go. We might not have to worry about it in our lifetime, Uncle Sam can keep borrowing for ever. And eventually if constrained by some law or agreements they will make new laws to do whatever they want. We saw that during the last crisis. The only thing certain is that your hard earned dollars will keep buying less and less.

    • Rates
      Nov 30, 2017 at 1:11 pm

      This might have been true in the absence of neocons who’s always clamoring for war. The next war either with Iran or Russia will be the end. Why would anyone accept the currency of a tiger with no teeth?

  20. GSH
    Nov 30, 2017 at 11:33 am

    What is being missed in this discussion is that our corporate tax rates are truly insane. The combined federal and local tax rate is around 40% depending on locality. This makes the US one of the least attractive countries to do business in. Look for yourself

    https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/corporate-tax-rates-table.html

    If the current tax legislation levels the playing field, I’m all for it. Although I know I’ll pay more taxes due to lack of local income and property tax deductions.

    • Timthetiny
      Nov 30, 2017 at 12:11 pm

      No one pays anywhere near that. The effective rate is about 18% overall. Just like people bitching about the top marginal rate when they pay 12% after all the loopholes.

      Which, incidentally is why the last half dozen tax cuts haven’t helped. You’re lowering the marginal rate to a point that is still above what people are actually paying.

    • Smingles
      Nov 30, 2017 at 12:28 pm

      “What is being missed in this discussion is that our corporate tax rates are truly insane. The combined federal and local tax rate is around 40% depending on locality. This makes the US one of the least attractive countries to do business in. Look for yourself”

      No, it’s not being missed at all.

      What you’re missing is those are not effective tax rates, those are statutory rates.

      The effective corporate tax rate is 18.6%. That’s lower than the UK (18.7%) and Japan (21.7%).

    • Garyb123
      Nov 30, 2017 at 1:18 pm

      I can’t understand why the US corps, multinational corps, and the super-rich don’t jump at the chance to support the US. As the US military keeps shipping lanes and foreign markets open to them. And, since the US dollar is the reserve currency of most of the world they’re able to control the global economy through the Federal Reserve. I wonder how they’ll fare when another country assumes military and economic leadership.

    • Nov 30, 2017 at 1:42 pm

      Our entire corporate tax code is insane. It should be thrown out. And they should start from scratch. But they’re not doing that. It’s impossible because there are too many goodies for too many industries and individual companies baked into it, and no one wants to lose their special treatments.

    • van_down_by_river
      Nov 30, 2017 at 6:43 pm

      Boeing stock is up 60% this year on enormous reported earnings. yet somehow they have paid zero federal taxes over the last two years. Zero is a long way from 35% – if Boeing had to pay 20% that would be a pretty big hit to profits (would need to borrow even more to keep buying their stock).

      I’ve been posting way too much. I guess this topic is a sore spot. Must keep reminding self – it just doesn’t matter, it just doesn’t matter…

    • JB
      Nov 30, 2017 at 9:02 pm

      good point BUT you have to look at their effective tax rates. It is incredibly inconsistent among sectors.

  21. Nick
    Nov 30, 2017 at 11:43 am

    Instead of tax cuts why not just start handing out checks to the middle class!!!!!!!!!!! It would do a hell of a lot more to stimulate economy than a bunch of convoluted, buried in bureaucracy tax cuts. America will continue to circle the drain economically and keep killing off it’s consumer base the middle class unless there is some type of debt jubilee. Call it the modern “homestead” act. The haves are going to just start giving back to the have nots. Or they will kill their hosts and will go down with us.

    • Kent
      Nov 30, 2017 at 3:09 pm

      Corporations don’t care about the American middle class. Corporations are global organizations, not American organizations. You might lose a middle-class American, but he’ll be made up by 5 poor Chinese guys.

      Tax cuts are about making CEOs, bankers, and especially the key shareholders of these companies richer. There is no other goal.

  22. Citizen AllenM
    Nov 30, 2017 at 11:44 am

    The Fed is simply the plumber of money. They have cut the money supply back because the US political system will now operate under gridlock until 2021.

    So they might as well let the system take the shock of the loss of easy money. It becomes a matter of judgement by the financial technocrats to have the political cover sufficient remove the extreme accommodation remaining from the last crisis.

    The Fed is not talking about the asset bubble, because they know that as they remove the easy money, it will begin to deflate. What they are counting on is the temporary backfill of hot money from China to continue to arrive here and keep the real estate market afloat, along with Wall Street. It is an astute bet.

    I think we will now go back to a 3-6-3 world, which is exactly what none of you expect- a slowly rationalizing banking and credit market, and some very modest inflation. No hyperinflation, no raging deflation, just sleepy time with asset declines in fits and starts.

    Because, in reality, either wages must soar (impossible under the current trade regime), or assets must fall when inflows stop.

  23. Nov 30, 2017 at 11:52 am

    They could nationalize the stock market, or at least the gains in market cap since the election. Call it a “stock market” tax and since a lot of it is hot foreign money, we’re not really hurting ourselves. If you’re looking at this Tax Cut thing with the long view you have to be thinking this is all wrong. We need to raise taxes, its just a problem figuring out how to do it.

    • Smingles
      Nov 30, 2017 at 12:42 pm

      “If you’re looking at this Tax Cut thing with the long view you have to be thinking this is all wrong. We need to raise taxes, its just a problem figuring out how to do it.”

      It’s not hard to figure out how to do it at all.

      The bottom 90% of the country own 23% of the country’s wealth.

      The top 1% own 39% of the country’s wealth. The top 1% own literally nearly double as much as the entire rest of the country combined. Oh yes, they pay about half of the nation’s -income- taxes, but that’s a direct result of the rest of the country’s income stagnating for the last three decades while theirs has accelerated to never before seen levels.

      Make this country a democracy again by rejecting the aristocratic principals that the far right have been enshrining in our tax code since Reagan, in our political system, and everywhere else by taxing wealth, period. And remove their influence in the system by rejecting Citizens United and taking money out of politics. And before any know-nothing wants to call me a socialist for proposing this, go read what the Founding Fathers had to say on the topic, what Adam Smith had to say, what David Hume had to say– they agree with me– and shove it.

      The severe wealth inequality, set to accelerate even more, is the root cause of the vast majority of dysfunction in our country– economically, politically, socially– and will ultimately be its downfall. And yet here the Republicans stand, telling us to eat cake…

      • Shari
        Nov 30, 2017 at 2:03 pm

        Agreed! And I would add a Robin Hood tax to financial transactions…tax it as soon as it moves! :-)

    • lenert
      Nov 30, 2017 at 12:57 pm

      Dean Baker lays out a simple alternative to the corporate income tax with government ownership of non-voting shares:

      “If the company pays a $2 a share dividend to holders of its regular shares, it also pays a $2 dividend on each of the government’s shares. If the company buys back 10 percent of its outstanding shares at $100 per share, it would also buy back 10 percent of the government’s shares at $10 each. If another company wants to take over the company, buying up shares at $150 each, the company also has to buy the government’s shares at $150 each.

      This is not an effort to get government control over the means of production. It is simply an inescapable route to its tax revenue.”

      (http://cepr.net/publications/op-eds-columns/an-honest-approach-to-simplifying-corporate-income-taxes)

      Meanwhile PCE is still under target but we’re raising rates anyway.

      • Nov 30, 2017 at 1:41 pm

        You realize this is advocating expanded Federal Reserve authority to buy stocks under their QE program. They buy stocks which are taken out of the float, as competition for shares heats up, the price of the shares left levitates and the Feds balance sheet improves. They can really get the squirrel cage going, as companies issue more stock, the Fed buys that stock and buries it. Sweet

        • Robert
          Nov 30, 2017 at 2:31 pm

          They may be doing this already. The Fed has the authority to purchase securities, though they should not(and nobody seems to know it), as it provides the opportunity for officers of a privately owned corporation operating under the color of government to manipulate the stock market. They could, for all anyone knows, be juicing not just, say the FANG stocks, but the exchange-listed cryptocurrencies as well. And, just as Professor Fisher was pronouncing in 1929 that the market seemed to have achieved a new sustainably high plateau, they can pull the plug, too.

        • d
          Nov 30, 2017 at 5:51 pm

          NO

          The stock in the company is Given to the State, for every 1 you sell you “Give one to the State”.

          The State cant vote that stock, and only gets money from it, in a buy out, or through dividends.

          The Mob has always said “Uncle Sam” is your 50% partner.

        • KMOUT
          Nov 30, 2017 at 7:53 pm

          Like Japan alchemy.

  24. gorbachov
    Nov 30, 2017 at 3:19 pm

    I don’t think Congress worries about debt they owe to Americans.They can inflate or print that away quick if they need to.

    The money they owe to other countries is another matter. If they inflate to fast U.S .dollars could not be accepted for payment and that would be a big problem. Since they only owe 6 Trillion to outsiders they don’t see a problem.

    What Cheney wanted to say was-Deficits owed to Americans don’t matter.

    .

  25. Ken Barrows
    Nov 30, 2017 at 3:55 pm

    Psst, the credo of the modern world is that debt (all kinds) must increase faster than GDP. It’s a feature, not a bug.

  26. Ishkabibble
    Nov 30, 2017 at 6:17 pm

    ALL of the individual national economies of the world must NOT depend upon exporting or importing stuff — whether that stuff is TVs or weapon systems or terrestrial resources or food.

    The logic of this recommendation is easier to understand if one thinks of the entire world as only ONE nation with only ONE SINGLE economy. Looking at the world in this way, if importing and exporting is vitally necessary for ANY economy (including the aforementioned macro-economy) to survive and thrive, to and from just exactly WHOM would this true macro-economy “export” and “import” — the people of Mars?

    No. This one-economy-world (the one we are actually living in right now) will at some point HAVE to figure out how to “go it alone”. NOT having accepted that this is necessary is IMO exactly why “the world” is going through what it is going through today. And this is why all of the individual national economies of the world should IMMEDIATELY, DELIBERATELY start “figuring out” and then implement the design of an economic system in which they “go it alone” while providing a decent standard of living for their citizens.

    One might argue that a “fully globalized” world of individual nations importing from, or exporting to, each other would, in the end, be better prepared to go it alone “as a whole”. But all we have to do is look around at the real, fully-golbalized world that is in existence today to see how well that is going and the likely-horrible next steps in its evolution — war, more war and even more war.

    The US, once a great manufacturing powerhouse for the world, in the present more-competitive world, has now fully reverted back to employing a much older, simpler gangster, colonialist, war-based “economy” —“buying” (extorting/stealing) everything it needs from the rest of the nations of the world literally at the point of a gun.

    Very unfortunately for the US, the rest of the world is not going to put up with its “exceptionalism” and its “spreading freedom and democracy” and its mercenary-buying USD for much longer. Some of the other nuclear-powered nations of the world are already saying “no” to US diktat and USD and they’re actually surviving.

    In addition to not having figured out how to go it alone, there is another very important, but rarely mentioned, cause of the still-ongoing, and IMO worsening, “financial crisis”. Just as contemporary humans have come to understand that the human race has evolved over at least hundreds of thousand of years, we relatively-recently-born humans MUST fully appreciate that the present economic systems that we live within have ALSO evolved into their present configurations over thousands of years.

    Not only are genes of our genetic past residing within our present bodies, the genes (remnants) of our distant political and economic past are also residing within our present political systems and economies.

    For a bone-simple example of the latter, money and property in all their forms are passed from generation to generation as inheritances. The significance of inheritances in the present economies can not be over-stated. Most importantly, the present, for lack of a better expression, “buying power” of inheritance (of “old money” from perhaps even the very distant past, maybe at”compound interest” ) is, for all practical purposes, unlimited.

    Inheritance and all of its accompanying powers now function as a counter-productive “burden” that must be “carried” by the recently-born who do not have inheritances of their own. Not only can the latter be ordered to do the bidding of the inheritance-owners for literally both of their lifetimes (and corporations, as “persons” — as beneficiaries of the inheritance — may have infinite lifetimes), much of these inheritances (much lately in digital form) flies around the world in an instant as speculative, bubble-creating investments in property, currencies, weapon systems, etc. creating economic as well as POLITICAL havoc.

    Again, the negative impact of inheritance should obvious, yet, like so many other important things, is almost never a topic of discussion in the MSM.

    To sum up, an economic system’s design that requires imports, exports, slave labor as well as perpetual war; while at the same time “just happens” to make its citizens “unable to afford” to pay each other a living wage to produce the things and provide ALL the services that all citizens vitally need (including taking care of the sick, elderly or infirmed, and allowing senior citizens to retire with some basic necessities of life provided before they drop dead at their jobs) is fatally flawed.

    Even though we at the grassroots level have been carefully taught to find collective discussion of an alternative to the present economic design (in which a microscopic percentage of the population owns the vast majority of wealth and capital equipment) repulsive, that is precisely what we are going to have to do. THERE IS NO WAY AROUND IT. We are going to have to stop bitching to each other and begging the Elite to behave better, and start discussing amongst ourselves what the “foundation stone” of a better economic system should be. If the outcome of that discussion is that “greed is good” and “growth is God” (when the already-unsustainable human population is 7.6 billion living/consuming individuals), then all we have to do is stop talking and hold on tight to the design we’ve got right now, because those are exactly its “core beliefs”.

    • d
      Nov 30, 2017 at 9:21 pm

      So somebody else understand for every exporter ( seller) there has to be a buyer To many seller’s = Problems.

      China, india, Dont or WONT see this.

      They Penalise Imports and supply Illegal State Aid clandestinely to Exporters.

      Then try to claim they are a “Market Economy” at the WTO.

  27. Kent
    Nov 30, 2017 at 7:27 pm

    Wolf,

    I’m betting that if you looked at the responses to your posts over the years, they have moved far to the left. And I’m betting that has political implications down the road.

    • Nov 30, 2017 at 8:18 pm

      That’s really hard to say. I’m never sure which direction dominates at any one time.

      I’ve always had comments from both sides of the spectrum plus from some libertarians that might not fit neatly into the spectrum, plus from commenters who don’t display their political persuasions in their comments (which I like).

      I discourage partisan bickering and political name-calling. So many commenters try to be neutral in their comments though they might lean in one or the other direction (I like this too).

      Also, the number of commenters on each article is really pretty small when you think about it. For example, there are 100 comments on this article at the moment but some commenters post more than one comment. So the number of commenters on each article is really too small a sample size to extrapolate from in a broader context.

  28. Maximus Minimus
    Nov 30, 2017 at 7:30 pm

    Overall a sobering article and comments, but what I am missing is a theory why the elected representatives of the people have such blase attitude to national debt – which by the way, is infectious; it’s spreads around.
    Let me make a guess. Few if any of the above read web sites with alternative views. The source of their opinion (if any) lie in the legacy media, the Nobel prize economists, the Ivy league gurus, think tanks, the FED…
    I have to observe, that those are not the institutions held in high regard on the sites that I visit.
    Last but not least is the apathy of the general population.

    • d
      Nov 30, 2017 at 7:53 pm

      “Let me make a guess. Few if any of the above read web sites with alternative views. The source of their opinion (if any) lie in the legacy media, the Nobel prize economists, the Ivy league gurus, think tanks, the FED”

      Galaxies away.

      The source of their opinion, lies in their heavily corporate filled pockets.

      America is not considered a politically corrupt Country. Simply as the corruption in America, is legalised.

      Just as the Duopoly that the corporates own, is enshrined in the constitution.

      Nobody wants to Seriously talk term limits, let alone constitutional amendments, and end to the senatorial system, so the corporates continue to win.

      Rome failed, due to the flaws in its political system, that America copied, as it wanted to be different, as usual.

      America must change it Political system, or fail, just like Rome. Simple.

  29. KMOUT
    Nov 30, 2017 at 7:50 pm

    Granny Suddenly worried? I guess so if ya got an R by your name. She didn’t care from 10 trill to 20 trill, what’s the diff now. Flyin in the coffin corner at night with rocks in the clouds below don’t feel so good, eh?

  30. JM Keynes
    Dec 1, 2017 at 2:42 pm

    – Off topic: I change my mind. The FED won’t raise interest rates. Because Mr. Market the 3-month T-bill rate has dropped below 1.2%.

    • Rates
      Dec 1, 2017 at 5:12 pm

      What are you talking about? The Fed runs a tight ship. It’s impossible that they are leaking this out to select players right right?

      Snigger.

      • JM Keynes
        Dec 1, 2017 at 7:19 pm

        – Nope. The FED follows the 3 month T-bill rate and that can be followed on “www.stockcharts.com”. All the other “Data Dependent” claptrap is just to confuse the gullable people and hide this simple fact.

    • Dec 1, 2017 at 8:27 pm

      JM Keynes,

      Closed at 1.27% (not sure what you’re looking at). Re-change your mind?

      • J.M. Keynes
        Dec 2, 2017 at 3:25 am

        – Oooops. you’re right. Still think that that rate will fall.

  31. Rvette454
    Dec 2, 2017 at 10:59 pm

    The “National debt” is a misnomer, plain and simple. The increased ND has never been unsustainable or led to economic decline, the contrary is true, less dollars in the economy because of reduced Federal spending or expanded revenue has stopped private economic growth.

  32. Dec 5, 2017 at 5:23 am

    Before long there will presumably be 2 choices to by one means or another fix this wreckage, the street Weimar chose or a noteworthy war to paper things over … . Despite the of the choice picked, Joe Sixpack will be tossed under the transport. Say farewell to the expectation of an average retirement for the plebs, kiss the white collar class farewell and so forth. Say farewell to the desire for good and better than average reasonable social insurance for the plebs. Also, if training is as of now costly, it is nothing contrasted with what will hold up.

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