US National Debt Spiked by $1.5 trillion in 6 Weeks, to $25 trillion. Fed Monetized 90%

I’d never imagined I’d ever see this sort of spike, though in recent years I added an upward arrow with “Debt out the wazoo” to my charts, not realizing just how factually accurate this technical term would become.

By Wolf Richter for WOLF STREET.

The US gross national debt – the total of all Treasury securities outstanding – jumped by $1.05 trillion with a T in the four weeks since April 7 and by $1.54 trillion in the six weeks since March 23, to $25.06 trillion, the Treasury department reported today.

Those trillions are whizzing by so fast it’s hard to even seen them. WOOSH… What was that? Oh, just another trillion. The flat spots in the chart are the periods when the debt bounced into the debt ceiling. Yeah, those were the days!

I’ve been lamenting and lambasting the stupendous growth of the US national debt since 2011, the beginning of my illustrious career as a gnat in the big world of financial media. And through all these years, I’d never imagined that I’d ever see this sort of spike in the US debt, though in recent years I’ve been adding an upward arrow and the green label “Debt out the wazoo” to these charts, not realizing just how factually accurate this technical term would become.

The US debt was even surging at an accelerating rate during the “Best Economy Ever,” when there should have been a surplus and a reduction in the debt, so that the government can go into debt during bad times.

I wrote back then, for example on February 19, when the debt had spiked by $1.3 trillion over the past 12 months to $23.3 trillion: “But these are the good times. And we don’t even want to know what this will look like during the next economic downturn.”

Whether we want to know it or not, we now know it and cannot un-know it.

And we didn’t even have to sit on the edge of our collective chair for long for that next economic downturn to arrive. It’s more than just a downturn. It’s the big one. The nightmare has become a reality. And waking up or looking away no longer helps.

The government has now signed into law a series of stimulus packages totaling $2.8 trillion or thereabouts.

Phase 1: $8 billion, enacted on March 6. To fight the spread of The Virus

Phase 2: $100 billion, enacted on March 18. Tax credits for employers offering paid sick leave, plus increases to unemployment benefits and food assistance.

Phase 3: $2.1 trillion, enacted on March 27. Largest stimulus package ever, dwarfing the 2009 stimulus package of a mere $800 billion. The CARES Act includes provisions to bail out the investors of Corporate America and financial markets more generally, directly and also indirectly via the Fed’s Special Purpose Vehicles (SPVs) to which taxpayers provide the equity capital to take the first loss.

The package includes extra unemployment benefits, free money for taxpayers and retirees, funds for the healthcare system, some money for “small businesses” under the Payroll Protection Program (PPP) that quickly tended to flow to well-connected not-so-small businesses, etc. etc. This is a huge massive complex bill with lots of goodies in it.

Phase 3.5 or 4: $484 billion, enacted on April 28. Refills the PPP and the Economic Injury Disaster Loans, plus sends money to health care providers, hospitals, and for coronavirus testing.

Phases 5 – umpteen: to be enacted soon.

So about $2.7 trillion for now. At first, there was a mad scramble of lobbying to get all the favorite provisions into the bills. Now a mad scramble has ensued to siphon out this money. Billionaires and millionaires will be printed, especially if they’re well-connected.

And lobbyists are highly motivated to get even more stimulus packages through Congress. This is a once-in-a-life-time opportunity.

And while these trillions sally forth into the wild yonder, tax revenues are collapsing. The difference has to be made up with borrowing. The Congressional Budget Office has jacked up its estimate for the fiscal 2020 deficit to $3.7 trillion. There are only five months left in this fiscal year. So these trillions are going to have to be borrowed in a hurry.

Fed steps up to the plate, monetizes 90% of the additional debt.

From March 11 through its balance sheet released last Thursday, the Fed added $1.39 trillion in Treasury securities to its assets. Over the same period, the Treasury Department added $1.54 trillion to the outstanding debt. In other words, the Fed has – indirectly, as is the iron rule in the US – monetized 90% of this additional debt. We’re living off printed money, pure and simple.

But this was heavily frontloaded, with the Fed buying $1.1 trillion in Treasuries over the first 3.5 weeks. The Fed has since backed off. Last week, it bought only $62 billion. And it looks like the market will be tasked to digest more of this debt.

On its last balance sheet, the Fed shed MBS, loans to “SPVs” were flat for the fifth week, and repos fell into disuse. Fed still hadn’t bought junk bonds, stocks, or ETFs. But it sure sent Wall Street dreaming. Read... Fed Drastically Slashed Helicopter Money for Wall Street. QE Down 86% From Peak Week in March

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  221 comments for “US National Debt Spiked by $1.5 trillion in 6 Weeks, to $25 trillion. Fed Monetized 90%

  1. Chris G
    May 6, 2020 at 11:13 pm

    Is inflation on its way?

    • Fernando
      May 7, 2020 at 1:18 am

      My five pence:
      Massive layoffs, demographics and chemical industry all indicates consumer deflation. The financial markets seems to hold all inflation.
      Also, remember that all that printed money tries to replace all the money destruction that would occur if we allow a full depression to come.

      • Petunia
        May 7, 2020 at 9:51 am

        All those baby boomers are going to start withdrawing money, from financial assets, to live on at higher numbers each year. The millennials are not saving at levels to offset the decline. Watch for the financial asset deflation spiral.

        • Trinacria
          May 7, 2020 at 11:34 am

          What Hemingway said applies to this nation that is being “cocked up” (as the British say) beyond recognition (but same with the rest of these other pathetic nations)….how did you go bankrupt he was asked? “Two ways, gradually, then suddenly”.
          Many things were set in motion in the 1930’s, 40’s, 50’s and 60’s to start the ball rolling on the “gradually” . We can add to that the FED who now goes beyond its charter and pushes things further downhill. The 70’s and 80’s, had their own issues to further deteriorate the situation….gradually now picks up a little speed. the 90’s terminating with the repeal of Glass Steagall throws some gas on the fire. Then we start hitting market and real estate bubbles, borrowing out of control, bailouts as far as the eye can see. And voila’ , we are now at suddenly.
          Most of the american populace is complicit as all they care about is shopping, consumption and other related mindless stuff and therefore allowed the criminal politicians together with the corps that own them to bring us to suddenly. Of all of course, while abandoning any values and ethics as those are such old fashioned notions. Good luck and gird those loins.

        • Ed
          May 7, 2020 at 4:34 pm

          Many things were set in motion . . . every decade. But our national debt disaster was really set in motion in the 1980’s, gaining steam ever since.

          The WWII debt declined drastically and steadily until around 1980.

          https://tradingeconomics.com/united-states/government-debt-to-gdp

        • Ed
          May 7, 2020 at 4:45 pm

          My comment is in moderation because I added a link to a debt chart.

          The WWII national debt declined steadily until around 1980.

          It is not accident that the 1980’s marked the arrival of supply side economics and the Laffer Curve, which was often drawn as practically a straight line, suggesting any lowering of taxes would increase revenue.

          Most economists believe the tax revenue v. tax rate curve is an asymmetric parabola with a peak (max revenue) being at a markedly higher tax rate than we have today. Of course, the policy goal is still up for discussion, having said that!

    • Roger Lagerfeldt
      May 7, 2020 at 1:18 am

      Inflation with low intrest is coming

      • historicus
        May 7, 2020 at 5:15 am

        Roger…
        It is likely the Fed will explain away any high inflation readings as “temporary” or “virus related” so as not to adjust Fed Funds to meet the threat. So agree, inflation is coming….supply chain interruptions and empty shelves (oil the exception)…and the Fed will keep rates low to steal from the prudent and the savers.

      • Jdog
        May 7, 2020 at 10:07 am

        You cannot have inflation when money is being destroyed faster than it is being borrowed into existence….

        • Bobber
          May 7, 2020 at 10:54 am

          Can you identify the assets that been destroyed so far? The only thing I see is a ton of money created (printed), and promises to print more.

          They’ve already done one helicopter drop. You think they’ll be afraid to another one?

        • Ed
          May 7, 2020 at 4:55 pm

          The high stock market and lower interest rates have been sustaining the corporate and gov’t borrowing binges.

          If either of those give way, I agree that borrowing will plunge as companies hunker down to handle their debt loads. Will the Fed try to keep the dance going forever?

          Interesting times.

        • cb
          May 7, 2020 at 6:02 pm

          What money has been destroyed?

          Is not the most Fundamental question in Finance ,,,,

          How many dollars, physical and digital, are in existence, who owns them and where are they?

          If you can answer that question, you are the first I know of.

          I am not aware of any money being destroyed. Credit, and with it purchasing power, perhaps. Money, no. The FED is creating dollars at an amazing speed. If they weren’t creating money so fast, then the dollars in your pocket and FDIC insured bank account woud be more valuable.

    • HD
      May 7, 2020 at 2:00 am

      In the long run IMO: yes. Big time.
      Either debts and deficits do no longer matter in this world and 20, 30 or 300 trillion are just silly numbers on a piece of paper,
      or,
      We see what history has always shown us when the printing press goes into overdrive: massive inflation and probably worse, but this time occurring in the land that holds the world reserve currency and with nowhere else to go, because no other currency can currently replace it. At some point, even the almighty dollar won’t be the prettiest horse in the glue factory anymore.

      Besides, massive inflation is the only way out of these humungous debt levels. Paying it back in the conventional way, like politicians still pretend will happen, would be like a 90 year old retiree paying back his new 4 million dollar sedan with 500 dollar monthly installments. A futile excercise, to say the least.

      Maybe the IMF will put its SDR’s back on the table.

      • historicus
        May 7, 2020 at 5:18 am

        Paying back or paying down debt is not even in the discussion. The modern monetary theorists have discovered that giving people their own money, and diluting its value in turn, is a wash. It is a pea and shell game. We steal from the future to finance the present….and the younger you are the more upset you should be.

        • May 7, 2020 at 6:54 am

          Paying back the debt is collapsing the money/credit supply, the exact opposite of the goal of a continual expansion of the credit. It is inherent in the system of using debt instruments as the nearly and effectively sole means of currency (excluding the few token coins in the system).

          Take a few minutes and read 12 USC 411-414. It defines what fed reserve notes are. No, the debt is not designed to be paid back….EVER!

        • HD
          May 7, 2020 at 7:31 am

          A continual expansion of credit cannot exist in a finite environment, period. Only question is: when will it hit the wall?

          Last time I checked, gravity still applies.

    • gRant
      May 7, 2020 at 5:01 am

      I am operating under the assumption that inflation is “hiding” so to speak within the corporations that operate at a loss and have large debt. Examples like the Car industry i.e. Ford, GM, Tesla and VW. Their offering products to consumers at a loss and incurring that debt and holding it, their operations are being subsidized by easy money at low rates. Inflation only happens when their allowed to collapse and these subsidized products no longer exist, reduction in supply causing a rise in prices as “price discovery” is allowed to happen within the market.

      • Fernando
        May 7, 2020 at 5:13 am

        What about the demand side? Talking about cars it seems only Ferrari is doing well at the moment.

      • John
        May 7, 2020 at 7:04 am

        Cat makers operating at a loss? Whered you get that stuff youre smoking?

      • nick kelly
        May 7, 2020 at 7:59 am

        Don’t lump normal outfits with Tesla. The reason VW has only just got into E-cars is that it wasn’t profitable. VW makes a profit on the cars it makes. See below.

        ‘Volkswagen AG’s VOW namesake passenger-car brand missed its profit-margin target in 2018, the German auto maker said Tuesday. Operating return on sales before special items fell to 3.8% at the brand, compared with 4.2% earlier, missing Volkswagen’s target of between 4% and 5% percent.Mar 12, 2019’

    • Old Engineer
      May 7, 2020 at 5:24 am

      Inflation out the wazoo.

      • Jdog
        May 7, 2020 at 10:10 am

        You need a basic lesson in economics….

      • elysianfield
        May 7, 2020 at 11:26 pm

        …I think I need a new wazoo….

        • Noelck
          May 8, 2020 at 1:24 am

          Why does everyone deny inflation? Just because some inflated asset prices will fall?

          One chart to rule them all:
          https://www.officialdata.org/us/inflation/1848?amount=1

          Is this chart wrong?

          Gold was around $300 in 2000. Since 2000 we have basically quadrupled our money supply. Gold is now around $1700.

          If the fixed number of bitcoin in the world was 1 million and they suddenly make it 2 million the price of bitcoin should fall 50% and things should cost double the amount of bitcoins.

          Printing money is inflation.

    • CoCosAB
      May 7, 2020 at 9:10 am

      Nope!

      Look at money velocity (M1/M2/MZM)! MZM and M2 at ALL time lows, M1 trying to reach them…Without velocity very difficult to have global inflation spyking! One some products/services (very specific) it may rise a bit…

      • sunny129
        May 7, 2020 at 6:11 pm

        Add – STAGNANT wage growth since late ’80s
        – Demand CRUSH
        – Supply shock when reversed, to whom China is going to sell?

        Deleveraging DEFLATION of assets once the Mkts meets the reality within the next 2-3 qtrs when full data on unemployment and the earnings will be clear. There is time lag on this, as of now!

        Inflation may be in Food ( due to shortage, mal-distribution) Medical care unless checked by Govt. Education was before but not with more & more online learning.

        Attitude to wards debt based consumption will be limited to NEEDS than WANTS going forward.

        A DEBT has to be paid or written off unless there is bankruptcy of the borrower and or the lender. For each debt there is a creditor at the other end – investors, pension/hedge funds, MFunds etc. Btw. Without the healthy CREDIT mkt there is no such thing as normal functioning Equity Mkt!

        Besides SERVICING the debt can be postponed for a while but cannot be kicked for ever, in the PRIVATE sector compared to Public with unlimited creation of digital money.

        DEFLATION more likely than Inflation, at least first.

    • aqualech
      May 7, 2020 at 9:38 am

      Alive and well in the stock market.

      • Happy1
        May 7, 2020 at 9:51 am

        And home prices. And general inflation. If the same inflation measures applied as in the 1980s, there has been 4+% annual inflation since 2000 on average.

    • Matt Belben
      May 7, 2020 at 10:26 am

      Question: So we live in a country where everything is extremely consolidated with chain stores and banks and whatnot, ie you don’t spend your money at the store and then have that store pay their workers a reasonable wage who then go and spend it in the same place (or the owner make a lot of money and then spend it in the same city). Would this effect be enough to hoover up all extra money that isn’t nailed down in the local economy and dump it back into assets owned by the rich? Is it possible that we will just end up with yet more inequality and asset price inflation instead of classic inflation?

    • Erle
      May 8, 2020 at 1:54 am

      I dunno. Not having a borrowing facility I decided to reward my employees from my pocket. I BSed my way into being an essential in order to stop at least a thousand layoffs from my big customer. They seem to like the fact that their supply chain from us has not been interrupted. Likely they do not care much at all but need the steel to prove that they are doing their jobs from at home. I have a tough time in providing the stuff for work at home folks as dropping a 110,000 pound machine in their front room is impractical as it needs 36″-48″ of rebar concrete underneath it.
      I did get 200 dollar gift certs for the employees from a meat dealer. Lucky for me that I do not have vegans but they would be accommodated without a hitch. Being an employer I was not allowed to get the gift without paying full tax upon it, so I bought a used Cadillac with six speed Tremec manual transmission because no women or people of color would want it. I am holding up my little corner of the economy.

    • San Franpsycho
      May 8, 2020 at 10:45 am

      Not any time soon. We’re seeing a huge collapse in aggregate demand due to job losses, and an extra $3t in government spending isn’t going to replace or exceed the lost income. On the monetary side, the Fed can only create bank reserves (so-called “base money”) that’s up to the banks to distribute, which they’re not doing. The only inflation the Fed can directly influence is in asset prices, which they’ve been propping up for over a decade now; but this has limited effects on consumer prices, aside from housing.

      Where we might start to see inflation is on supply side through supply chain frictions in the short term and de-globalization in the longer term as countries bring more of their fragile just-in-time-delivery bottom-dollar production back onshore where they’re less exposed to forces majeure and the vicissitudes of geopolitics. Also, don’t expect oil to stay at $25/barrel. Saudi can’t support its budgets at this level and it seems like it’s succeeded at knocking out US shale production, so this will go up as well in tandem with increasing demand with people coming out of lockdowns.

    • EndtheFed
      May 11, 2020 at 4:49 pm

      You bet lol. Better word is devalued currency. You’ll be wiping your A$$ with the dollar soon. It’s not worth no more than toilet paper now but the world is just waking up to this fact.

  2. Keith
    May 6, 2020 at 11:15 pm

    We are all MMTers now (Modern Monetary Theory). I do not think there is any way we can grow and pay our way out of this whole. I think our only recourse is to go all in with this spending spree and see where it takes us as a country. As an individual, have plans A-Z to figure out how to provide for you and yours and take advantage of any govt handouts to stabilize your futures.

    On the bright side, I think we are still late to this debt party, so we should be able to maintain for a while longer, excepting any more surprises, that is.

    • Dos Tacos Mas
      May 7, 2020 at 1:01 pm

      “As an individual, have plans A-Z…”

      “Preparations A through G were a complete failure. But now, ladies and gentlemen, we finally have a working plan, which we shall call… Preparation H!!”

  3. Suzie Alcatrez
    May 6, 2020 at 11:16 pm

    I can’t wait for all the deficit hawks to come out of the woodwork next year after Biden is sworn in.

    • MM
      May 7, 2020 at 2:34 am

      Anything to shoot down Medicare for All or a Green New Deal, but we might still get a Boeing bailout!

      • polecat
        May 7, 2020 at 10:17 am

        Read Corey Morningstar’s ‘The Manufacturing of Greta Thunberg’, then convince me that it’s not a ‘steal’ of a deal !

    • HD
      May 7, 2020 at 4:21 am

      You know what the US need? A new president who is willing to allow for the following course of action: ok, so my country is a real mess. It still has a lot going for it and immense potential, but financially speaking we’re toast, much like the rest of the world. And it will take harsh measures to set things right. I only have 4 years to start that healing process because with what I am contemplating, a second term will be off the table. First, I’ll have to get every world leader that matters around the table and assess with them the damages that are now being inflicted upon the world, financially, ecologically and geopolitically. Try to call some sort of truce to sort things out without a major conflict. Second, bailouts are to be limited to the strictest minimum. We’ll have to determine what needs to be preserved in order to prevent chaos and anarchy and keep domestic and foreign predators at bay. Send the rest of the lobbying herd the message president Ford sent to the officials running New York in 1975: “What I cannot understand—and what nobody should condone—is the blatant attempt in some quarters to frighten the American people and their representatives in Congress into panicky support of patently bad policy.”

      Unicorn dreams? Perhaps. But if secretary-general Gorbachev managed to stop the ticking time bomb in his country at the time, thus setting a new course, a US president should be able to follow suit in the face of what we’re up against now. Mind you, Gorbachev was forced to resign, but he singlehandedly ended the cold war.

      • Frederick
        May 7, 2020 at 8:03 am

        Comparing the Russian population during the collapse of the Soviet Union with the American population of today is not realistic in any way so the results will be far different

        • HD
          May 7, 2020 at 10:35 am

          I’m not comparing two populations, but the course of action to take by a leader in the face of a possible implosion. Simply put: in Russia a financial implosion was at hand due to a malfunctioning economic system, in the US and the rest of the free world it is in many ways the other way around: an economic implosion due to a failing (out-of-control) financial system. And forget the virus in all that, because that is just a trigger.

          Nothing to do with Russians or Americans as such, but with the willingness of a leader to address the core of an urgent problem.

      • roddy6667
        May 7, 2020 at 8:40 am

        Gorbachev is from Russia, a country of people who are used to making sacrifices and toughing it out.

        • polecat
          May 7, 2020 at 10:45 am

          Imagine if you will, Muricans pushing a broom, or pulling a rake (No, not That kind!) .. where as in reality, they’re firing up the backpack blower, to their neighbor’s .. or to their client’s neighbor’s chagrin!

          We can’t seem to shake that siren song of CONvenience, no matter the cost. THAT’S the problem. We’ve collectively become inured to thinking we can have it all, anytime anywhere, anyhow .. without pain, sweat, or patience – damn the consequences ! .. be they intended or otherwise.
          And of course, the financial intermediaries especially fit that bill to a T. Useless Tapeworms, the whole fn lot !

        • Person X
          May 7, 2020 at 10:59 am

          I agree completely with polecat….we have eliminated the idea that sometimes things have consequences. We just try and cheat our way out of everything and it seems just the norm to think that no one should pay the price for anything if it doesn’t work. Sometimes the answer is less jobs, or bankruptcy etc. and if that can’t happen then we just keep piling on the bad decisions and throwing money at it to delay the consequences.

      • Frengineer
        May 7, 2020 at 10:55 am

        HD for President!!!

        • HD
          May 7, 2020 at 12:16 pm

          No thanks, I prefer to remain a keyboard warrior. Far easier and without any consequence in the real world. Besides, someone told me you need to be American to apply for the job.

      • May 7, 2020 at 1:01 pm

        HD:

        “But if secretary-general Gorbachev managed to stop the ticking time bomb in his country at the time, thus setting a new course, a US president should be able to follow suit …”

        Be very careful what you wish for. I lived there during these times, can tell you first hand. It’s all very cool – when you watch it on TV from abroad. I hope I won’t have to go thru something similar again.

        • HD
          May 7, 2020 at 1:46 pm

          Point taken, Andrei, and I believe Gorbachev was far more popular in the west than in the USSR where things were messy for a long time apparently. But I have a question because I sincerely want to know: had Gorbachev not acted when he did, how would things have gone down in the USSR, for the regime and for its citizens? I’m asking because it might be of some relevance to what is currently happening in the world.

        • May 7, 2020 at 6:19 pm

          HD:

          “I believe Gorbachev was far more popular in the west than in the USSR where things were messy for a long time apparently”

          Gorbachev was IMMENSELY popular when he just came to power and started his reforms. People didn’t believe it was even possible to openly say what he was saying. People wanted the changes but it appears the majority didn’t have any clue what these changes will bring along. I believe many would have eagerly go back in time if was possible.

          I recently browsed Gorbachev’s book where he told how he was traveling meeting with people when later he was running for president of Russia – I was glad he managed to return home in one piece. Imagine some town where half of its population has been employed for years by a big factory that was just rendered useless by the changes he initiated – and he came there asking these people to vote for him?

          “I have a question because I sincerely want to know: had Gorbachev not acted when he did, how would things have gone down in the USSR, for the regime and for its citizens? ”

          I don’t know the answer. There possibly is no single answer for all the citizens. I would guess that it could have been gradually decaying for quite a long time without any drastic changes.

    • Happy1
      May 7, 2020 at 9:55 am

      Yes, irony indeed. But how does boondoggle green new deal annmd Medicare for all help us out of this spiral?

    • VintageVNvet
      May 7, 2020 at 10:19 am

      C’mon SA,,, anyone with any kind of focus/awareness of the machinations of the dems know that creepy joe is just a stalking horse for whomever the rulers of the universe in general, and the dems in particular (both so called ”parties” of USA politicians being the same paid political puppets of the oligarchy IM and many others opinions) have chosen to replace the current pres…
      OK, I will concede that the biter may be elected, in spite of his clear record as ”biter” etc., etc., as a result of the brainwashing hate promulgated SO continuously by the media haters, etc. , as well as by the humongous amount of money that will be spent, THE single clear indicator in USA elections recently, esp. pres ones,,, but, if so, he will be replaced very soon, if for no other reason than his very clear dementia, etc.
      And SO, this will give our real rulers a very clear path to total control of us PEEONs now and for the near future,,, and, IMHO, they, the real rulers, have already given very clear indications of how they are going to take us all to the cleaners,, aka modern serfdom,,,
      I want to make clear that I am NOT in favor of ”blood in the streets,” but I am totally in favor of working out constitutional amendments, etc., to at least try to get our ”ship of state” back on the course to more democracy and the individual freedoms arising therefrom that IMO our founders had clearly in mind when they did their very very dangerous work to start USA.
      Thank you.+

      • Starrygordon
        May 7, 2020 at 8:17 pm

        I agree that Biden seems to be a stalking horse, but I don’t think the ruling class is as competent as you imagine, and certainly not as competent as _they_ imagine. They are not going to be able to control things — the incompetence made visible by the COVID crisis being an excellent example. I think we can expect a good deal of random stuff in the next several months. ‘Interesting times.’

  4. DR DOOM
    May 6, 2020 at 11:24 pm

    Congress is moot. The Executive is moot. The Judical branch bars the every day man Of standing in their courts and has made him moot. Redress is losing hope.

  5. MonkeyBusiness
    May 6, 2020 at 11:24 pm

    So MMT is basically here.

    Can’t say I’m surprised. The only thing consistent in this country is no matter who is in charge, we see a rise in debt.

    Phase ?? will be the Make America’s Infrastructure Great Again Bill. And just like any infrastructure project, they will start “small” i.e. 3 trillion, although the final total will probably be 20 trillion. The Fed will be too happy to advance the Treasury anything they want. Inflation will go crazy for sure.

    • May 7, 2020 at 1:39 am

      If by inflation you mean wage inflation, it would certainly be a welcome change. If you’re referring to the CPI, that is actually a proxy for wage inflation as it mainly measures increasing costs of discretionary purchases minus hedonic adjustments. I don’t think that will rise for a long time yet.

      We’re stuck in a kind of vicious circle:
      1. Wages stagnate and spending weakens, shown by a low CPI.
      2. The federal Reserve moves to boost asset prices.
      3. A bit of temporary capital spending ensues along with a heavy increase in the concentration of wealth.
      4. Cost of living rises as wages stagnate and spending weakens, shown by a low CPI. Rinse and repeat.

      • historicus
        May 7, 2020 at 5:22 am

        Those who push for wage increases should be outraged at any promotion of inflation by the Fed.
        This is what steals value from the dollar earned today.
        The meager 2-2.5% inflation the Fed is “okay with” RIPS 22 to 28% off the dollar in just ten years. THAT hurts the working class, and in dramatic fashion. But it never seems to enter the discussion.

        • Happy1
          May 7, 2020 at 9:55 am

          Amen

      • Tom Pfotzer
        May 7, 2020 at 7:25 am

        John:

        Well apprehended, and well said.

        Add in misallocation of “temporary capital spending”, some disillusionment via cronyism, and Historicus’ point about inflation in the context of flat real wages, and I’d say that completes the picture.

        So, what are root causes? Why is all this happening?

        What are we going to do differently once the crash happens and we’ve cleared away the rubbish?

        • brent
          May 7, 2020 at 3:44 pm

          The root causes is a voting public that doesn’t understand what is going on and is too tired, distracted, or swayed by alternative narratives, and thus has been unable to build consensus and organization to elect politicians willing to addressing our economic system.

    • Jdog
      May 7, 2020 at 10:23 am

      MMT is a lie. It is based on the fallacy that debt has no impact on growth which anyone who understands anything about economics knows is not true.

      When debt reaches a certain point, it adversely effects productivity and growth.
      Also if debt grows faster than income, the eventuality is economic collapse.

      The bottom line is it is much easier to borrow money than to earn it. When
      borrowing becomes too easy and common place, it begins to take the place of production which is why MMT cannot work long term. Humans will always do what is easy rather than what is difficult given the opportunity.

  6. phathalo
    May 6, 2020 at 11:32 pm

    We will need a bigger chart… so how soon to get to the quadrillion?

    • M
      May 7, 2020 at 12:18 am

      Yes, exactly. At this rate, we will need a logarithmic chart or to knockdown the wall in the conference room housing the chart to accommodate a larger one. :-) Good thing our computers can handle quadrillions easily.

      I wonder how the total US liabilities are doing? They were last estimated at over $200 Trillion with a T! See 2017 Forbes article, ” Your Pension is a Lie …”

      I am kind of afraid to ask and pray that no one will add to that total all unfunded state and local liabilities which were not in the $210 Trillion. This may sooner or later cause the dollar to loose credibility, as foreigners realize that our leaders’ plan is we will just print dollars to infinity and beyond! We will retire basically into a continuing Ponzi scheme.

      Private pensions are also toast. I will leave your figuring out why as homework. :-)

      • M
        May 7, 2020 at 12:30 am

        I guess having the IRS go after ultra rich tax cheaters’ foreign shell companies and the huge corporations owned by them to reduce the US federal debt, which do not pay taxes, is now taboo. MEMO: ultra rich crooks and banksters now have the right to bailouts whenever they make mistakes and have the right to not pay taxes.

        • M
          May 7, 2020 at 12:50 am

          Hospitals, medical equipment/supplies manufacturers, clinics, and other medical providers must be funded or we will all be toast in the coming winter.

        • Wolfbay
          May 7, 2020 at 6:28 am

          If we take everything from the rich crooks and banksters it would probably fund the budget for 6 months.

        • John
          May 7, 2020 at 7:24 am

          Ha, wolfbay says

          “if we take everything from the rich it will only fund the budget 6 months.”

          Seeing that the upper 10% hold 95% of the wealth, how does your remark even begin to make sense? But yet by saying that are you inferring that the lower 90% can and should fund the budget?

          I do believe you are just repeating tired old lies.

        • Happy1
          May 7, 2020 at 9:57 am

          There isn’t enough wealth in the US to pay this kind of debt. There will either be actual default or default by inflation.

        • Phil
          May 7, 2020 at 10:16 am

          https://www.brookings.edu/blog/up-front/2019/06/25/six-facts-about-wealth-in-the-united-states/

          Looks like a lot of money out there. People at the top broke this thing, let them pay for it. They stand to lose the most anyway.

        • M
          May 7, 2020 at 2:54 pm

          Phil: you would be shocked at how much money is held through foreign, shell companies that in turn own chains of other entities. All published, wealth computations exclude that hidden wealth.

          It is why many companies choose to buy back their stocks instead of paying dividends, in my opinion. Remember always, CEOs, directors, and corporate officers are usually just well compensated employees. The corporate control groups (beneficial owners of the foreign, shell companies) can fire them anytime.

          It is all a puppet show for the gullible. Same for banksters.That is why a certain politician’s wealth tax idea was hated and turned media against her. It would have disclosed hidden millions/billionaires.

        • VintageVNvet
          May 7, 2020 at 4:41 pm

          Phil,
          Basic error when they say top 20% own 77% of wealth, over triple the middle 60% means wealth is over 102%,,, eh?
          Otherwise interesting to see this from Brookings, not exactly known to be uhhh ”radical.”
          Still won’t matter much as long as the politicians of both parties are basically paid puppets doing the bidding of the same masters.

        • Noelck
          May 8, 2020 at 1:42 am

          Maybe start in South Dakota :)

    • historicus
      May 7, 2020 at 5:24 am

      But it will only be “1” quadrillion…..just one…. a small number in the mind of the public. The “little number” game.

  7. Phoenix_Ikki
    May 6, 2020 at 11:34 pm

    These numbers are just scary especially at the speed and velocity of it the last couple of weeks. Maybe if we had been more prudent during the “good time” then this might make more sense given the calamity we’re facing around the world, sadly though this chart will be a forever shooting to the moon chart. I can’t imagine any scenario in my life time that will see this trending down perhaps as good of a chance as being able to travel faster than the speed of light. What’s truly scary is that we are so desensitize by the frightening large numbers as if trillions have lost its meaning now. What’s adding another couple of T here and there, 25.06T, add another 10T and at some point people are too numb or too ignorant to know what that really means down the road.

    To add insult to injury, if there’s any real life consequences from our national debt blowing up, none of these old F$$$ from the FED, administration or congress that helped contribute to the problem will live long enough to deal with it. F over the future generation for decade or centuries to come and since most of these elites are in a different class, I am sure their offspring won’t have to deal with the consequences either.

    • Beardawg
      May 6, 2020 at 11:53 pm

      Phoenix_Ikki

      “….What’s truly scary is that we are so desensitize by the frightening large numbers as if trillions have lost its meaning now…”

      I continue to be baffled as to how trillions can enter our economy and we get deflation. It is just non-sensical. Barring E and W coast real estate which has been in La La Land for 50+ years, everything from milk, eggs, Big Macs, daily goods to residential real estate should rightfully be going “out the wazoo” – but it doesn’t. For this reason, I DO agree that all the funny money has “lost its meaning” since we are not really feeling the inflation (much) and inflationary predictions for the past decade during “wazoo” times has likewise not materialized. Baffling.

      • Phoenix_Ikki
        May 6, 2020 at 11:58 pm

        Well, you brought up a good point. Real estate is a good example of kind of out of control inflation but then it’s not part of CPI so inflation can be made to look a lot lower than what it is.

        • polecat
          May 7, 2020 at 11:01 am

          Yes. The Hand Magician’s Trick, The Wave of the Hand, Reeling the Mark, Shelliing the Pea, ‘The World is Your Oyster!’ …..

          Well, I can tell you that at some point, that sorting hat’s gonna be workin overtime. And it won’t be magic either. It will become a series of bare-knuckle fights!

      • No1
        May 7, 2020 at 12:03 am

        Have you received any of these trillions? Likely, only through the stock market or the housing market, unless you work for a unicorn. Most people who make money through financial markets are ill-inclined to spend their money. If the money was spent on Great Society-style programs, then you would have CPI inflation.

        • Beardawg
          May 7, 2020 at 12:11 am

          No1

          “….Most people who make money through financial markets are ill-inclined to spend their money….”

          So in essence, the wealthy are seeing inflationary paper gains but don’t really spend? I guess that does make some sense. If their inflated account balances are not spent, then I guess us pleebs don’t really see the inflation in most everyday transactions. I had not thought of it that way. Maybe “wazoo” only means something to the uber-wealthy. That is strangely reassuring.

        • No1
          May 7, 2020 at 12:42 am

          A lot of that money is stashed in random tax havens. I think outside of its effect on asset prices (which are terrible), it doesn’t really matter to normal people. This is why monetary policy will always be so unfair and skewed to the wealthy. This is the only way to flood the economy with money without it causing CPI inflation, then the FED just prays some will trickle down to the plebs, which it is doing less and less all the time. So plebs end up with expensive real estate they can’t afford and little in the way of a benefit from the monetary policy.

          Probably would be better off giving capitalism a try.

        • Happy1
          May 7, 2020 at 9:59 am

          CPI inflation is vastly understated since changed in the 90s. By the older more honest measures it has been well over 4% annually the last 20 years.

      • andy
        May 7, 2020 at 12:36 am

        Great question Bdawg.

        I think its because about 90% of the $2.7trn (and a further $4 trn in Fed bailout money) goes direct to asset purchases and does not chase real goods and services and then inflate the CPI.

        Double wammy is the real goods and services economy is also collapsing.

        Note to asset holders (includes pension recipients) and all others- when you try to cash in your assets and buy real goods and services expect collapsing purchasing power/hyperinflation.

        • Karen
          May 7, 2020 at 9:21 am

          This is exactly what’s going on. I’m starting to get traction in persuading people inside the bubble that they should NOT be delighted to to see stock markets rising against a backdrop like this. It’s just appalling

        • SocalJim
          May 7, 2020 at 10:19 am

          Karen …

          Actually, I would be worried if the stock market was not rising. If you look at ROE from the dupont formula, you would see that increasing financial leverage does increase ROE, and that flows to increasing stock prices. Financial leverage in corporate America has been on a one way train with buybacks financed with corporate debt offerings, and this pattern continues with the recent FED actions. If stock prices started falling when financial leverage was increasing, while that would be a broken capital market system.

        • May 7, 2020 at 2:13 pm

          Companies that have losses have a negative ROE. Leverage increases that negative ROE. There will be a lot of this in Q2.

        • timbers
          May 7, 2020 at 11:31 am

          SocalJim,

          Zillow says my home appreciated $4,799 these past 30 days.

          I don’t believe that.

          Do you?

        • timbers
          May 7, 2020 at 11:32 am

          “…appalling.”

          That’s our leaders, the fruit of their policies and labours.

      • Icilius
        May 7, 2020 at 1:48 am

        “I continue to be baffled as to how trillions can enter our economy and we get deflation.”

        where exactly are you seeing deflation?

        as to the trillions entering the economy, i think you misunderstand. these trillions are not entering the ‘real’ economy. most of them are being used to prop up financial assets and balance sheets on wall street and the corporations.

        in other words, they are not being ‘spent’ in the sense of milk, eggs, and big macs. if those trillions were entering the ‘real’ economy and being spent, you would certainly see prices increase for these items. prices are increasing, however, but more from scarcity than from any amount of money printing [at the present]

        also understand that the fed can print up any amount of money it wants, even a quadrillion dollars. if this money just sits on the sidelines and does not MOVE through the economy, it will not have much effect. i believe the term is ‘velocity of money’, and in real inflation scenarios [like weimar germany] when people were paid, they rushed out to buy things because by the end of the day, prices would have increased by 50,100,200%. the money you held had to leave your hands quickly in order to benefit from it. that action, the immediate spending of increasingly worthless money, adds fuel to the fire of true inflation/hyperinflation.

      • MD
        May 7, 2020 at 2:09 am

        There is inflation when the money is pumped in – in everything that wealthy speculators speculate in – stocks, real estate, art, classic cars etc.

        There’s no change in the price of a loaf of bread because said speculators are not running out to spend it on loaves of bread.

        • VintageVNvet
          May 7, 2020 at 7:54 am

          As a ”bag boy” at first ”supermarket” in small town in early 1960 era, I remember well that most weeks the bargain bread deal was 10 CENTS per ”24 inch” loaf,, usually plastered large on the front windows of the store… 10 cents!!
          And, to be a bit more current,,, the house we paid cash for in early fall of 2015 had doubled by early fall of 2019 per the tax appraiser’s website,,, then went up another 25-30% — and I will add that we have some kind of ”save our homes” tax raise limit, thank the Great Spirits.
          These machinations by the fed and guv mint will no doubt double the ”market value” again, soon as these trying times are past,,, but who cares,,, the real value of a home is always the same,,, no matter the market value.

        • SocalJim
          May 7, 2020 at 10:20 am

          Where I shop, food prices are headed higher. My grocery bill is headed up, and I would suspect yours is too.

      • Mr. Ralph Hiesey
        May 7, 2020 at 3:18 am

        Well, with Fed holding interest rates at near zero, why not just hold cash instead of bonds? No credit risk. Fed dumping cash in trade for assets. Cash is being held non transactional as wealth. That’s why no inflation.

        I wonder what happens if inflation does start to go up a little, making that cash look a lot more combustable–and the Fed tries to stop it by increasing interest al la Volker. Then all that cash may suddenly look very unsafe–come out of the woodwork to catch on fire to chase real stuff at an unbelievable rate before cash approaches zero value. I hope I’m not right.

      • Heff
        May 7, 2020 at 5:26 am

        How’s the old saying go: It doesn’t matter until it does? If you look at long term charts of credit market debt, they double every 9-10 years, give or take. This is what makes gdp grow. Yet, at some point, obviously, debt cannot keep doubling. I believe, at some point very soon, debt will matter.

        • patrick helmick
          May 7, 2020 at 9:44 am

          I keep waiting to see MMT implode the global economy but instead it is coronavirus (or the response to it) that has done the sinking – but until MMT is discredited by PAIN the politicians are thrilled by the ability to print/or X’s and 0’s money for nothing to infinity – no pain – no stopping it !

      • May 7, 2020 at 9:13 am

        Beardawg ,

        “I continue to be baffled as to how trillions can enter our economy and we get deflation. ”

        Where the heck do you see “deflation” – as in lower consumer prices???

        Gasoline has gotten cheaper because oil collapsed. But that’s about it. Has your health insurance premium gone down? Is rent going down? Is food getting cheaper? I have not seen any of it.

        In my life, there were only three quarters of consumer price deflation — the rest of the time, it was more or less rampant consumer price inflation.

        • Mr. Ralph Hiesey
          May 7, 2020 at 1:46 pm

          Wolf

          Of course you’re right about inflation, there HAS been some inflation for years. But I think maybe Beardawg and I have both been slightly brainwashed by the Fed–they keep agonizing that inflation isn’t high enough. And jawboning that it’s really hardly a noticeable problem at all or anything to worry about, so stop worrying as we lower rates again–

          And considering how much M1 has been expanded since 2007, it is astonishing how little inflation has happened. The fact that M1 velocity has gone down to 50% what it was in 2007, of course “explains” it. Which provides direct evidence that that QE mostly went into held cash wealth at zero velocity, rather into hands of the bottom 80% who would have likely spent it.

      • Jdog
        May 7, 2020 at 10:49 am

        “I continue to be baffled as to how trillions can enter our economy and we get deflation. It is just non-sensical.”

        You are only looking at one side of the equation. No one is looking at how much money is being destroyed.
        Just as money is borrowed into existence, it is also defaulted out of existence. Just as the leverage of borrowing multiplies inflation, default on leveraged debt multiplies deflation.
        We have deflation because money is being destroyed by default on debt faster than government is borrowing it into existence.
        Try to imagine how much money is being lost as the entire world shuts down for 2 mos. Do the debts stop just because the income does? For every business that shuts down how many other businesses are effected? When the Auto Makers shut down operations in Detroit, it devastated the entire rust belt because of the effects on the supply chain.
        Today it is not just auto makers, it is almost every industry which is shut down, which effects all the suppliers, and the suppliers, suppliers.
        Every business that goes under effects many more businesses. Money is being lost and destroyed everywhere world wide.

        • cb
          May 8, 2020 at 5:27 pm

          Jdog says: ‘Just as money is borrowed into existence, it is also defaulted out of existence.”
          ______________________________

          But money is not defaulted out of existence. The debt might go away, but the money is already in the system, where it stays.

    • paul easton
      May 7, 2020 at 2:44 am

      phoenix ikki please relax. it is easy to get out of huge levels of government debt. just get another government.

    • Frederick
      May 7, 2020 at 3:54 am

      Nah, they will all be decamped to places like New Zealand and Paraguay I imagine well before the real doo doo hits the fan

    • Saltcreep
      May 7, 2020 at 6:23 am

      No matter how good the system is at maintaining the illusion, it will break when a sufficient amount of pensions and other liabilities start to come due, and people to a greater extent seek to convert those promises into real consumption. There are far too many promises and too few real resources available at current prices to make good on them according to expectations, so there will be a nasty awakening.

      I suspect it will eventually be strongly inflationary, as defaulting on the promises will bring about an immediate and massive reaction, whereas making good in nominal terms, causing galloping inflation, will cause a slightly slower massive crash in our living standards.

      A commercially viable, highly energy efficient and easily scalable fusion technology or something might save our bacon for a while longer, allowing us to access and deplete even more marginal resources. But barring some sort of technological miracle we’re pretty much screwed over coming decades.

  8. Memento mori
    May 6, 2020 at 11:46 pm

    The antidote to debt is living within your means.
    Don’t become a debt slave, don’t buy things you can’t afford and don’t really need.

    • TonTon
      May 6, 2020 at 11:54 pm

      One thing my grandmother taught me ‘Neither a borrower nor a lender be.’ I purchased my frugal house with cash. Anyone who has not been preparing for the last 12 years for the ensuing madness should start doing so as soon as possible.

      • Frederick
        May 7, 2020 at 3:56 am

        Alittle late I would say but better late than never Peter Schiff has been screaming about how nothing was fixed after the Great Recession I listened to him and got out early

    • Wisdom Seeker
      May 6, 2020 at 11:58 pm

      Amen. But there’s more to it. Debt and Credit are opposite sides of the same thing. One cannot exist without the other. So the second antidote to debt is also to avoid accumulating credit. It’s not enough to avoid being a slave yourself, you also have to avoid enslaving others.

      So no debt, but also avoid accumulating excess bank credit as savings. As an investor, avoid owning bonds (debt). Also avoid the stocks of companies mired in debt, as well as the stocks of companies with more cash than they can productively spend (Apple, Berkshire…). And, for that matter, the stocks and business of companies that treat their employees like slaves (Amazon).

      When you work through this, aside from being frustrated that there’s very few ethical ways to invest savings, you also realize how deeply, deeply messed up the financial system has become. The earth couldn’t care less about debt or credit, and humanity has overly constrained itself by imagining so much of it into existence.

      If you want to break the financial chains, follow Shakespeare and “neither borrower nor lender be”.

      • Memento mori
        May 7, 2020 at 12:06 am

        The only reason you need to invest your savings is because of the mandated 2% theft by the Fed. If your money wasn’t constantly devalued, the majority of people will be happy just keeping cash.

        • historicus
          May 7, 2020 at 5:28 am

          memento.
          Yes. The financial history of this nation prior to 2008 was that Fed Funds equal or exceed inflation.
          Now, somehow, it is accepted by the financial talking heads that 2-2.5% inflation is a good thing. And that having rates well below the aggregated and compounded inflation rate is the right path.
          Those inflation rates rip 22 to 28% off the dollar in ten years…
          And all that will be posted are charts of what appears to be a benign inflation rate…..omitted is the aggregation and the compounding.

        • roddy6667
          May 7, 2020 at 8:54 am

          No, you don’t “need” to invest. Inflation can depended upon to always be present, eating away at your savings. There are two alternatives. You can “invest”, which means to gamble it, hoping that somehow a passive machine will replace what inflation takes while you sleep. This works sometimes. It doesn’t work now. It’s a crapshoot, and hundreds of millions of people are finding that they are rolling snake eyes. The second option is to spend less and save more. You need to overshoot your retirement goal to allow for shrinkage. This works if you suck it up and do what it takes.
          Depending on the stock market to save you is magical thinking. It rates up there with prayer and voodoo.

        • cb
          May 8, 2020 at 6:29 pm

          I would like to understand the true motivation for te FED wishing for inflation. What is the end profit do they see coming from it, and what group do they see as profiting?

          To my way of thinking it keeps the hamster wheel rolling, and keeps the hamsters (workers) running, while the wheel owner (asset holders) siphons off energy. It encourages borrowing to buy assets, and drives the prices of those assets based on expectations of asset appreciation. It drives a desperation to purchase, before one is “priced out.” It drives bubbles. It cruelly traps young families into debt servitude by having them reach to provide security, and overpay for a house before thay forever miss the opportuniy. It is one of the components of many modern societies and is uncivilized. It steals from the young and uncapitaled to support the capitaled. It gives a substantial leg up to the well born, and penalizes the disadvantaged even beyond their current impoverished condition. It is like conducting a race uphill, where the weakest participants are burdened with a backpack full of rocks, while the strongest participants are given a shot of oxygen to start the race. It drives inequality and is ruinous to a moral and virtuous society. It turns people into wagesalves, or less.

          Is it as evil as the picture I paint, or is their some hidden virtue that the all knowing FED has provided? Is it a necessary component of keeping society working? What am I missing?

      • Icilius
        May 7, 2020 at 2:10 am

        there is really nothing wrong with debt, as long as you can service it. even if you cannot, there are processes in place to deal with it [bankruptcy]. the problems arise when those processes are not allowed to function properly.. as in, companies that are failures for whatever reason and should deservedly be liquidated or restructured in bankruptcy, are instead bailed out by the government. or, banks that are essentially insolvent, given monetary ‘life support’ by the federal reserve. ‘too big to fail’ is a total garbage concept. it essentially institutionalizes bad decision making, recklessness, and ensures that malinvestments are never resolved or cleared from the system.

        there will always be borrowers and lenders. there is nothing wrong with either one. that shakespearian maxim is but wishful thinking in a reality that does not exist on this earth. the creation of credit and its impact of driving human effort and motivation cannot be understated or substituted.

        • Jdog
          May 7, 2020 at 10:57 am

          Debt is only beneficial if it is being used to generate income. Debt used for consumption is always harmful.
          Not only does debt make the item you are purchasing more expensive than it should be because of finance charges and interest, it fuels inflation which erodes the value of your income.

          People used to understand these principals, but today they do not. Most people today are broke, even the ones who think they have some wealth in assets are really broke, they just do not know it yet. The deflation that is coming will wipe out most of the equity people think they have and wipe out the value of their investments.

        • cb
          May 8, 2020 at 6:08 pm

          Icilus said: “the creation of credit and its impact of driving human effort and motivation cannot be understated or substituted.”
          ________________________________

          Can it be overstated? Is your position that in the absense of debt, society could not prosper as fully as without it?

          Can an economy function without debt?

          Would an economy be less if it was comprised of 100% equityholders as opposed to creditors and debtors?

          I will submit thet being in debt is a powerful motivator. It is very effective at subjugating debtslaves to their masters, the creditors.

        • cb
          May 8, 2020 at 6:42 pm

          and let’s at least clarify that there is something wrong with a “lender” that gets to loan what they create out of nothing.

      • cb
        May 8, 2020 at 6:35 pm

        Wisdom Seeker says: “So the second antidote to debt is also to avoid accumulating credit. It’s not enough to avoid being a slave yourself, you also have to avoid enslaving others.”
        ———————————————
        Not only wise, but virtuous. A tough path in our FED controlled society.
        Social norms and practices are shaped by common practices. When in a system run by Liars and Thieves, decency is subject to degeneration.

  9. iStever
    May 6, 2020 at 11:49 pm

    Can only kick the can down the road for so long until u gotta pay the piper. All this money printing and debt binging will get us into a bigger mess than covid-19 ever could.

  10. Willy Winky
    May 6, 2020 at 11:52 pm

    Having run out of ammunition after battling the wolves that caused GFC, the Central Banks have now dropped multiple nuclear bombs into the global economy in the form of many trillions of dollars of stimulus.

    The wolves have retreated behind the fence and are observing the carnage as the Central Banks continue to drop bomb after bomb into their compound, scattering the sheep, and destroying what’s left of the fence.

    More wolves are massing on the perimeter and they are licking their chops as they wait for the Central Banks to run out of bombs.

  11. DO
    May 7, 2020 at 12:06 am

    “This is a huge massive complex bill with lots of goodies in it”

    And yet they put it together in a few days…with lots of benefits for the little people, surely. Just a coincidence…So there’s no way they had it ready beforehand. Of course that means then, that they could actually write very complex laws like real healthcare or immigration reform. I guess it’s just change you can believe in, to make America great again…

  12. OutWest
    May 7, 2020 at 12:23 am

    An interesting strategy. Rack up the national debt and leave it to the younger generations…I would have never come up with that clever idea…

    • Ed
      May 7, 2020 at 5:02 pm

      You’d think the grey-haired politicians and the many grey-haired voters who are driving the deficit would be embarrassed. Taxes have been lowered, defense spending has been raised, and social security and medicare have been kept as is in recent years.

      I’m grey a bit myself. It just does not compute. What are we getting today for the impoverishing of our grandchildren?

      • Gaius Marius
        May 7, 2020 at 8:09 pm

        As a Millennial this is something that’s been pissing me off for more than a decade. Its my generation and my children’s generation that are going to be stuck with the debts of the “I got mine, f**k you” generation refusing to live within their means.

  13. Mike
    May 7, 2020 at 12:39 am

    I still don’t know what this all means. What does it mean? WHAT DOES IT MEAN!?

    If all these trillions is to plug the various (what would be) debt default leaks, then the US economy will become a Japanese Zombie economy.

    We’re already at 0.25% interest rates and can’t go up.

    I guess if the service economy and small businesses don’t recover and rehire everyone, the Fed will need to shift focus at the unemployment and throw money at that problem too.

    I was also debating a relative about how the spot oil market might break between May 19th and June 18th and could be the grey swan that starts more market turmoil.

    From his perspective, he didn’t see how it matters since he will just be able to fill up cheaper, doesn’t have money in the market and will still receive his pension. I couldn’t argue with that..

    At some point, I’m sure all this debt will matter, but right now it’s very deflationary while the Fed is trying to stop mass defaults and bankruptcies.

    Maybe later it will become stagflation or even inflation, but be can’t come up with a scenario where that happens with oil so cheap.

    • MC01
      May 7, 2020 at 5:38 am

      I don’t know in what parallel universe financial market speculators live, but if they saw the storm brewing in South Asia they would be running around with their hair on fire.
      Malacca and Singapore have completely run out of mooring room for oil tankers and LNG carriers: for safety reasons ships now have to be moored east of Benut, in open water. I’d like to say I have never seen anything like this before but the reality is nobody has ever imagined anything like this before.
      As serious as the situation is in the Gulf of Mexico, this is what people trading energy futures should be watching right now. The only good piece of news is the backlog of tankers in the Pearl River Delta appears to be clearing but that’s about it. This stuff is going to send shockwaves on the energy markets for years.

    • GotCollateral
      May 7, 2020 at 7:21 am

      Yeah, the biggest issue I see for the inflationary argument is that the vast majority of this new debt is used to services old debts and spends little time being exchanged for real goods and services.

  14. roddy6667
    May 7, 2020 at 12:40 am

    It worked in Zimbabwe, so why not?

  15. MCH
    May 7, 2020 at 12:59 am

    Well, one thing for sure, the US isn’t letting any glass ceiling get in its way.

    To the moon, Alice…

    • MC01
      May 7, 2020 at 9:42 am

      When I was a child I fell through a large glass pan. Let me just tell you it isn’t exactly pleasant so hitting it with your head on your way up will result in a lot of stitches and maybe a blood transfusion.

  16. Jacques Huyghebaert
    May 7, 2020 at 1:09 am

    Do I understand correctly that for each trillion dollars of fresh fiat money created, every person in the United States gets in fact taxed by an additional amount of $3,000 debt to be paid sooner or later, by him, his children or grandchildren. In other words, if the US public debt has indeed reached $25 trillion does it mean that each citizen, including babies, children and old people, is now in theory bound to bail out the government by $75,000 ?

    • MCH
      May 7, 2020 at 2:05 am

      Our political class has a reaction to that….

      “It’s not our money….”

    • historicus
      May 7, 2020 at 5:32 am

      Jacques
      The other side of the MMT ledger….
      “…each citizen, including babies, children and old people, is now in theory bound to bail out the government by $75,000 ?”
      and here’s your $1200 check….yippee

    • John
      May 7, 2020 at 7:34 am

      Actually thats per person. Take into account that a low percentage of those people pay taxes and then calculate what your share is. And yes what you cant pay gets billed to your progeny with interest.

    • Jdog
      May 7, 2020 at 11:06 am

      That is exactly what it means. But, the debt never gets paid off, it does not even get any principal paid off. It does however need to be serviced. Debt service now accounts for almost 20% of the Federal Budget.
      That debt can be rolled over by selling new bonds to replace the expiring ones, but somehow that interest on the debt has to be paid to bond purchasers.
      The taxpayers are the ones ultimately on the hook for the governments debts, and the government can confiscate or bail in the assets of the citizens to pay for its debts if that becomes necessary. That is what happened in the last depression when the Federal Government confiscated all the citizens gold.
      Most people do not realize the Federal Government has gone bankrupt twice before, once in 1895, and again in 1929.

  17. Harvey Cotton
    May 7, 2020 at 1:54 am

    Nothing goes to heck in a straight line. But things come out the wazoo in a straight line.

  18. DP
    May 7, 2020 at 2:02 am

    I thought previously the Fed bought existing paper from certain banks. The missing link to get the CPI inflation was the direct purchase of new issuance from the treasury? Am I correct in saying this or have I got it wrong?

    • DP
      May 7, 2020 at 4:22 pm

      Oh you’ve stated”indirectly”. I think I may have answered my own question.

  19. Upstate
    May 7, 2020 at 5:22 am

    After the top of the parabola is reached on the chart, will our next leg be
    “Down the Rathole “?

  20. Debt Wazoo
    May 7, 2020 at 5:27 am

    > not realizing just how factually accurate this technical term would become.

    Serves you right for underestimating me!

  21. Michael Engel
    May 7, 2020 at 5:57 am

    1) Where are the orders?
    2) The orders came from Trump.
    3) Since car dealers wouldn’t clear their swamp, Ford “volunteered” to
    build ventilators for NYC and the rest of the world, because Ford rating is junk.
    4) During the 1893/4 deep depression the orders came from Japan. GB Irish shipyards built a navy for the empire of the rising sun. Ten years later it was successfully tested.
    5) After US GDP plunged 37% during the 1893/4 depression, – that sent R/R
    to the BK court, – the orders came from Cleveland (85-89 and 93-97) and McKinley (97 until his assassination in 1901) to build the US navy. TR navy was tested in Cuba.
    6) In the 1932 wall street asked : where are the orders.
    7) The orders came from FDR. US debt popup because the orders never stopped. After sputnik, the gov orders came to build DARPA, silicon valley and US hwy’s.
    8) Today US gov debt is up to $25T. US treasury saving account in the Fed
    up vertically and reached $1T . Foreigners entities in F.R : 4.4T.
    9) So, if the Fed is so crooked why so many foreign gov all over the world park their money in the Fed.
    10) And why the USD osc between Mar 2015(H) and 2017(H) getting ready takeoff like a missile in June/ July.

  22. S
    May 7, 2020 at 6:17 am

    To all these fundamentals I say “So what?” Yup, for every sideways moving unicorn company, there is a Peloton unicorn doing just fine. Fundamentalists (formerly me) are toast.

    • Jdog
      May 7, 2020 at 11:10 am

      You can ignore fundamentals, for a while, but they will still assert themselves at some point, and they will not care what you think, as they do what they always do.

  23. Sinbad
    May 7, 2020 at 7:01 am

    They will kill the dollar.

  24. Yerfej
    May 7, 2020 at 7:03 am

    The issue for the man on the street in any western nation (or China and Japan for that matter) is WHERE are you going to put your money to protect yourself from printing? There is nowhere to go other than to buy a farm removed from big liberal cities and barter with neighbors. Everything will eventually implode and reset and don’t think for a minute the “elites” who debased society will be anywhere to be found.

    • John
      May 7, 2020 at 7:38 am

      Buy a farm and then the tax man cometh. There is only one answer to the fraud being played on us. Im sure wolf doesnt want that brought up here.

    • roddy6667
      May 7, 2020 at 9:08 am

      In China, people buy second and third homes to secure their futures. The national home ownership rate is 130%. In some cities it is 200%. This is the source of all those articles about “ghost cities”. Most of the empty units were purchased for cash during construction. They are empty, but paid for. Between 85 and 90% of families in China don’t pay rent or mortgage because they own outright. There is no property tax. The plan is for 300 million rural workers to stop farming and move to the cities. Everybody will move up in housing, and the vacancies will be removed. This plan won’t work in the US. Is there a plan?

      • VintageVNvet
        May 7, 2020 at 5:17 pm

        R-2/3,
        After several decades of trying a lot of different lifestyles in a lot of very different locations in USA and working with/for a lot of very very different folks from the very poor and homeless to the very very rich old money folks (as well as some similarly rich new money types), I think that the only plan that is actually being done is the rich working to be able to isolate themselves physically, and having more than one location to do so.
        Why they think they are going to be able to persist on any kind of isolated basis is beyond me, as it seems readily apparent that cooperation with neighbors and adaptability to what now appear to be inevitable events is going to be the only long term basis for health and happiness, perhaps even survival.
        BTW, I want to add that even though I excoriate the oligarchy frequently on this site, I have met folks at every socioeconomic level that are good people, and that is the main reason that I think this financial mess needs to be resolved through constitutional amendments, etc., and not through ”blood in the streets, etc.”

  25. timbers
    May 7, 2020 at 7:38 am

    My big beef is, 87% of American’s get their water and sewer from local/state government. Not to mention public schools, fire, police, etc.
    Yet State and Locals are clearly hurting and becoming increasingly desperate financially.

    We’ve bailout out every junk bond and Wall Street type from here to Timbuck Two.

    Still no major bailout for State and Local (although there have been piecemeal patches within the earlier bailouts for The Rich, Buy Back Corporations, Junk Bond Junkies, etc).

    So what’s the plan?

    1). Force Locals to jack up property taxes and drive the middle class out of their homes, so Blackstone can buy the home on the cheap. Renter nation.

    2). Force Locals to sell public water works / police forces (think Robocop) / Fire Dept so Blackstone can buy them on the cheap and privatize drinking water and jack the rates up.

    3), Force Locals to sell public schools so Betsy can take them over and sell them to her friends.

    • Happy1
      May 7, 2020 at 10:06 am

      Some of his in states that are fiscally prudent aren’t excited about propping up pensions in IL and NJ which account for large portions of state spending in those locations without which those states wouldn’t need a bail out.

      • Happy1
        May 7, 2020 at 10:06 am

        Some of us, sorry for typo

      • timbers
        May 7, 2020 at 11:17 am

        While I get what you’re saying, I didn’t mention retirements.

        Although I DO support bailing pensions out, too.

        Bailing pensions out would be a drop in bucket compared to the bailouts we’ve already done for “every junk bond and buy back corporation from here to Timbuck Two” and if would put funds into the hand of folks that will spend it, producing far more economic stimulis impact that would produce far more jobs and “trickle down” that giving it all to Wall Street.

        And both parties are responsible for retirement underfunding.

    • Jdog
      May 7, 2020 at 11:16 am

      Most taxes do not go for public services, they go for overly generous pensions.
      I do not mind paying for water or sewer, but it chaffs my ass to pay some worthless bureaucrat a executive salary pension and a Cadillac health care plan when they did not earn it because of the corruption between public unions and the politicians taking the bribes from the unions……
      All public unions, and especially police unions need to be abolished!

      • VintageVNvet
        May 7, 2020 at 5:42 pm

        hey dog,,, IMO the problem is not unions of any kind,,, the basic problem is that we have allowed public servants, elected or appointed, to make their own rules and regulations including:
        1. Public medical systems that are limited to public servants.
        2. Public retirement systems that are limited to public servants.
        This needs to stop and be corrected retroactively so that ALL public servants have exactly the same public medical and retirement system as all citizens, namely medicare and social security (by any name) ,,, but only ONE PUBLIC system…
        3. And let’s not even begin to talk about the extent of other kinds of preferences, usually not pecuniary, (at least publicly,) that our public servants enjoy, eh?
        As mentioned on here frequently, these are all very likely symptoms of the decline of any country/nation/etc., as the various bureaucracies — including unions — harden and become brittle/corrupt and muddy their mission.

        • cb
          May 9, 2020 at 11:16 am

          VintageVNvet said : “hey dog,,, IMO the problem is not unions of any kind,,, the basic problem is that we have allowed public servants, elected or appointed, to make their own rules and regulations”

          Yes, but those public unions support those public servants and effectively bribe those public servants to represent the public union members interests. The evidence seems to indicate the public servants have given away the farm to the public union members and to to themselves.

        • cb
          May 9, 2020 at 11:19 am

          @ VintageVNvet –
          I agree with you about the rest. Good thinking.
          (you have a very interesting background and outlook on things)

    • Tikea
      May 7, 2020 at 3:25 pm

      Blackstone can buy rentals, but they will be BADLY burned when rent control takes it from them, and into government ownership!

      Private home ownership will move from individuals to big corporations, and through rent control, when there’s no more profit due to low income, to the government. That’s property theft via rent control.

      While China calls themselves “communist”, they are the true capitalists.

      While we (the U.S.) call ourselves “capitalist”, we are the communists.

      Red U.S. – that’s reality, folks. Our power is already gone, all that will happen now is the slide into the abyss, it’s just a question of how fast.

  26. Concerned American
    May 7, 2020 at 7:49 am

    I guess at some point it all becomes just funny money although I doubt anyone will be laughing except for the privileged few.

  27. timbers
    May 7, 2020 at 7:58 am

    Good news, people. No bailouts for State and Local or folks losing their retirements, but we do have this. Nancy P. has signed on for a plan to bailout corporate lobbyists.

    “Industries as varied as oil refining, construction, fast food restaurants, and chemical manufacturing are seeking federal cash to support their lobbyists in Washington, D.C.

    Senior lawmakers, including House Speaker Nancy Pelosi, plan to accommodate the demand and change the eligibility standard so that small business bailout money can flow to business advocacy groups.”

  28. Michael Engel
    May 7, 2020 at 8:00 am

    1) The German 2Y osc in a trading range, underwater, since Jan 2017. The German 2Y year hit its low @ (-) 1.04% in Jan 2020.
    2) The German Service Sector dropped from 55 in Jan 2017 to 16 in
    Apr 2020.
    3) Euro Zone Service PMI dropped like a rock from 52 in Feb 2020 to 12 in Apr 2020.
    4) Europe mfg PMI plunged from 60 in Jan 2017 to 33 in Apr 2020.
    approaching the GFC lows from 2008.
    5) Gravity between US and the German yield curve is dragged us down.
    6) Vector down // vector up. When JP moved in he tried to lift the European zone and help our banking sector with high interest rates. Druggie snubbed JP.
    7) Us treasury inject debt to inflate, to counter the much stronger global downtrend and to quench the thirst for US dollars. The global financial sector is severely dehydrated for many years. Too much water too fast is dangerous. It might shock the banks.
    8) US gov try to preempt and prevent US 10Y from swimming with the sharks.
    9) If that will happen US will need oxygen tanks and a steel cage to survive in the murky water.

  29. dr spock
    May 7, 2020 at 8:12 am

    I do not understand why some of our “homegrown” billionaires have not stepped up and contacted the biggest agencies in each state that help the poor and homeless. There are massive lines of people waiting in line at these shelters for food everyday because of job loss from Covid-19 and they are out of food before many are fed. Out of human decency, these billionaires should have the agencies call up the farmers who are destroying their crops and animals because of understaffed meat processing plants, plus no trucks to pick up and deliver. They need to send money to hire healthy protected workers to help in the meat processing. The farmers and truckers should be paid a decent wage to deliver this food to these critical food networks until the situation stabilizes.

  30. May 7, 2020 at 8:32 am

    I guess we Americans should put our arms up in the air roller-coaster style as we swirl down the toilet bowl of Debt Collapse. Bids on Treasuries, in the real marketplace, the non-Fed marketplace where bids are based on supply and demand, not to mention Default Risk which is now firmly on the U.S. table, are going to rise no matter what the Fed does. Just too much supply at below inflation rates and the CPI is running at 5% or I will eat my new Zimbabwe hat! The question is: “Where are all the bananas??!!”

  31. Just Some Random Guy
    May 7, 2020 at 8:35 am

    Nasdaq is down a whopping 1% for 2020.

    • Just Some Random Guy
      May 7, 2020 at 8:42 am

      Update: Nas is POSITIVE for the 2020

      • Jdog
        May 7, 2020 at 11:17 am

        The lemmings are in a full run heading towards the cliff, make sure you join the crowd…….

    • May 7, 2020 at 9:30 am

      Yes, it shows how totally nuts the results are from the Fed’s money printing binge — as 33 million people filed for unemployment. This top priority of the Fed to make asset holders whole no matter what is sickening and perverse.

      • Just Some Random Guy
        May 7, 2020 at 10:10 am

        Why do you always forget about the $2600/mo federal UE those 33M are receiving? On top of the $3400 a family of 4 received via stimulus check?

        Stocks are up 60-70% from the March lows because investors realized the doom and gloom scenarios people feared aren’t happening. That’s why nas is positive for the year and why soon DJIA and SP500 will be as well.

        RV sales up 9% in Q1 vs Q1 2019. RVs are about the last thing people would buy if they feared a depression was under way. It ain’t happening. Outside of newsrooms that are still pushing the hysteria, the country has moved on with their lives.

        • May 7, 2020 at 2:07 pm

          Good lordy. Most of Q1 was pre-Covid-19. Irrelevant now. In the US, the Covid-19 era started in mid-March.

      • BuySome
        May 7, 2020 at 10:38 am

        Should have put Bozo the Clown on those notes and statement of “Backed by the full faith and credit of the printing press”. Maybe we should get the serial numbers so if they do try slipping them into the ecomony we can all boo and hiss and demand they take them back for burning.

    • Phoenix_Ikki
      May 7, 2020 at 10:14 am

      Yup and like clockwork, the market now rallys every week when more unemployment filed numbers get release. 3M more this week? No problem, 300pts up today so far. Tomorrow, official unemployment % get release, probably in 15% range, probably 1500pts up tomorrow. The market has become a parody in itself..not even The Onion can make this crap up. Nasdaq now back to all time high goes to show the market is on course to create its own alternate reality with generous help from the FED.

  32. May 7, 2020 at 8:45 am

    Also, remember that all that printed money tries to replace all the money destruction that would occur if we allow a full depression to come.

  33. Brant Lee
    May 7, 2020 at 8:56 am

    How bad will the bad times get? If I’m correct unemployment is 22% now? Not to say many people working fewer hours or drawing less salary. Maybe we should spend some savings on something physical while we still can, for instance: tools, equipment, and supplies. Things that actually have substance and trading value. It may not be available soon.
    Everyone here is sure that assets in the financial systems will never be frozen or lost, right?

    • Just Some Random Guy
      May 7, 2020 at 9:26 am

      TEMPORARY

      Key word everyone refuses to use when talking about these numbers. Whether it’s 22% or 32% or 12% it’s a meaningless number. No rational person thinks it will be double digits for any significant period of time.

      • Concerned American
        May 7, 2020 at 9:49 am

        Call me irrational. Any thoughts that we jump back to anything like normal are sadly mistaken. Unfortunately, a lot of small businesses will go bust and not come back. The Feds insistence on bailing out Wall Street at the expense of Main Street will see to that.

        • Happy1
          May 7, 2020 at 10:08 am

          I suspect things will be 90% of normal in relatively short order, with some very big losers in entertainment and travel, but large sectors returning to near normal.

        • Just Some Random Guy
          May 7, 2020 at 10:21 am

          “Unfortunately, a lot of small businesses will go bust and not come back.”

          You know thousands of businesses fail every year right? And you know what happens when they do? Other businesses start up to take their place. You keep hearing how all these restaurants and bars will never recover. What you don’t hear is how restaurants and bars have always had one of the highest failure rates of any business. They fail every day, across America.

          There’s this corner where I live that had an endless parade of failed restaurants. Great location, lots of traffic, close to the freeway for long distance travelers stopping off to eat. And yet nobody could make it work. There was Chinese, Mexican, pizza, and a couple of others. They each lasted 12-18 months. Finally the building was converted to a cell phone repair shop which funny enough has stayed in business for 2+ years. That’s the nature of the restaurant/bar business, it’s damn near impossible to be profitable long term.

        • VintageVNvet
          May 7, 2020 at 5:56 pm

          JSRG,
          You are correct about rest/bar biz being tough to persist in! When I decided to become a licensed GC several friends pointed out that the only biz more likely to fail was a restaurant!
          But, there are certainly tons of exceptions, from the Chez in Berzerkeley still going strong 50 years later, to the great taco stand that was at the sw corner of Sepulveda and Washington in the sixties, now nearby.
          Maybe the key is the ”proprietor’s shadow” as was the only factor found to be correlated to the success of crops, eh?

      • VeryAmused
        May 7, 2020 at 10:12 am

        I will give agree that the horrendous numbers will probably decrease drastically in the medium term. We will go from a horror show to epically bad within the year and stay that way for a good while.

        You, and other “V shaped recovery” fold, seem to believe the virus CAUSED the downturn. The virus ACCELERATED and AMPLIFIED the downturn. The downturn has been occurring for months if not years before the virus came along.

        You cannot have RENT, FOOD, HEALTHCARE, TRANSPORTATION, CHILD CARE and DEBT outpace wages by a huge margin (CPI, lol) and not have an extreme recession follow. The distortions for the bottom 70% have grown too massive. You then pile on virus fear on top of all this, please.

        No rational person thinks it will not be double digits for a significant period of time.

        • Just Some Random Guy
          May 7, 2020 at 10:26 am

          VeryAmused,

          I disagree. The economy was firing on all cylinders at the start of the year. There is no evidence to show what you said above is true. 3.5% unemployment, with no inflation and mortgages at 3.5%. That’s a disastrous economy? Come on!! That’s just silly.

          And that’s why this is a temporary blip. I don’t think it will be a V-shape myself, I think it’s more like a check mark. But whatever you want to call it, we’re well past the low point and on an upward trend. Whether we’re back to where we were in 3 months or 6 months or 9 months is the question, not whether we’ll be there or not.

        • May 7, 2020 at 2:16 pm

          “And that’s why this is a temporary blip.”

          Life is temporary. Nothing is permanent.

      • Jdog
        May 7, 2020 at 11:25 am

        So explain what is going to stop the cascade now that it has begun…..
        It is estimated that 25% of the service related small business that closed during the shutdown will never re open. The owners are broke and their credit is ruined. Their employees are collecting more in unemployment than they ever did working and have no intention on giving up their new windfall. The people who used to supply those closed businesses if they can stay solvent will need far fewer employees. The businesses that do reopen will have to reduce their seating and customer base considerably meaning less income and profit. Many of them even though they re open will not survive. This is a cascading shit show and anyone who denies it is living in fantasy land…

  34. Karen
    May 7, 2020 at 9:00 am

    The biggest US high-yield bond ETF (HYG) has seen its assets increase by 60% over the past several weeks, thanks to the Fed’s plan to buy junk-rated debt. It how holds $20.7 billion, up from $13 billion on March 23. As a result, $HYG has made new all-time highs amid the worst economic crisis in our lifetimes.

    Investors: be careful what you wish for

    • timbers
      May 7, 2020 at 9:26 am

      The Credit “Market” must be liquid (and forever subsidized by savers apparently) to properly function. Now, let’s make sure no one asks if we need a credit market or question what the credit “market” actually does.

    • timbers
      May 7, 2020 at 9:34 am

      Also, funny how the Fed making the problems it creates even bigger, makes it appear even more indispensable.

      • historicus
        May 7, 2020 at 1:57 pm

        Central Bankers exacerbate each “situation” by propping up to unrealistic levels, then when the systemic event occurs, they author their own powers, accrue new ones, and become more powerful.
        To wit: the Special Purchase Vehicle …. out of line, out of intent with the Fed restricted to lonely federally backed securities.

    • NewGuy
      May 7, 2020 at 10:45 am

      I’ve been bitching about this national debt since Reagan showed up. But if you really want to see it take off, see what Medicare for all does.

      Socialists: be careful what you wish for.

      • timbers
        May 7, 2020 at 11:10 am

        Medicare for all would potentially shrink the deficit, as it cost about 60% less than what we pay now for health insurance.

        If might be about revenue neutral in terms of tax dollars, but it save hundreds of millions of folks in insurance premiums that would totally dwarf it’s cost.

        • timbers
          May 7, 2020 at 11:25 am

          Correction: MedicareForAll costs about 40% less than health insurance, and would be about revenue neutral tax wise dispite add about 40 million with access to healthcare, and saving trillions to folks and business currently paying insurance.

      • May 7, 2020 at 2:34 pm

        NewGuy,

        I’m not a fan of Medicare-for-all. But there are a lot of insurance industry lies and propaganda circling around that really bother me. You mentioned one of them – and I’m going to address it here:

        Any state-run health insurance shifts not only spending but more importantly revenues such as insurance premiums from the insurance industry to the state-run health insurance. But state-run health insurance doesn’t need funds to pay for dividends and the like.

        The insurance industry is the largest industry in the US by revenue. And one of the most profitable ones. And it pays out a huge amount in dividends.

        Medicare-for-all would shift these huge amounts of revenues from the insurers over to Medicare-for-all. Instead of insurance companies getting the revenues, they would go to Medicare-for-all.

        Any numbers that do not include the revenue shift from insurance companies to Medicare are insurance industry propaganda and lies and lobbying BS. And they’re being spread around liberally.

        • NewGuy
          May 7, 2020 at 4:23 pm

          I know “free” is the most powerful word in marketing, but sorry, the only propaganda and lies being spread around liberally are the ones that tell us government can do it cheaper and better. EVERYTHING they touch costs more than the private sector can do. And we all know how they will finance it. More taxes, and more borrowing and less medical services. And with more borrowing, you get to pay for it in other ways.

          I have relatives in England who say the NHS is good enough for an ambulance ride to get a broken leg fixed, but when it comes to a hip replacement, heart or cancer surgery, expect to get in the back of the line and wait at least 4 months. That little melanoma will have spread to your liver by then. My mother in Florida got her hip replacement done in 5 days. Even in Canada, the wait time for a specialist can be as long as 19 weeks and many Canadians come to America to get surgeries done.

          What we will end up with is a 2 tier approach. Good care for those who can afford private care and sub standard care for the masses. Case in point, look at education. I prefer to play the game of playing one insurance company against the other and shop around. Shop around for doctors too. It’s a pain in the ass but it’s amazing what the price differences can be. I recently checked on colonoscopies, and they ranged anywhere from $700 to $4000.

          Competition keeps prices down, not monopolization. Just because it works in a small country like Sweden with a highly educated and healthy population of 10.5 million people, it doesn’t mean it will work in a country of 330+ million people, many who do nothing with their lives but work scrappy odd jobs, smoke and drink, and not to mention all the 20+ million illegals who don’t pay into the system. My health care is expensive enough. I’ll be damned if I can afford someone else’s health care also.

          I know it’s frustrating for people who don’t make much money to afford health care, but the real argument is wages. Thanks to the Fed who keep jacking prices UP, and the federal government who have been fighting to keep wages DOWN by allowing work visas, private sector union busting, outsourcing, offshoring and open borders cheap labor, the workers in America have fallen behind. Both Dems and Cons have sold out on the middle class for the past 30 years. At least our President is trying to balance this out somewhat, but the same old faces are fighting him, and the same old stupid electorate keep voting for the same old faces.

          And if insurance dividends are your pet peeve Wolf, then buy their stock and get your health care refund.

          I say good luck with socialized medicine, but maybe we have to try it to see how bad it is. And then, good luck trying to get rid of it.

        • May 7, 2020 at 11:45 pm

          NewGuy,

          Talk to people who are actually on Medicare instead of dragging out word-of-mouth stuff from the UK, no?

          “Competition keeps prices down” 😂😂😂😂😂 “Keeps prices down….” Dude check those prices. They have skyrocketed — for employers and consumers alike. What competition in health-care? Are you going to shop around when you’re in the hospital. Come on.

          No one said anything about “Free.” READ what I wrote. I said the REVENUES (the premiums) are shifted from insurers to Medicare. Medicare will collect the revenues, not insurers. Medicare is NOT free, has never been free. People pay into it all their working lives.

          I’m still not a fan for Medicare for all, but you do need to get some stuff straight.

        • Ed
          May 7, 2020 at 5:12 pm

          It’s hard to square the circle. How is the U.S. the most expensive system and at the same time, supposedly, the most efficient and cost effective?

          Since life expectancy is so low in the U.S. relative to many other similarly wealthy countries, what is the explanation? I have some candidates:

          – The profit-taking, which is very high in insurance and pharma.
          – Redundancy and waste. Any idea how much time is spent now in doctor’s offices handling paperwork? Anyone not on either Medicare or a gold-plated insurance plan who has kids knows. This would get better with one payer.
          – The U.S. system really, really emphasizes very expensive late-in-life drugs and treatments and sacrifices preventative care. This is an expensive choice, on both sides. Is this our desired policy? Seems to be, because it’s a choice Congress has made.

        • VintageVNvet
          May 7, 2020 at 6:22 pm

          Wolf, NG, Ed,
          First of all, we already have multi-tier medical services delivery systems in USA:
          1. Every USA county I have lived in has a county health department that will ensure you get basic services if homeless, poor, etc. (been awhile since I qualified, but feel sure they are still in place)
          2. VA Medical system is generally wonderful, despite the bad PR it gets from time to time; my fil just died at 93.5 after years in a nursing home, with trips to local VA Med Center as needed, etc. I am getting quality care in the form of regular check ups, and emergency care as well the one time needed.
          3. Medicare is taking good care of my 90 year old mil, with regular check ups, meds, various misc services.
          4. The 4 grands are on different state programs, one of them diagnosed late w. 4th stage leukemia received stellar care at one of the best med centers in the world and is completely cured by what was then a trial protocol, now I understand just one of the wonderful modern actual cures for cancer. (paid by a state program)
          5. And then there are the private practices, called, I believe, ”the Harley street groups,” in London, and the private insurance programs supporting them.
          6. Finally, at the top of all of these as far as total service goes are the public systems, paid for by tax payers, that are exclusively for public servants, elected and appointed.
          So, with any kind of serious effort, it would certainly seem to me that a proficient manager could pull all of these various programs into a much much more cost efficient form, by any name. And the lack of clear focus on preventative programs, seemingly the most cost effective, should be first item on any such managers list.

    • Jdog
      May 7, 2020 at 11:27 am

      Do you think that will stop any of those junk bonds from defaulting?

      I really do not care who is holding the bag when the bottom drops out as long as it is not me…

  35. Paulo
    May 7, 2020 at 9:39 am

    I had just one question as this has been unfolding for the last 2 months, and while I read the article.

    What did you think would happen?

    Elect the self-proclaimed “King of Debt”, enabled by a system controlled of rotating insiders, led by an administration in obvious chaos, and toss in a crisis. Every single pundit raised the alarm of what would happen if a real crisis hit, and what just happened? Other than a nuclear exchange, the biggest possible crisis hit like a sledgehammer. This all seems pretty natural to me. Unavoidable. Remember the tax breaks? Remember the supposed 4-6% growth just around the corner?

    Plus, the foundation is built on credit and myth; exceptionalism, decaying moral behaviour, pandering, under funding of key aspirations, and an overpriced and dysfunctional health system. Unending war and hegemony.

    Living within/below one’s means is what individuals do, what some individuals do. I suspect many readers on WS fit that category. Most people do not. And now? There is no solution or realistic way out of this collective mess. The blue ribbons have all been handed out. The wealth has all already been siphoned off.

    As I watch the finger pointing, “It’s the states responsibility for testing, PPE, mitigation”, and read the tweets “Liberate _______”, I have only one question left? What on earth is holding any of this together? I have concluded it is only inertia. I am now wondering if the US will break into regions after the Pandemic reasserts itself from premature reopening? Example: Cascadia.

    Willie Nelson:

    Turn out the lights
    The party’s over
    They say that all
    Good things must end
    Call it a night
    The party’s over
    And tomorrow starts
    The same old thing again

    There are two things that I believe just might save this mess, but it doesn’t do a damn thing about the debt fallout as written about in the article.
    1) The Pandemic does not reassert itself from premature reopening.
    2) There is a vaccine that works and is widely distributed to the World.

    And if this all comes to pass, after the jubilation and new economic purpose explodes, the debt……THE DEBT still has to be addressed some way or another.

    But wtf do I know? I’m just some retiree who lives below the radar who will spend the morning cutting firewood for a winter 5 years from now. After, I take my dog for a walk. Enjoy the day, I know I’ll do my best to do so.

    regards

    • Atlas
      May 7, 2020 at 2:23 pm

      Paulo,

      I hope this does not make you feel uncomfortable but, I think I love you.

      Atlas in Oregon

      • Karen
        May 7, 2020 at 9:18 pm

        Yeah, what Atlas said!

    • cb
      May 9, 2020 at 1:03 am

      @ Paulo –

      Entertaining reading, but this can’t be laid so solely at the feet of the current crowd. This situation has been building at least since Reagan, make that at least since Nixon, no at least since Johnson, and perhaps before.

      It’s all about concentration of wealth and power. That is the bane of free markets.

  36. Jdog
    May 7, 2020 at 10:05 am

    Just remember, this debt has to be serviced. If you do not think this means much higher taxes in the future, you are kidding yourself….

    • Happy1
      May 7, 2020 at 10:10 am

      This or inflation, I think the latter is more likely because it is an invisible tax that doesn’t require a politician to vote, just an unelected Fed to engineer.

  37. 911Truther
    May 7, 2020 at 10:13 am

    Hi Wolf, help me understand something and please correct me where I’m wrong.

    The Fed’s charter only allows it to buy debts that are guaranteed by the US Federal government. The list includes US Treasuries, Federally Guaranteed Mortgages and Federally Guaranteed Student Loans.

    If I’ve understood your previous articles, the Fed never bought any junk bonds (they were just jawboning).

    Does the Fed have investment grade corporate debt on it’s balance sheet? And is investment grade corporate debt allowed under the Fed’s charter?

    Did the Fed’s charter get changed with the Cares Act? You wrote:

    +++The CARES Act includes provisions to bail out the investors of Corporate America and financial markets more generally, directly and also indirectly via the Fed’s Special Purpose Vehicles (SPVs) to which taxpayers provide the equity capital to take the first loss+++

    I’d love to see you write an article discussing all the questions I have above.

    • May 7, 2020 at 2:11 pm

      It works like this: the Fed lends to a corporation, an LLC, namely the Special Purpose Vehicle (SPV) the Fed had set up. The US Treasury provides equity capital to that SPV. Then that SPV buys whatever. So it’s actually not the Fed that buys this stuff or holds this stuff. It just lends to the corporation that buys and holds this stuff. That is the fig leaf the Fed is using.

      • May 7, 2020 at 4:36 pm

        Fed is a conduit to loan taxpayer money provided by Treasury, to the LLC, (what are the terms?) Does it go on the Fed balance sheet? Or it already is? Fed loans 100B to SPV which buys bond ETFs which track bonds which Fed holds in place for Treasury, it all gets interesting.

  38. The Colorado Kid
    May 7, 2020 at 10:16 am

    In the past, on this site, I have spouted off about inflation & even hyperinflation. I think this is incorrect. We are not Weimar, Zimbabwe or Venezuela YET. We still have a long way to go to get there and it certainly won’t occur while we are still the World Reserve Currency (with no contenders in sight) and are in the midst of the most profoundly deflationary event in certainly the last 80, or so years.
    Yes, we will get to inflation, but only after a sharp deflation first. We are certainly going to have supply side disruptions in things like toilet paper and meat.
    The USD might lose 50% of it’s value as the USD eventually is replaced as the World Reserve Currency, just as the British Pound did after the USD took over after Bretton Woods.
    We are going into an event here that is going to be an epic debt deflation and transfer of wealth from the Munchkins and Fink’s of the world to the workers over the next decade. Just as the 1929 crash eventually ushered in prosperity for the workers and the Uber wealthy lost like 80% or more of their wealth over the next 15 years and the workers and unions gained ground.
    There is hope here as we deglobalize and bring back industry. Wages will have increases and yes, prices will increase as well, but regular folks might be able to more than compensate by making a much higher wage- a true livable wage. Unfortunately, there will be pain in the interim as this Fourth Turning unfolds.

    • The Colorado Kid
      May 7, 2020 at 10:26 am

      Additionally, with regard to Weimar, don’t forget that the World was a mix of currencies still on the Gold Standard & currencies that were not. The hyperinflation of the early twenties did not break the Weimar Republic contrary to popular belief. The Republic endured through the crash of ’29 and beyond and was finally done in by austerity because the government went the other way and was absolutely terrified of printing and spending. This was ‘fixed’ by the greatest ‘Keynesian’ of all time when he came to power in 1933 and ushered in what was essentially MMT and massive spending on everything from infrastructure to art which absolutely turbo charged the German economy.

    • NewGuy
      May 7, 2020 at 10:50 am

      Hope you’re right.

    • VintageVNvet
      May 7, 2020 at 6:37 pm

      CK,
      The workers and unions gained ground from about 1941 to about 1953, as they were needed for cannon fodder and to manufacture the cannons, etc. for the wars and expected wars of that era.
      Not sure where you get the idea that the rich lost ground because, as far as I have seen, they were right back on top of the best ocean front houses, ranches, farms, etc., not to mention voyaging on the great ocean liners, filling the great restaurants, opera houses, etc., around the world, with the exception of just a few of the rich of the losers of those wars whose wealth was actually taken by the winners.
      Suggest you might read, or read again, some of the literature of the 1930 era, as I have read recently that our current situation is the worst inequality since then.

      • The Colorado Kid
        May 8, 2020 at 10:55 am

        VNvet,
        The 1929 Crash marked the apogee of wealth inequality and began the long ‘process’ of a wealth transfer. If you read constantly about this as I do, you will discover that the wealth transfer from the wealthy was approximately 80%. Again, this didn’t happen overnight. I suggest a book entitled “A Bubble That Broke The World” by Garet Garrett. The book was written in 1932 at pretty much the nadir of the Great Depression.

        With regard to MMT, the analogue is 1933- 1939 Germany. The American Public bought massive amounts of German Bunds because of the low interest rates in the USA. The Germans went on an MMT spree rebuilding their military, infrastructure and pretty much everything including the arts. The thing is: it seemed to have worked! For awhile everything was great. Then, and this is my belief, it forced WWII because the Germans needed to start the insatiable quest for land & resources (Lebensraum). That & war tends to be very inflationary which is helpful in itself to any debter nation.

  39. porque
    May 7, 2020 at 10:52 am

    This is totally and completely ‘free markets at work.’

    We are no longer a market based society.

    We are now a patronage society.

    One party system resulted in Government taking over the market, and ‘risk takers,’ essentially just being slang for the connected. This was Japan, this is now us.

    How quickly will it be for us to return to a market based economy? Look at Japan, we are subsidizing businesses that would normally fail. Well, when would they not fail, in a world with no virus? Perhaps, but there’s no way to know since that is not reality.

    The good news is, what do we need markets for any more anyway. Let us call a spade a spade and start working on things that make life better for everyone, like socialized spray tans, reality TV, and bullying.

  40. May 7, 2020 at 11:00 am

    The FED is jawboning on authority they don’t have. Fed promises bailout packages and SPV, with NO OVERSIGHT, while a debt crisis looms, and Congress waits to extract concessions. With the stock market at new highs how do you think that testimony will go? Waters sees taxpayer money going to Blackrock to buy up her constituents homes at pennies on the dollar?

  41. Lisa_Hooker
    May 7, 2020 at 11:10 am

    Wazoo Bank is the New York subsidiary of the Cayman Islands Bank of Obscurity, LLC. Hence the expression “out the Wazoo.”

  42. Concerned American
    May 7, 2020 at 11:11 am

    Inflation requires the economy to have too much money chasing too few goods. That is difficult to achieve when we are likely to have high unemployment for quite some time. I just don’t see US businesses hiking salaries in a high unemployment environment. The more likely path is deflation via debt destruction for the foreseeable future. What happens after that is anyone’s guess but I expect it will not be pretty. Hope to hell I am wrong.

    • Jdog
      May 7, 2020 at 11:32 am

      You are seeing it correctly, and that is the first step to survival.
      We are still in the first half of the first inning of this thing, and it is going to get much worse going forward. Anyone who thinks things are going back to where we were before the virus struck is believing in fantasy.

  43. BuySome
    May 7, 2020 at 11:37 am

    Is it possible that we are simply looking at a test of political will? They are shoring up entities which operate super-nationally across global borders. They want to shift to a system beyond national controls of population groups, but they want to stay wealthy and in control. So they want to test our stress levels to see if we are ready to suck up to the new plan of limited guaranteed benefits while they skim the hell out of the take and stuff it into their own pockets. They know most of the world is already being fooled, so all that is left is to crack the extremely independent will of the American people (those few souls from all over the planet who still thought a Republic of free will was possible) as they know we have already allowed their infected mentality to creep in to several generations who have come to accept invasions of privacy and thought kontrol as a norm. If we really think that voting for either party this year will hold some kind of solution, then they know we have fallen hook, line, and sinker.

  44. Michael Engel
    May 7, 2020 at 11:52 am

    1) You are either a Patriot or Loyalist. You can’t be both. Colonel Lynch will catch u and hang u on a tree. US main focus will be China. No more bs between the two.
    2) Nations will have to choose sides. The world will become black or white. Americanism vs Communism. RIP the global trade.
    3) USD domination will not be replaced. There will be no global currency, because the friction between Washington and Beijing will be growing. The financial world will be dissected into two halves : USD & RMB, including barter.
    4) From Beijing to the Mediterranean : RMB, thanks to Africa and Iran.
    5) The rest will trade in : USD.
    6) Both USD and the RMB will rise at the expense of the Euro.
    7) Nations that want to be protected under the US umbrella will have to trade in USD.
    8) Nations that will be bribed by China, or coerced by NK & Tehran
    will have to choose RMB.

    • May 7, 2020 at 12:43 pm

      (one Europe crashes dollar soars. US trade deficit divided by zero
      (two Americanism??
      (three No more treasuries for dollars, sterilized bonds found to contain COVID.
      (four Fiat is exchanged up front, but gold under the table or no deal.
      (five Dollars are taken grudgingly.
      (six Euro currency collapse.
      (seven Listen you are in a mess, but we’ll give you military aid, to take care of those rebels we funded surreptitiously, in exchange you prop up our failed system. Okay no Treasuries, maybe Corporates, or some nice MBS. We have some right here.
      (eight Tehran is the new power center in the ME. They promote the DINAR, which is gold backed, and China says ok. see (four. China invades NK, sets up new leadership, makes them a vassal state.

  45. BuySome
    May 7, 2020 at 12:11 pm

    You do realize that both political parties are in fact Loyalists to an international King Of the Kontrolled Kommunal. There are no Patriots up for election in the 1770’s nor today. Burning draft cards started a movement. Burning the ballots might be coming to a public space near you…bricks and bats might not be optional this season. But it’s more likely a bunch of dumb sh*ts will just ease into their new masters slave compound.

  46. Lisa_Hooker
    May 7, 2020 at 12:25 pm

    Overheard in the bond market – “Help! I’ve fallen and I can’t get up!”

    • BuySome
      May 7, 2020 at 1:32 pm

      And in the “stock” market?….. “Where’s the beef?!!”

  47. Brian
    May 7, 2020 at 4:56 pm

    Any chance this Fed money is flowing into bitcoin? With a tiny market cap of $120B, yet a long term threat to the Fed when inflation goes crazy and people lose faith in the dollar, it seems a prime time for the Fed to pump money into bitcoin to drive up the price, only to liquidate it later at a loss to try and destroy it.

    $120B seems like a small investment for the Fed to make to ensure they remain the most viable long term monetary solution.

  48. Up North
    May 7, 2020 at 8:31 pm

    Eh, just wanted to say a huge thank you to all of you -Wolf as well of course-for all the combined wisdom. Just spent 1h roughly reading much of all the comments, and as usual, learning much. I got 4 kids under 8, and I’m getting all the advice i need here everytime i take the time to read yall. You guys are better than any personal financial adviser! And all the disagreeing between you guys is the best! Cheers, Up North

  49. Allen
    May 8, 2020 at 10:58 am

    I’m not sure I’m going to ask this question correctly so bear with me.

    As I understand it in the first “Covid stimulus” package there was baked into the legislation some law as to how the Fed and the Treasury would now interact somewhat differently with one another. In short the outcome of this is that our government would now be going to the Fed for some loans- in essence this could mean a municipality that might need federal assistance for public infrastructure projects e.g., would be reliant on Wall St. for those loans and the private sector would be able to dictate the parameters of such “public” projects.

    Is that something you have come across?

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