US Gross National Debt Spikes $1.2 Trillion in 6 Months, Hits $21 Trillion

These dang trillions are flying by so fast, they’re hard to see.

The US gross national debt jumped by $72.8 billion in one day, on Thursday, the Treasury Department reported Friday afternoon. This March 16 is a historic date of gloomy proportions, because on this date, the US gross national debt punched through the $21 trillion mark and reached $21.03 trillion.

Here’s the thing: On September 7, 2017, a little over six months ago, just before Congress suspended the debt ceiling, the gross national debt stood at $19.84 trillion.

In those six-plus months – 132 reporting days, to be precise – the gross national debt spiked by $1.186 trillion. I tell you, these dang trillions are flying by so fast, they’re hard to see. And we wonder: What was that? Where did it go?

Whatever it was and wherever it went, it added 6% to the gross national debt in just 6 months.

And with 2017 GDP at $19.74 trillion in current dollars, the gross national debt now amounts to 106.4% of GDP.

In the chart below, the flat spots are the various debt-ceiling periods. This is a uniquely American phenomenon when Congress forbids the Administration to borrow the money that it needs to borrow in order to spend it on the things that Congress told the Administration to spend it on via the appropriation bills. So that’s where we are, on this glorious day of March 16, 2018:

This was the largest spike in the gross national debt over a period of 132 reporting days, going back to 2011. Perhaps during the depth of the Financial Crisis, when all heck was breaking loose, and when credit was freezing up, and when millions of people lost their jobs, and when the government stopped receiving payroll deductions from them, and when capital gains turned into losses, and when corporations were drowning in red ink and not paying taxes either, in other words, when tax receipts collapsed due to the crisis, and expenditures for unemployment and other things jumped, well then the debt might have increased more sharply in a time span like this. But not since then.

This chart shows the changes in the gross national debt on a rolling 132-reporting-day basis, going back to 2011:

And this is happening in a booming economy when the debt shouldn’t increase at all as booming tax receipts would match, or more than match, government expenditures. But hey, not in this brave new world.

Despite the boom times – and they’re likely as good as they’re going to get – the government is already forecasting record issuance of net new Treasury debt in order to fund the surging deficits. And the market will have to absorb this debt, just as the Fed has started to unload Treasuries from its balance sheet.

Why is Sears’ CEO still touting “progress” and financial “improvement” even in SEC filings? Why not tell investors the truth, for once? Read… Sears is Dead Meat Walking, after Horrid Holiday Quarter

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  99 comments for “US Gross National Debt Spikes $1.2 Trillion in 6 Months, Hits $21 Trillion

  1. Bobber
    Mar 16, 2018 at 6:58 pm

    The federal government must be planning to default on its debt. There is no other explanation.

    • John
      Mar 16, 2018 at 7:32 pm

      Nope. No “default”. They will print until this implodes. Then, watch the financial reset by military force. Those with nothing… will keep nothing… Those with small to moderate means will be fleeced. Those with substantial means will claw and justify their actions to be in the monies club. The very wealthy will manipulate the financial chess board at the direct expense of everyone else. What happens next with the angry disenfranchised masses is anyone’s guess? Marie Antoinette ring a bell?

      • wotan
        Mar 18, 2018 at 2:16 pm

        i love cake!

        • Rogergoldkin
          Mar 20, 2018 at 6:50 am

          wotan: Cake is a good thing to have if you don’t have any bread.

        • Ron
          Mar 20, 2018 at 8:22 pm

          Cake? In the french language, it is an euphemism. And no amount of sugar will get the bitter taste out of your mouth.

    • van_down_by_river
      Mar 16, 2018 at 9:09 pm

      I don’t think it’s a big secret – the government is defaulting on it’s debt via inflation (currency devaluation). Americans don’t care about inflation, they have huge debts and almost no savings so inflation helps them stay solvent plus they enjoy complaining about it. The wealthy profit by borrowing massive sums and buying up assets so they also love inflation.

      Government debts are inflationary and in a culture of scofflaws and scoundrels inflation is welcomed as it allows people to walk away from their obligations. Government running up huge debts? No problem, just cut taxes and increase spending on non-productive, capital destructive outlays like the military. By all means, lets hire more heroes and give them all pay raises, you can never be too safe and you can never spend too much on the military.

      The Fed says we need more, not less, inflation. The government is just doing their part to help the Fed achieve the inflation they say we need so desperately – thank-you Donald Trump and the Republicans for giving us this inflation we have all been waiting for.

      I’ve had enough of our free lunch culture. I subsist on a minimal amount of groceries and 95% of my paychecks now go toward the purchase of gold. I’ll work and save for a few more years then leave and never come back. You guys stay here and enjoy your free lunch, I’m sure it will last forever, but I’ve had enough and I’m planning my escape.

      • John
        Mar 16, 2018 at 10:16 pm

        But to where? I was just in China… I spoke with a well dresss businessman in the Financial district for a while. I was really taken aback when he shared with me that many of the Chinese #1 fear is how they will afford living in their “silver years”. Sounds like a common thread to me!

      • Jas
        Mar 17, 2018 at 2:57 am

        What happens if gold returns to it’s pre-bubble price of ~$350/oz? What happens if the world goes into a extended depression, who’s “free lunch” will you depend on?

      • Cynic
        Mar 17, 2018 at 7:30 am

        Gold has killed more people than it has ever saved: be careful – very hard to turn liquid, safely and when you want, above all in a real crisis. Travel far enough, and you will find people who will murder you for the price of a bottle of bad whisky, if that.

      • rob
        Mar 17, 2018 at 1:50 pm

        I love your comment where are you going?

        • van_down_by_river
          Mar 17, 2018 at 7:51 pm

          I’m comfortable speaking Spanish so I’m considering immigrating to Chile, Mexico or Spain, but I don’t know yet and I realize, unless you are wealthy, every place will have frustrations and hardships (I’m preparing myself for that eventuality)

          I agree with the comments regarding gold. It really is just a metal and it’s value is arbitrary and there is no guarantee humans will value it in the future. But I’m convinced currencies are being used as a scheme to default on debts and will be essentially worthless in my lifetime.

          Likewise other assets are heavily inflated (in comparison to what I earn) and propertiy owners will be expected to pay for generous retirement benefits of government workers. I believe those generous benefits to be rooted in corruption and I don’t want to get stuck paying for them.

          I concede I may be the one who is delusional but this fact can’t be denied: at the turn of the millennium the deficit was around $5 trillion now it’s over $21 trillion ($140,000 per worker and half of workers pay only social security taxes). I don’t know how this situation is sustainable and I see crashing the currency as the only solution.

          What will happen if/when the currency gets wiped out? I don’t know but I suspect it won’t be good.

        • rob
          Mar 18, 2018 at 1:20 pm

          thanks for the reply good luck

      • DR
        Mar 17, 2018 at 3:56 pm

        Where is the best place to go?

      • amoedo
        Mar 18, 2018 at 11:22 pm

        wouldn’t be better bitcoin than gold for you?

      • Begbie
        Mar 19, 2018 at 7:42 am

        last i checked, you cant eat gold

    • Bill
      Mar 16, 2018 at 9:54 pm

      You’re exactly correct, with some kind of “event”, probably a N-war they can control, but one that allows the declaration of “force majuere” on EVERYTHING. Quite clever, lots of dead people, etc. but nobody will figure it out until long after the fact.

      • Phil
        Mar 16, 2018 at 10:32 pm

        Is the war going to paid with more debt? If it is, who is going to buy those Treasury bonds?

        • Vagabond
          Mar 17, 2018 at 12:08 pm

          I wonder who is currently buying?
          Seems that he 10yr note is staying around 2.85%.. I would have thought with all this new printing and stocks still near their highs, that available cash to purchase would be limited and rates would be wandering rapidly upward.

    • roger
      Mar 18, 2018 at 3:42 am

      US is the only country in the world wish does not need to default bec. they can print USD.
      US can create a NEW USD and pay of with the old massproduced USD.
      US citizen with money in US banks can change the old USD to the new 1/1.
      The others will be paid by the old hyperinflated massproduced USD.
      In US securitie policy.

      • QQQBall
        Mar 18, 2018 at 4:18 pm

        Rubbish. Japan prints Yen, China prints its own currency, etc. Countries have a greater risk of default if they borrow in another currency such as Argentina borrowing in USD with the corralito program.

        BTW, inflating he debt away by printing is a de facto default.

        • rob
          Mar 18, 2018 at 5:16 pm

          China has to have dollars to give its currency value and if it prints yuan, its dollar value depreciates. Its debts in whatever currency are dollar derivatives and the only way repay them is by repaying with dollar earnings. if it cannot make the repayments because its dollar holdings are insuffient, it will default. This is the same for any country, in the dollar system, so only the us has the ability to print its debt obligations and this only lasts for as long as there is dollar acceptance and there are buyers of treasuries. If dollars were no longer accepted in payment, then no currency would be accepted and barter would return as the means of doing international trade.

      • Juanfo
        Mar 19, 2018 at 11:21 am

        Will this new USD be like Mexico’s new Peso?

  2. Rates
    Mar 16, 2018 at 7:20 pm

    Nothing to worry about. It’s just MMT …….. ROFL.

    Anyway, we have The Art of The Deal by The President himself. Here are a few choice quotes:

    “Leverage: don’t make deals without it. Enhance”
    ― Donald J. Trump, Trump: The Art of the Deal

    And when it comes to the Chinese

    “I’ve read hundreds of books about China over the decades. I know the Chinese. I’ve made a lot of money with the Chinese. I understand the Chinese mind.”
    ― Donald J. Trump, The Art of the Deal

    We are in good hands everyone.

    • Nicko
      Mar 17, 2018 at 6:46 am

      That wasn’t trump, that was his ghost writer.

  3. Lou Mannheim
    Mar 16, 2018 at 7:23 pm

    “Perhaps during the depth of the Financial Crisis, when all heck was breaking loose, and when credit was freezing up, and when millions of people lost their jobs”

    Oh the good old days, when consequences mattered. Am I a jerk for feeling a bit nostalgic?

  4. Camerons
    Mar 16, 2018 at 7:23 pm

    “the gross national debt now amounts to 6.4% of GDP.”
    You meant gross national debt is 106.4% of GDP?

  5. DK
    Mar 16, 2018 at 8:16 pm

    Pretty soon you’re talking about real money…..or maybe not?

    • Mar 16, 2018 at 8:27 pm

      This is one of the hottest disputed topics around here :-]

    • van_down_by_river
      Mar 16, 2018 at 9:30 pm

      Money is nothing more than electronic bits stored in various data bases. To go from trillions to quadrillions is just a matter of a few simple keystrokes. EZ PZ.

      Trillions are not a problem for the Fed or the government when money can be conjured by tapping a keyboard. Ronald Reagan proved deficits don’t matter (credit quote to Slick Dick Cheney) and Ben the Bankie, Super Mario and Kruddy Kuroda proved you can create as much money as you like and no one (except me apparently) will ever lose confidence in it’s purchasing power.

      • Dan Romig
        Mar 17, 2018 at 6:36 am

        Central banks can create money, but not productive farmland. General Mills understands this, and they just announced “a strategic sourcing agreement” to acquire 34,000 acres west of Pierre, South Dakota (640 acres per square mile).

        https://www.prnewswire.com/news-releases/general-mills-helps-transition-34000-acres-into-organic-farmland-300608870.html

        This is a wise move by General Mills. It’s still cheap to borrow money, Ag commodity prices are low and as a result farmland is reasonably priced IMO. And for vertical integration, this is the ultimate strategy.

        • G
          Mar 20, 2018 at 8:41 pm

          Agreed buy farm land with Mickey mouse us dollars

      • Peter
        Mar 18, 2018 at 4:24 pm

        If I wer you I’d be investing in something that people always need and isn’t a commodity where the price id dependent on fads or government. For instance, water, food, toilet paper, land and buildings. Not the normal buy a house and flog it for a profit. Thunk long term. When the crap hits the fan, we’ll all need to eat, drink, have somewhere to live and crap. Biology. So we will NEED these things, not just WANT them. That’s where I’d be investing, in things humans can’t do without. No matter how bad it gets. But in my lifetime I have never NEEDED gold. I don’t see me ever needing it in the future. But water, a roof, food and big paper; oh yes!
        Just a thought………

        • G
          Mar 20, 2018 at 8:43 pm

          U need gold to get food n toilet paper

    • Saltcreep
      Mar 16, 2018 at 9:43 pm

      Nonono, not real money. Apparent money. Not the sort of money that the Chinese, Germans et al. can suddenly start to swap for real stuff willy-nilly.

      • WalkerJon
        Mar 16, 2018 at 10:25 pm

        This stuff is currency…..not money. Gold and silver are money.

        • Frederick
          Mar 16, 2018 at 11:39 pm

          Thank you

        • bfast
          Mar 17, 2018 at 12:59 am

          No, salt is money. At least it used to be. I saw some guy on shark tank who claimed he could mine gold out of seawater. If his theory comes together, poof, gold isn’t currency either.

        • Saltcreep
          Mar 17, 2018 at 4:44 am

          Bfast, if the seawater fellow has something going for him, doesn’t that support the view that in the end the only real money is energy? Isn’t that sort of true even without that technology, as energy drives all current extraction and conversion of matter too?

          Salt is a nice example really, since we have a pretty simple process where we make shallow pits which we allow to fill with saltwater, and then let the energy from the sun remove the water and leave us with the salt.

          And why stop at gold? Extrapolating a bit further, those who command energy could presumably extract the atoms needed from whatever medium they might reside in, and combine and condense them into whatever matter they wish.

  6. Gibbon1
    Mar 16, 2018 at 8:28 pm

    The US is no longer a capitalist economy, we’re now a monetary economy.

    Instead of investing capital and getting a return. You force the government, hapless corporations, and consumers to accept debt and then harvest fees and interest differential.

    When it blows up you make the Fed, banks and other small time suckers eat the losses.

  7. George O'Har
    Mar 16, 2018 at 8:41 pm

    As Wolf points out, why, in this economy, more or less booming, or as booming as it’s ever going to get in this age of QE & monetary madness, is America rolling up such stupendous debt? The fact that even now, in this “best of times,” we can’t stop borrowing should scare the hell out of us all.

    Are these people in Washington completely mad?

    Ayn Rand called people like them looters.

    And that’s exactly what they are.

    • Mar 17, 2018 at 1:46 pm

      Moderators, I think this comment is in the wrong section. Discussion of Ayn Rand belong in the YA Fiction section.

  8. Anon1970
    Mar 16, 2018 at 8:49 pm

    Of course, the National Debt is only a small part of the financial obligations which the Federal government has committed itself to. It does not include unfunded liabilities for various Federal programs such as Social Security, Medicare and Disability. Nor does it include unfunded losses on various Federal guarantee programs from student loans to mortgages. One day, the whole mountain of debt and financial guarantees will come tumbling down and David Stockman will be proven right after all.

    • van_down_by_river
      Mar 16, 2018 at 9:47 pm

      Just add 3 or 6 zeros to the end of all existing currency units (except those units on the debt side of the ledger) and your problem is solved.

      One day you check your brokerage account and you find that, by government decree, your account, that the previous day had just $100,000, now has $100,000,000. Of course the government collects taxes on the money you received on the revaluation decree and everyone is happy :) The hundreds of trillions in government debt soon look tiny and all our problems are solved – so you see there is at least a plan, not to worry.

      The government promised you a free lunch and free means free. You voted for them and they will come through for you in a big way.

  9. Paulo
    Mar 16, 2018 at 9:13 pm

    I don’t usually follow the ideas of right wing idealogues, but this came to mind:

    “In 2007, the then comptroller general of the US, David Walker, gave a bleak assessment of the nation’s prospects. America, he claimed, was afflicted by precisely the problems that he saw as responsible for the collapse of Rome: “declining moral values and political civility at home, an overconfident and overextended military in foreign lands and fiscal irresponsibility by the central government”.

    Who is this guy? (from Wiki)
    “In the national press, Walker has been a vocal critic of profligate spending at the federal level. In Fortune magazine, he recently warned that “from Washington, we’ll need leadership rather than laggardship”.[12] in another op-ed in the Financial Times, he argued that the credit crunch could portend a far greater fiscal crisis;[13] and on CNN, he said that the United States is “underwater to the tune of $50 trillion” in long-term obligations.[14]

    He compared the thrift of Revolutionary-era Americans, who, if excessively in debt, would “merit time in debtors’ prison”, with modern times, where “we now have something closer to debtors’ pardons, and that’s not good”.[15][16]

    Don’t get me wrong, I do not call programs like SS and Medicaid entitlements. I believe that a wealthy country like the US could/can adequately provide for all its citizens provided each and all contribute to shared cause. But if someone else spends all the money and squanders the wealth, there won’t be anything left in the kitty. It reminds me of LBOs. We know what happens to the employees and common shareholders when a company is mined and stripped into bankruptcy.

    There are always consequences.

    • Gandalf
      Mar 16, 2018 at 11:18 pm

      It’s the Republican doctrine of cutting taxes until there is no money left to spend on the things that government is supposed to do. Just look at what has happened at the state level in Kansas and Oklahoma.
      Democrats used to be accused of tax and spend, since the days of GW Bush, the Republicans have been doubling down on Federal debt even worse by lowering taxes and increasing spending, while lip syncing to soothing chants about the Laffer curve and supply side economics increasing economic growth and Federal revenue.
      GW lowered taxes and added another mandate to Medicare (drugs!) and the Iraq War which was 100% done off budget, through a series of emergency spending bills that were never funded except by more debt.
      And of course you remember what happened late last year with the giant corporate tax cut, which everybody but the Republicans said was only going to increase the Federal debt.

      • Gibbon1
        Mar 17, 2018 at 4:44 am

        [until there is no money left to spend on the things that government is supposed to do]

        My standard comment. Having 20% of the economy devoted towards public goods isn’t insane anyway you look at it it. And currently the 1% wastes more than that on frivolous things.

    • Nicko
      Mar 17, 2018 at 6:50 am

      Bullocks. The US can and will print. There will never be a shortage of money. Indeed, the US is an oil export superpower once again…more hard currency, it’s an embarrassment of riches. If you want growth, focus on emerging markets, that’s where the margins are.

      • Paulo
        Mar 17, 2018 at 9:37 am

        Nicko,

        Newsflash, the US still imports 40% of its petroleum. It is barely, this year, sufficient in NG. Net imports have yet to fall below 25%, despite claims of energy independence. A lot of exports contain NG liquids, and bio-products.

        Thus, war footing continues in the ME with little chance of decline.

        I have read that unless the real price of petroleum is around $20 US per bbl, there is no chance of returning to past prosperity. (for any of us). The problem is, even at $60 per bbl Oil Companies are barely surviving. Thus, debt replacing cheap energy.

        Van (BTR) has a solution involving gold and bugging out. My solution is farmland, woodlot, and small rentals with no personal debt, plus maintaining good relationships with neighbours and community.

        hmmm, I just heard (via the local rumour mill) we are likely to lose our RCMP detachment quite soon. Nearest RCMP will now be 1 hour away unless they are out on patrol nearby. We also have a few lowlifes n the Valley. The good thing is everyone knows who they are. Maybe we’ll have to start locking our doors. Never have. :-)

        regards

      • Juanfo
        Mar 19, 2018 at 11:50 am

        Tell me about it, exponential parabolic population growth. 45 minute check out lines last night at Walmart here in Central America. 18 cashiers. Parking lot full of late model cars, all going to their new 10 thousand apartment complex. All financed with credit. I asked my wife where are they getting this money from? How is this sustainable?

  10. Wisil
    Mar 16, 2018 at 9:20 pm

    Just secretly run inflation up to 6% and keep the 30 bond around 3%, and we should be fine for another decade. I used to worry about national debt at 12T, but who cares any more. Wake me up when it gets to 200% of GDP.

    • Gandalf
      Mar 16, 2018 at 11:43 pm

      Wisil,
      We have been secretly running inflation up to 6% or higher, by changing the rules for determining the CPI, with hedonics and such.
      Decreasing the cost to produce something by dramatically increasing the efficiency of production with automation/mechanization or by using cheaper labor in foreign countries has been the #1 reason that real inflation for some things (e.g., cars and gasoline) have not gone up that much.
      But look at the cost of things where the cost of labor and increased efficiency through mechanization have had less effect and costs have skyrocketed in the last 30 years.
      Hotels, education, healthcare, have all gone way up.
      Remember when Motel 6 got its name because it cost $6 a night?

      • Gibbon1
        Mar 17, 2018 at 4:52 am

        It’s not really yearly price inflation that one should worry about. It is the long term decline in the labor share of income combined with increasing percentage of income going to rents. Which leads to households and ordinary businesses operating on too thin margins.

        The last bit is what people are angry about but don’t know how to articulate because economists have intentionally subverted people and politicians ability to talk rationally about what’s happening. See George Orwell’s critique of how ideas and language gets abused.

        • Cynic
          Mar 17, 2018 at 7:34 am

          Spot on, Gibbon1. The steady erosion of real prosperity for the masses, which can never return.

      • Wisil
        Mar 17, 2018 at 11:27 am

        If the six dollars was payable in pre-1964 quarters or half dollars (90% silver content) that $6 face value would still buy that same room today. It is easy to keep your eye on the bus of rising prices, when it’s the dollar devaluation bus that will kill you.

    • Gandalf
      Mar 17, 2018 at 12:14 am

      I would add that the wage inflation has similarly been held down by the competitive pressures of mechanization/automation and offshoring.
      In areas where the cost of finding a place to live has skyrocketed, the salaries of essential workers who are not highly paid in other regions, e.g., teachers and nurses, have gone up.
      “Rental equivalence” was one of the first fudges to the methodology of the CPI, in 1983, btw.

  11. Bill
    Mar 16, 2018 at 9:30 pm

    We are one “anomalous event” away from another 2008; which incidentally, was triggered by Putin’s sudden invasion of Georgia in August 2008. He learned quite a lot about that kind of thing… from just doing what they did.

  12. Huwei
    Mar 16, 2018 at 9:35 pm

    Tweny one trillion or 31 trillion or whatever trillion, it really makes no difference. In the end the USA will buy its own bonds, like Europe.

    Last time I looked Germany was not suffering from hyperinflation or any of the other maladies associated with negative interest rates. Yeah, so junk rated companies have yields lower than government bonds, so what? Maybe Toys R Us should re-incorporate in Berlin?

    So long as the whole world keeps inflating simultaneously, there will not be a problem. And the US is fiscally responsible compared to China.

    Does anyone seriously think that the US is going to pay down 21 trillion in debt?

  13. JB
    Mar 16, 2018 at 9:42 pm

    Running government deficits increases the deficits in the current account (trade balances). Economics 101 (national income identity). The last budget bill was a windfall to the Chinese

  14. John Griffith
    Mar 16, 2018 at 10:08 pm

    Debt smebt.
    The USA is pretty well self sustaining. National debt is currently illusionary. Until everyone goes crypto.

  15. R2D2
    Mar 16, 2018 at 10:32 pm

    Seems to me you folks have no experience at draining swamps. It’s so simple. You just hire good, simple, good hearted folks who know about money, like the Goldman Sachs folks (I feel all warm and fuzzy just saying Goldman Sachs). Then these folks start to pour mountains of money into the swamp. You keep doing this for 4-8 years, and sooner or later the swamp is gonna be all dried up. So simple, even a first grader can understand it. So, don’t worry, be happy!

  16. Memento mori
    Mar 16, 2018 at 10:43 pm

    I think last Tuesday , for the first time no Japanese 10-year bonds traded.
    BOJ owns almost evth. Japan is about 20 years ahead on the curve and nothing has happened yet.
    US has a long way to go, the FED can buy all the outstanding bonds, who is to prevent them from doing so? Then they can just cancel them in the end.

    • andy
      Mar 19, 2018 at 1:11 am

      Yes Mm, the Fed can buy and cancel.
      But the printed cash used by the Feb to buy the bonds still ends up in the economy.
      Chasing a finite amount of goods and services.
      Hence inflation and destruction of purchasing power.
      Same same.
      The debt promises get paid in currency not in purchasing power as currency devalues.

      • Jerimiah
        Mar 22, 2018 at 12:57 pm

        Bonds are purchased with US dollars that have already been issued, and are held by some entity at the FED. Issuing bonds is a deflationary tactic, duh.

  17. Mvrk
    Mar 17, 2018 at 12:33 am

    A curve of gross national debt-to-GDP from 1946 to present forms the shape of a near-perfect bathtub. 1946 was that last time debt exceeded GDP, but arguably for a valid reason, i.e. the funding of a very capital-intensive world war that was not discretionary…it had to be fought and won. So we can excuse the left side of the bathtub. The right side, though…that’s just pure denial/insanity.

  18. bfast
    Mar 17, 2018 at 1:00 am

    Ain’t sure how this will turn out, but I doubt if it’ll be pretty.

    • Realist
      Mar 17, 2018 at 4:10 am

      But it will be interesting.

      Let’s see now, I have seen/am seeing the last spasms of the dead British Empire, I have seen the death of the Soviet Empire, now I’m apprently seeing another Empire being in the process of falling down because I think David Walker is spot on.

  19. Dzivago
    Mar 17, 2018 at 2:05 am

    Why to worry ?.Look at Italy/Belgium/Japan when it comes to GND/GDP.Just sleep on,nothing to worry as said.Just ask Janet or Ben to finance everything or just start another war abroad,U are very good ar tht,it can give all the reasons to default:National Security is at stake so everything is allowed

  20. Mar 17, 2018 at 2:38 am

    “debt out the wazoo”

    … is that a technical term?

    • Mar 17, 2018 at 8:40 am

      Yes. I try to avoid specialized jargon. But occasionally, there’s no way around it :-]

  21. LouisDeLaSmart
    Mar 17, 2018 at 3:00 am

    \\\
    Wolf, I read somewhere recently that both China (the largest non-US treasury holder) and Russia have sold a large volume of US treasuries in January. I am not sure what their motivation is, but if they persist, with the QE going on (it’s a good question will there be enough matured treasuries to keep this pace going without releasing anything into the market), and the debt that needs to be covered by treasuries…what if there is not enough money out there to buy the treasuries?
    \\\
    What would be the consequences of the treasuries not getting sold? Are we looking into a hyperinflation scenario like Venezuela?
    \\\

    • Mar 17, 2018 at 9:53 am

      China holds about $1.17 trillion in Treasuries. Russia holds only about $97 billion. So in terms of the overall Treasury market, Russia’s holdings are inconsequentially small. But China’s holdings are about 5.5% of the total, and about 7% of the publicly traded Treasury market, so that could be consequential. But if they dumped all of it at once to shake up the world financial system, the Fed would simply pick them up. It would amount to less than the Fed acquired during QE. And everyone knows this. So China is not going to try to ruin its own economy by doing something like this.

      There will always be demand for Treasuries. But not at today’s yields. A 10-year Treasury yield of 5% next year? The whole world would jump on it and buy it, including me :-]

      • rob
        Mar 17, 2018 at 1:59 pm

        Why are chinas treasuries holdings increasing?

        • rob
          Mar 17, 2018 at 2:03 pm

          if they were intending to sell treasuries now or in the future they would be buyers of the yellow and they stopped two years ago.

        • Mar 17, 2018 at 2:34 pm

          China’s Treasury holdings in January were down from August 2017, but are up from a year ago. They’ve been in the same range for years. They fluctuate but they don’t seem to break out of the range in one direction of the other.

        • rob
          Mar 17, 2018 at 3:05 pm

          They started letting there reserves drop (yuans value fall) and then xi got the word when trump avisited nd now everything is up up up.

      • rob
        Mar 17, 2018 at 3:13 pm

        Ruin its economy? by taking in payment, and holding the ious, of an insolvent customer as its assets.

        • Juanfo
          Mar 19, 2018 at 12:49 pm

          We send them worthless paper garbage, they send us worthless plastic garbage.

      • andy
        Mar 19, 2018 at 1:18 am

        Buy a 10 year UST at 5% with the prospect of corresponding 5% pa USD devaluation is a nil return for 10 years.
        Who would do that Wolf?
        Or are you saying the USD will not devalue over 10 years.
        Open to question I think given the debt explosion.
        The whole point of the discussion.

        • Mar 19, 2018 at 7:39 am

          If the dollar devalues 5% a year, all financial assets denominated in dollars lose purchasing power at that rate, including stocks.

          In addition to the devaluation of the dollar, stocks might drop a bunch over the same period. So you get mangled twice.

          Or you can put your money in cryptos, then you might lose 50% in three months, and the dollar devaluation doesn’t even matter.

  22. Mar 17, 2018 at 3:16 am

    It’s a pump and dump operation on a massive scale. Stock and asset prices pumped up by giant flow of deficit spending and tax cuts. And the timing of the dump will be when once again over leveraged and interlinked financial institutions and their baroque instruments start to collapse globally. What will be dumped is debt and I suspect that will more likely be our pensions and our homes and our health care before it is the weather the banisters as once again they rescue the rich as a matter of “national security”.

    • Mar 17, 2018 at 3:30 am

      Here’s an example of why debt is soaring from my personal business experience. I develop large solar farms. Under current regs there is a 30% Investment tax credit and immediate expensing of a system. A five megawatt PV system cost $10,000,000. $4,785,000 gets written off taxes in year one if you have the tax appetite ($3 millionITC + $1.785 million expensing based on 85% of cost with 21% corporate rate.) Wondering why deficits are suddenly heading to the sky?

  23. Kent
    Mar 17, 2018 at 8:22 am

    The same crew complaining about deficit spending will re-elect the same clowns doing the tax cutting and over-spending.

    The swamp are us.

  24. Michael Gorback
    Mar 17, 2018 at 9:11 am

    Too bad St Patrick can’t come back and drive all the snakes out of D.C.

  25. Bobber
    Mar 17, 2018 at 9:26 am

    With debt growing at $1T per year, they say it’s a great time for a tax cut. Don’t worry, if we reduce government revenues, they will increase.

    Crooked spineless weasels are running this country. Time for real change.

  26. Benx
    Mar 17, 2018 at 9:54 am

    I’ve got my Dixie cup ready for the trickle down. Can’t wait.

  27. william moga
    Mar 17, 2018 at 9:55 am

    good news – we’ll all be millionairs . . . bad news – a loaf of bread will cost $365.

    • Tom T
      Mar 17, 2018 at 8:07 pm

      $365 … is that million or trillion?

  28. Mar 17, 2018 at 11:00 am

    The chart is misleading the draw down (accounting anomalies) in early 2017 is part of the reason for the surge now. And in considering that blue spot below the line, consider width and volume compared to the surge in 2018. Subtract all that blue from the peak surge now and the chart high might actually be a bit lower than the previous chart and inline with the other peaks. That is not to say the debt isn’t going to grow, unless 45 finds a source of revenue, like a national gas tax. And there is the tariff revenue

    The benefits of tariffs are uneven. Because a tariff is a tax, “the government will see increased revenue as imports enter the domestic market. Domestic industries also benefit from a reduction in competition, since import prices are artificially inflated.”
    China is at ground zero in the global unwind of trade, and these US sanctioned (selfish and mean spirited) measures should protect the domestic economy, and at the end of the day they still have our debt, and our dollars. So how much of that blue spike in debt is foreign held obligations we are ready to write off?

  29. Colin
    Mar 17, 2018 at 11:31 am

    It’s hard to say if this continues, but I read retail spending has dropped three straight months. After taking a lot of money out of savings last year Americans may just decide to stop taking out of their savings(which hurts spending) or, worse yet for spending, may decide to put money back into their savings. They may use less debt this year as well, which will hurt spending. All signs point to peak oil around the middle of the 2020’s. You have a bad debt problem and it’s very probable that current and future circumstances will make it much worse.

    • Mar 17, 2018 at 12:10 pm

      Retail spending only dropped on a seasonally adjusted basis from month to month. Retail spending ALWAYS plunges from December (peak holiday selling season) to February (end of return season). This plunge is usually 18% to 23%. The data is then adjusted with HUGE seasonal adjustments to get sort of a straight line from December to February that goes up slightly despite the seasonal plunge. When this seasonally adjusted line goes down slightly, that’s what is reported in the headlines.

      BUT: Not seasonally adjusted retail sales in February were 4.2% higher than in February 2017. NSA retail sales in January were 5.2% higher. NSA retail sales in December were 5.7% higher (Q4 was very strong). This data shows that retail sales continued to grow strongly in Feb (4.2% year-over-year), but not quite as strongly as at the end of 2017 (5.7%).

      • Mvrk
        Mar 17, 2018 at 1:26 pm

        Let’s see how retail sales unfold over the next few months, Wolf. So far what we’ve seen from our $1.5 trillion of debt-financed tax cuts are companies announcing stock buy-backs hand-over-fist, and at record high prices at that. Their execs must have gone to the Jeffrey Immelt School of Business. And now that those “one-time bonus” PR stunts have run their course, actual wage increases are nothing to write home to mom about. And apparently, the voters in Pennsylvania weren’t too impressed with the “crumbs” they’re seeing in their paychecks, as the GOP had to switch gears on their tax cut-centric campaign ads because they weren’t resonating with voters in this past Tuesday’s election. So I guess we’ll just have to wait-n-see.

  30. Richard Magnano
    Mar 17, 2018 at 2:12 pm

    It seems as though we have hundreds of officials who’s responsibility, supposedly is to oversee the workings and lives of our citizenry. But in reality most of them subconsciously or consciously treat the responsibility of their position with less importance of the future ramifications of what they vote for or against. They are given an enormous pay and benefits for
    the time on the job and after. I can’t recall but a few executives in the private sector who were not fired for the lack of there positive performance. This blaze attitude and performance has got to STOP. We all are running in a National Race. We must slow down to a normal walk. America is $21 Trillion in debt with no signs of slowing.

  31. timbers
    Mar 17, 2018 at 4:19 pm

    Wolf, I take issue with the word “booming” to describe this economy.

    Anyways, all will be better, for the “hawkish” Fed is about to unleash the full force and awesomeness of 3 – yes THREE – teenie weenie itsy bitsy 0.25% interest rate increases this year!

    That’ll show those spend thrifts in Washington.

    • Mar 18, 2018 at 11:17 am

      Yes but they are all on the same side of the boat, the doves are now hawks and they want to accelerate balance sheet offloading, TOO ACCOMODATIVE is the term they use

  32. Jack Hydrazine
    Mar 17, 2018 at 5:34 pm

    The national debt will double again since it is going hyperbolic on a geometric progression. Expect $40 trillion within the next seven years or by the end of Trump’s second term, if he wins it.

  33. JA
    Mar 17, 2018 at 11:13 pm

    It would be interesting to see a graph of federal tax receipts. I wonder how the rate of increase in expenditures compares to tax receipts. Is there an expectation of closing the gap?

    My friends have told me about surprise bonuses so it appears the various corporate boards of directors have coordinated this bonus thing. This bonus income surge, along with the taxes from stock sales should raise tax receipts. Unfortunately, I also expect we’ll see even higher inflation.

    For those worried about the dollar, I wonder if Trump’s opening of govt lands to oil drilling will result in the US becoming a huge oil provider in a couple years? If yes, will oil & gas exporting, the export of new silicon valley tech, and trade tariffs be enough to reverse our trade deficit and thus support the dollar? Maybe Tillerson wasn’t fired but given the task to go back to the oil industry and push for rapid oil development. If the preceding is the plan, then Kudlow’s comment to sell gold and buy the dollar isn’t as crazy as many of us think.

    • Mar 18, 2018 at 11:34 am

      Yes. Government collects revenue from tariffs. The excess energy supply brings down prices and allows government to fill in the gap with taxes (see Trump national gas tax), The propose fiscal spending is a mirage. Bush was going to build the border wall for a trillion, they built nothing, now Trump wants it for a lot less than that and illegal immigration has been slowing steadily anyway. Sun comes up in the AM, politician takes credit. Kudlow is just blowing smoke, he is an adviser, that’s all. If times get tough they will lean on the states, and since a Dem takeover is likely in the midterms, you might expect the new Congress to get tough on the deficit. The first you do is address the deficit, the debt can wait. You might expect another balanced budget amendment sometime soon.

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