Debt Ceiling Kicks in, Treasury General Account Plunges: Let’s See How Close to Zero it Gets Before Congress Ends this Farce

OK, that was suddenly very fast.

By Wolf Richter for WOLF STREET.

The balance in the Treasury General Account (TGA), the checking account of the US government at the Federal Reserve Bank of New York, plunged by $116 billion in the latest week, to $390 billion, according to the Fed’s balance sheet, released this afternoon. Since mid-July, the balance has plunged by nearly half.

In the spring 2020, the Treasury Department issued $3 trillion in new debt to fund the stimulus and bailout programs, but didn’t spend it all. By July 2020, the TGA had $1.8 trillion sitting in it, up from around $300 billion before the pandemic.

In January, the Yellen Treasury said it would draw down the TGA from $1.6 trillion at the time to $500 billion by this summer. On August 1, the debt ceiling became effective, and the government now has to live off its checking account. And the TGA balance just plunged through the green line:

OK, folks, let’s get some popcorn and watch “The Debt Ceiling Farce 2021” as it unfolds. Everyone knows how this farce will end. Since 1960, the farce played 78 times. Each time, after everyone got through extorting concessions from the other side, Congress either raised the debt ceiling, extended it, suspended it, or changed the definition of “debt.”

So that’s how it ends. The day after, I’ll get to write one of my infamous post-debt ceiling articles with headlines like this: “Gross National Debt Spikes by $340 billion in One Day.” But that was in 2015. Now the amounts are much huger. Then I’ll get to follow up with something like, “US Gross National Debt Jumps by $1 trillion in 2 Weeks.”

During the debt-ceiling farce, the Treasury Department is allowed to use certain “extraordinary means” – more on those in a moment – to keep the government from defaulting. After the debt ceiling is lifted, new debt gets issued and those entities are made whole. In the end, everything gets caught up and nothing changes.

The suspense doesn’t lie in how it ends, because we know that, but how long they drag it out, and how close “we” get to the out-of-money day.

This time around, the out-of-money-day is in October or November, according to estimates by the Congressional Budget Office.

Back in early September 2017, just before the debt ceiling was lifted, the TGA had dropped to $39 billion. That’s awfully close, given how huge the US outlays are that have to be paid on a daily basis. So let’s see how close to zero we can get this time.

It’s a farce because Congress told the Administration to spend this money but then doesn’t allow the Administration to raise the money via debt sales to spend this money as Congress had told it to.

It’s just nuts, and foreigners scratch their heads every time, and so do we, but that’s how the system works.

The one thing the debt ceiling never ever does: reduce deficit spending. It just temporarily limits borrowing until default moves into view, and then the floodgates are opened again.

If Congress fails to extend the debt ceiling, the US government will default and will not be able to pay its bills, and financial markets around the world, which have never seen this kind of clusterf**k before, will crash, and every member of Congress, the richest of them on top, will lose half or more of their assets in no time.

And that’s exactly why this will never happen.

As of August 1, 2021, the gross national debt outstanding on July 31 became the debt ceiling: $28.43 trillion. And that’s where the debt now sits. The US government cannot add to it, but it can roll over its maturing debts.

On August 2, Yellen spelled out in her letter to Congress the first “extraordinary measures,” as they’re called, she will take to keep the US from defaulting, as authorized by law – initially raiding the contributions made by members of three big federal retirement systems:

  • The Civil Service Retirement and Disability Fund
  • The Postal Service Retiree Health Benefits Fund.
  • The Government Securities Investment Fund (G Fund) of the Thrift Savings Fund that are part of the Federal Employees’ Retirement System.

When that has reached the limits, Yellen will inform Congress of other “extraordinary measures” she will take.

The government has $390 billion in its TGA, and it can take some “extraordinary measures.” But it is burning a huge amount of money every day, and at some point, it needs to issue new debt, or it’s going to default.

We’re going to watch the TGA account get drawn down over this period. And let’s see how close it will get to zero before Congress votes to lift the debt ceiling. For sure, if it gets too close to zero, a 10,000-point drop by the Dow will motivate Congress to do anything, even lift the debt ceiling.

After which every entity that the government has wrung out will be made whole, and this process of making whole will of course trigger the infamous headline of mine that the Gross National Debt Spiked by $490 Billion or whatever in One Day.

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  144 comments for “Debt Ceiling Kicks in, Treasury General Account Plunges: Let’s See How Close to Zero it Gets Before Congress Ends this Farce

  1. DR DOOM says:

    The debt ceiling thing use to get some serious air time with a bloviating congress member warning of one day it will be 2021 then what. Well it’s 2021 and and we have bizzaro world. The past debt ceiling bloviating now seems like some fond memory when things were singularly f&?ked up instead of clusterly F&?ked up. It’s kinda comforting in a weird way.

    • Joe Saba says:

      of course our REAL PROBLEM
      is SPENDTHRIFT CONGRESS – 100% corrupt and run by their bosses the 1%

      • polecat says:

        Yes. CON grease IS the FARCE!

        Expect from them nothing else but to continue lubing their own personal gift engines .. whilst they mime ‘relief for the benefit-nonbenefit of the lower casts.

        • DR DOOM says:

          Congress is doing exactly what Webster Dictionary defines as the job of a politician. They have successfully in a devious and manipulative manner turned 1/2 of the country against the other half and outsourced their duties to boot. And they have en-riched themselves gloriously. We the electorate can not define much less agree on sound money being necessary to underpin an economy. We the electorate are being harvested. As we should be. Our own “independence” was not a grass root movement directed by ” we the people” It was led by the elite class of that period. If real change happens we will be led again or providence forbid we descend into chaos of the un-led.Hollywood has placed organic fictions in the brain pan along with the idea a raccoon talks to Bambi and the other forest citizens. Hollywood has not placed into your brain pan the glorious charge of the Poles to save Westen Culture in the Sultans attempt to seize Vienna. Thomas Jefferson was hanging by a thread on that day.

        • Dan Romig says:

          DR DOOM, you are telling it like it is.

          As long as the two party duopoly keeps the electorate corralled-in, the electorate will indeed be harvested. Perhaps it is as it should be since the masses are so blind to the mechanism of the structure of power that controls them, that they cannot jump over the fence of the corral that confines them in a “Red vs Blue” Theatre of the Absurd and takes their tax dollars, liberty and a sound fiat currency.

          One thing that I would add is that so few seem to have a grasp on the history of central banks in the USA, and what happened on 25 February 1927 in Washington D.C. when Congress passed a tidy little piece of legislation that has put “we the people” where we are right now. And unless Congress intervenes at some point in the future, where we will always be.

        • NBay says:

          My usual comment Doc and Dan;
          No statues of Founding Father Tom Paine ANYWHERE….we didn’t have a revolution, just swapped management.

          And am still sometimes reading history of firearms and cannons. Sort of a half ass effort to find out if it was pure tech or generals that won the day for the west during that period….not that it really matters….yes I realize generals order stuff made. And I don’t want someone’s (opinion) book to read.

          I do have my own notions on the Bronze Age Collapse, though, which was purely tech from the general Balkan area…..not that it really matters, either.

          And even though it’s all just chance, I prefer scientists to prophets.

      • RH says:

        The corruption runs deep and the congress and presidents are just the tools. Reportedly, Obama’s mother was close to Geithner’s father. Thus, the question arises: was President Obama supported financially and nominated to enable the banksters to evade any serious punishment or any reform? See “Eric Holder, Wall Street Double Agent, Comes in From the Cold” in rolling stone.”

        The Dodd Frank baloney “reform” allows banksters to take away (steal via “bail-ins”) innocent depositors’ money (instead of becoming personally liable for their banks’ frauds like ordinary Americans would be liable if they did such crimes) and also required that legitimate credit unions and smaller banks with no organized crime links first have to give up ALL of their assets to bail out the major, corrupt, banks with the most organized crime links if the major banks fail. See DW’s “Money laundering, oligarchs, terrorists: How corrupt are the banks? | To the Point” and also “Financial oligarchy and the Globalization of Organized Crime” in casinocapitalism website.

        All American businesses wish that they could get free money like the banksters and wall streeters can get from the US government and their “Federal” Reserve — which actually is privately owned but has a deceitful name to fool Americans.

  2. DawnsEarlyLight says:

    I think the day after headline will be “Treasury Granted Moratorium on Replenishing the Treasury General Account”!

  3. St5 says:

    I think there is a chance, however remote, that some in congress will let it go. They can make money on the way down too, especially if they know it’s going down.

    • GotCollateral says:

      Game theory-esque defection

      Besides, US defaulting on some of its debts is historical record (from wikipedia “List of sovereign debt crises”):

      1780 Devaluation of the Continental dollar to 1/40 of face value[19]
      1790 Crisis began in 1782. Ended by the Compromise of 1790 and the Funding Act of 1790.[20][21]
      1798 The United States ceased payment of its debt to the overthrown Kingdom of France, prompting the Quasi-War.
      1862 The Greenback Default[22][20]
      1933 Executive Order 6102[2]
      1971 Nixon Shock[23][24]

      So far from impossibility, and likely to happen at least once in some form during someones lifetime (assuming one lives to at least 75-80).

      • davejr says:

        Don’t forget 1964 when silver was removed from coinage. That was a default too.

        • robert says:

          In the ’60s the government blamed it on too many vending machines causing the coin shortage, later it was acknowledged to be the greedy speculators melting down coins, (I clearly remember the news stories of the day) but it was really just Gresham’s Law, repeated countless times in history.
          Only pre-1982 cents and pre-2014 nickels are currently worth melting at this time.

        • Jim Mitchell says:

          In 1965 when we children got our hands on the new coins, my ten year old sister said, “It doesn’t feel like real money.”

        • historicus says:

          The reason coins had serated edges was because people used to skim the metal off the edges
          If the grooves were still in place the receiver knew it was intact
          Thats when they were made from valuable metal

      • Raging Texan says:

        Every day an unconstitutional thieving monstrosity of a federal reserve exists and the govt is using anything other than what the Constitution allows for money is a default.

        • WyleeEconomist says:

          Lest we forget capitalism is a self-destructive boom/bust cycle… The FED is a necessary evil to bail out the 1% with the money of the 99% to keep the system going. If not for the FED we’d have to revert back to Feudalism or evolve into a democratic-socialist government where the majority of tax revenue goes to helping tax payers… as opposed to the 1% and military industrial complex tax payers feed in the US.

        • Raging Texan says:

          @Wylee

          False on so many levels

        • historicus says:

          The Fed has stolen the power of taxation from Congress. They impose an inflation tax upon us. Only Congress can tax and that power cannot be delegated. Additionally Congress controls the minting of the money. The Fed cannot control the money supply to the extent they do now. The constitution gives that power to Congress and the power may not be delegated.

    • Cmoore says:

      When is SHTF going to happen??

      • Raging Texan says:

        Cmoore USA is somewhat following the history of Rome, could be tomorrow or maybe in 300 years. Prep accordingly.

      • Anthony A. says:

        Cmoore, it’s happening right now in slow motion right before your eyes.

  4. Quinntheeskimo says:

    One thing is for certain if Congressmen threaten to shut down government like they usually do when posturing to pass the vote on the next extension, there will be celebrating in the streets. Government can’t risk using that for leverage anymore. ; )

  5. sludgehound says:

    Debt out the wazoo is funniest piece of econ 1001 (inflation I know) read in long while, if ever.
    Headline post wazoo should be something like it:

    Wazoo Hole Plugged by Congress, Yet Again

  6. Cem says:

    Everyone’s met someone who fails upwards.
    It defies logic, reason, and every known metric and yet they still get to throw “VP” in front of their name.

    …that’s the U.S. right now.

    At least we’re pulling out of the Middle East

    • Micheal Engel says:

      We are not pulling out of the ME. US main valve control the flow of thing in the ME. Iran wants us out, but the rest want us in.

      • Raging Texan says:

        Engel what’s gotten into you? Where’s our mysterious market prophecies?

        • ivanislav says:

          He even forgot to put a number on it.

        • Jack says:

          RT,

          Please don’t insult our beloved

          “oracle of Wolf Street “.

          Michael have been a huge plus to this forum. We cannot bare the thought of messing around with him!

          He’s as essential as WS is to retain our sanity in these crazy times :)

      • Dave says:

        Well so far Iran has been of some assistance in speeding our exit from Iraq and Afghanistan (which geographically sandwich them) and expanding their sphere of military and political influence……..

        The moment we entered those countries we were doomed to leave defeated

    • Trailer Trash says:

      Some guy named Peter wrote a book about it. His “The Peter Principle” describes how people in a hierarchy are promoted to their level of incompetence, where they are stuck for the rest of their career.

      Eventually all important management slots are filled with incompetents and that’s how we get companies that manage to make money in spite of their best efforts to do otherwise.

      The Peter Principle applies to any hierarchical institution such as governments, non-profits, etc. The US Military runs a bit different. With them is it “Up or Out”, as required by federal law. When officers are passed up for promotion twice, they are forced out.

      • robert says:

        For governments, it’s called Kakistocracy.

      • Auldyin says:

        TT
        He was a Brit, got his inspiration from UK Govt and civil service. Works for anywhere though!

      • Dave says:

        I would say that is a very broad brush you paint with, Trailer Trash

        I know a few government employees who are very dedicated and industrious……. especially when it comes to taxes I owe!

        I actually do know a few, and there are good people there as well, just like everywhere else

  7. MCH says:

    Farce makes for compelling TV.

    Come Mr. Richter, you know how the game is played, the networks will want this dragged out as long as possible, because they need ratings. You have the two sides pointing fingers, you don’t even need to watch to know what the jackasses and dumbos are going to say on TV. We’ve trodden over this ground so many times, it’s ridiculous.

    Yes, it’s a farce, but the media need to make it into drama to boost ratings. Further the divide. You know how they like it, now give them your eyeballs. Especially NBC, cause I heard the Olympics didn’t do that well for them this year.

    • Anon1970 says:

      In a case of life imitating TV, watch the Netflix series “Designated Survivor”. When I watched the series, I thought it was just good entertainment. Now, who knows?

  8. CRV says:

    If it all go’s wrong they will blame climate change.
    According to an article on Yahoo: “A working paper from a researcher at the nation’s central bank warns that climate change could hold back economic growth”.
    Now you know they are clueless and looking for something to blame it on.

  9. Sams says:

    When money was gold the kings used to write out taxes to pay their expenses. And send their soldiers to collect the taxes. With USA having the largest military in the world and security organisations to match, congress could do the same.

    It would be interesting to see the faces of CEO’s and the like at the big companies when the SWAT team arrived to collect the tax;)

    • Old School says:

      What’s wrong with just pegging the debt ceiling right where it’s at and saying $28T is enough. If you can’t run a balanced budget and service $28T debt with t-bills at zero then you are a bankrupt state that is kicking the can.

      • Sams says:

        They can run a balanced budget, but then taxes must rise. And they must tax all that have money, that includes the donors financing politicans. Not just the general public.

        • makruger says:

          And since raising additional revenues by increasing taxes on the wealthy and corporations is a non-starter for the conservatives (as well as the democrats), thus the showmanship must go on.

        • Happy1 says:

          You mean taxes must rise or spending must be cut, the latter is the one that they never get around to, and this is the real problem.

        • WyleeEconomist says:

          Lest we forget capitalism is a self-destructive boom/bust cycle… The FED is a necessary evil to bail out the 1% with the money of the 99% to keep the system going. If not for the FED we’d have to revert back to Feudalism or evolve into a democratic-socialist government where the majority of tax revenue goes to helping tax payers… as opposed to the 1% and military industrial complex tax payers feed in the US.

    • joe2 says:

      Like in Hagar the Horrible. Fat guys in black hoods with huge axes holding them upside down shaking coins out of their pockets.

      You laugh. Social Justice taxes – tax on what you should be making with your privilege – coming to a country near you soon.

      • Mora Aurora says:

        Or like in The Wizard of Id:

        “Sire! We face a revolution!
        What can I do?
        Eliminate all taxes!
        How big a revolution?”

    • Anon1970 says:

      In days of old, heavily indebted royals often defaulted on their debts, expelled their lenders and seized their physical assets.

    • Hashcrash says:

      I’m sure Elizabeth Warren approves of this comment. Noone else does tho.

  10. Micheal Engel says:

    If congress stall, TGA overdraft. JP collect fees on few $T’s at c/c rates. UST shortages send TY to a new all time high. RRP goes to $2T.

  11. historicus says:

    National Debt was circa $9 Trillion in 2009….

    The Fed pegs interest rates at unrealistically low levels for 12 years….
    and what do ya know….the Govt over spends by $20 Trillion.
    IF the real cost of borrowing had been where it should have been, the costs would have prevented the profligate actions of a runaway government fueled by interest rates brought to us by a rogue Federal Reserve (Bernanke, Yellen and Powell) who are allowed to ignore their mandates by the same people who profit from them doing so….CONGRESS.
    Shame.

    • Raging Texan says:

      “If only the Fed were a little wiser, then it would all be better. . . We just need a wise administrator in there to fix all our personal and national problems.”

      Many people believe this unfortunately.

    • Yamo says:

      @historicus……… +1000

  12. JaiSeli says:

    Probably getting censored again for being a “Truth-Teller”. Huh, Wolf? “Sheep Street” is a more fitting title!

  13. Chris Coles says:

    Surely their way out is always deflation of the value of the $, which also means we are about to witness massive inflation of the price of everything. Thus the way out is to “enjoy” a complete collapse of the world economy; while at one and the same time . . . have someone else take the blame by using the ancient phrase, often used before . . . “Nothing to do with me”

    • Augustus Frost says:

      No, not voluntarily. What you describe means the end of the Imperial Empire and that will never be abandoned voluntarily.

  14. .
    Just raise it to 100 trillion and avoid this silliness for the next quarter century, at least.
    .

    • Insta says:

      If historicus is right above and debt has gone from 9T in 2009 to 28T today, then we are on pace to reach 100T in slightly over 13 years, and if congress knows the new ceiling is 100T they could probably spend it even faster. Plus the rate has accelerated the last couple years, so it will probably be even sooner than that.

  15. historicus says:

    The debt ceiling markers on the chart provided….

    Plowed through…. like the reverse of a high rise building demolition

  16. Micheal Engel says:

    Most US army bases are in Nc, SC, GA, TX… they can “re-educate”
    hostile gov.

  17. Paulo says:

    regarding: It’s just nuts, and foreigners scratch their heads every time, and so do we, but that’s how the system works.

    Yup.

    There has got to be a better way of doing democracy, or at least pretending to do democracy.

    Regarding Cem’s comment: At least we’re pulling out of the Middle East

    Nope

    Dictionary
    eu·phe·mism
    /ˈyo͞ofəˌmizəm/
    Learn to pronounce
    noun
    noun: euphemism; plural noun: euphemisms

    a mild or indirect word or expression substituted for one considered to be too harsh or blunt when referring to something unpleasant or embarrassing.

    • Carl Wilson says:

      Euphemism is too harsh a word. Surely we can come up with one that is less accusatory.

  18. JustTruth says:

    Pychopathic insanity ending in Collapse.

  19. JustTruth says:

    Insane, corrupt and evil psychopaths running the country. Result will be complete Collapse.

  20. David Hall says:

    Printing money to fund spending. Taxing to fund spending.

    They thought real estate prices were an outrageous bubble before the inflation hit. How can you build a house cheap? It takes four decades for hand planted seedlings southern pine used for framing lumber to reach harvest size.

    Eldercare charging $27/hr. for non medical in home assistance. About 1975 the minimum wage was $2.10/hr.

    • Augustus Frost says:

      Eldercare is a candidate for the next “free” benefit. No different than the wish list included in the latest $3.5T spending bill, yet another one where the costs are going to be grossly underestimated based on prior history.

      Nothing like a bankrupt society piling on additional “entitlements” by imagining it is wealthy because it doesn’t recognize most “wealth” is phantom capital.

      • josap says:

        Once the “elders” have used up whatever savings they have managed to acquire, the government does pay to care for them.

        The care is mostly inadequate for humans, but their children have no interest in caring for them. So they are warehoused at the least cost to a society that no longer values them, their assets have been long spent, and their ability to earn an income is long gone.

        • Chris Herbert says:

          100% correct, josap. Bring on the ‘morphine lady’ then drop the final curtain. We are a cruel people. Humans are considered ‘over killers’ by scientists. So too are rats. My money is on the rats.

        • Jack says:

          Chris Herbert

          No!

          This trend of elder abuse is a rampaging disease of ( mainly western societies), and I say societies and not countries, because even immigrants to the west have adopted this approach to dealing with their elders!!!

          I’ve read somewhere in another article here about the ( new trend, albeit forced by today’s economic realities) of multi generational households.

          This is something that should be encouraged, the whole philosophy of farming out responsibility of caring for your own family members to the ( tax payers) is a falsehood.

          It has been propagated by mainly European countries coming out of ww2 , and going fully socialist states.

          The security blanket for the vulnerable members of society should have been tightly constrained to the ( deserved categories only) .

          orphanages and the like, where No members of family exist to look after the person in need.

          Typically, the governments love to increase their foothold in the lives of an average individual, to the extent that we’re seeing today a large group of officials and semi officials advocating the curtailment of more of our rights( freedom of movement, freedom of choice,… you get the gist).

          And that brings me to the news from Afghanistan!

          The Taliban are nearing the total control of that country!

          I don’t hear anymore members of the fake democracies crying about the erosion of the freedoms of the poor Afghanis!

          Maybe because our own freedoms are at stake now?!

          The reality of the matter is clear, keep out of other countries business and concentrate on your own citizens.

          There are items in the government expenditure side of the ledger that needs to be eliminated NOW!

          the alternative is obvious, the popcorn and cola show goes on. Till it doesn’t.

        • Augustus Frost says:

          Josap, what you are other respondents to my comments write is one of the primary indicators that US society is headed for collapse. It’s an example where it’s someone else’s responsibility where this “somebody” is actually no one.

        • David Hall says:

          The agency pays a worker $12/hr. A CNA gets $13/hr. One CNA with 20 yrs of experience is working 55 hrs a week. A general assistant with a bad shoulder is working 16 hrs a week.

      • polecat says:

        Anymoar, these daze.. ‘eldercare’ equals, if I may use the StarTrek vernacular, “has ceased to function”. Just ask Andrew.

  21. David Hall says:

    Printing money to fund spending. Taxing to fund spending.

    They thought real estate prices were an outrageous bubble before the inflation hit. How can you build a house cheap? It takes four decades for hand planted southern pine seedlings used for framing lumber to reach harvest size.

    Eldercare charging $27/hr. for non medical in home assistance. About 1975 the minimum wage was $2.10/hr.

  22. FromKS says:

    How much of that 1.8 Trilly drawdown went to public programs versus banks via reverse repo?

    • Wolf Richter says:

      This went into government spending, paying the bills that the government pays every day, from military salaries and procurement to federal unemployment benefits (till they expire in September). This government spending getting spread around in the economy.

  23. Micheal Engel says:

    1) Healthcare cost is down.
    2) Food commodities are rising, after years of coma, after years in zombie state, no inflation :
    3) Wheat Futures backbone Sept/Nov 2007. Prices are higher than 2016 lows, reaching the backbone lower bound.
    4) Lean Hogs Futures backbone : Apr/ June 2014. Price 5) Soybeans Futures backbone : Mar/ Apr 2008. After testing 1998 level
    from 2018-2020, in accumulation, price osc inside.
    6) Arabia coffee & sugar bs.
    7) Live cattle Futures : Feb/ May 2015. After reaching 1993 fractal zone,
    file mignon is < the backbone.
    8) Blame WMT, the supermarkets and the steakhouse chain stores, which charge more.

    • roddy6667 says:

      Health care cost is down? Really? In what alternate reality?

      • Raging Texan says:

        Healthcare costs have gone down quite a bit for my family because we just do it at home now. Removed by own appendix last week. Surprisingly easy. Plenty of howto videos on youtube. It hurt a lot less than I thought it would, the key is to use a really sharp scalpel. Got antibiotics from my cat’s prescription and they worked fine, no infection everything is healing nicely.

        • MonkeyBusiness says:

          ROFL. What’s next? My wife performed brain surgery on me!!

        • Mora Aurora says:

          Hedonic adjustments!

        • polecat says:

          “Kachoo!” (Where the goodbad Doc is dripping copious amounts of viscous snot) “Hey – don’t worry .. With the spectrum of anti biotics I’m giving you, I could sew up a dead cat inside of you and you’d never get an infection.”

          Minority Report – pre eyeball replacement surgery ….

        • stan65 says:

          Healthcare, schooling, police, borders protection,…

          Anything our parents paid for through their taxes, and received adequate services for, we still pay for in full but receive no services at all.

          Inflation.? Theft? Robbery?

        • 91B20 1stCav (AUS) says:

          Monkey-that would be: “…sain brurgery…”.

          may we all find a better day.

    • Anthony A. says:

      “Healthcare cost is down.” What are you smoking today?

      • Micheal Engel says:

        Fewer doctors visitation, less CT & MRI, fewer dental care, fewer heart bypasses…more smoking, less doctor bills.
        Forth stimulus check send by IRS to your bank account, by Aug 19,
        to pay implant…

        • Anthony A. says:

          What? It took me three months this year to get a dental appointment for surgery and a dental implant. These places, and others, are booked out many weeks and have been since the reopening started.

          I paid $6 K + for the implant. No 4th Stimmi check yet, but I’ll look for it.

        • DawnsEarlyLight says:

          The cost of healthcare, verses the amount of money spent on healthcare are totally different cases. Nice try.

  24. Artem says:

    I’ve been dieting lately by setting calorie limits on how much I eat if I go above by weight ceiling. It’s now 300lbs, and I hope I don’t have to raise that again.

    • gametv says:

      in your analogy the equivalent human weight for our debt load is about 1,000 pounds.

      • Yancey Ward says:

        LOL, the human equivalent is in a coffin the size of a shipping container 6 feet under.

        • DawnsEarlyLight says:

          Sorry, coffin containers are unavailable at the moment.

        • polecat says:

          Not if your at sea .. rather, it’s fathoms, and that’s Davy’s locker, not no mere coffin.

          YoHo, YoHo, a Medical PIRATE’$ life for WE F (you will get your treatment and LIKE IT!)

          Billy G. smiles from on high …

  25. Mendocino Coast says:

    Looks like no one is going to stop all this !
    historicus statements are spot on as to who the blame is on

    It seems no one has the Power to stop what’s going on and I certainly don’t want to join them. I am reading more and more how many Americans are leaving the country ? just giving up I guess . Time for a change wow at this late stage for me I thought I was all set for the Future not at all.

    Makes No sense at all now their are no answers anymore excepting to discuss the Horror of it all

    Sure its easy to talk of what’s happened but its like the Virus their is no cure no stopping it

  26. Jack Hank says:

    Wolf,
    I really enjoy the “Debt out the wazoo” chart. You need to make a series and you can ™ them. The next in the series should be “Fed balance sheet out the wazoo™”. I have a feeling that over time it will look the same as the Debt out the wazoo™. The only thing that will change between the two charts will be the little flat areas labeled as “Debt ceiling” on the Debt out the wazoo™ will need to be relabeled as “The good times” on the Fed balance sheet out the wazoo™ chart. You could then move onto Reverse repo out the wazoo™. I know that doesn’t make sense because RR is not cumulative, but it’ll make a great chart and there’s not much that makes sense in this world anyways. Feel free to run with this and all the best!

  27. America pays her bills by selling her dollars to other nations. Those dollars return, expenditures are closing, forever wars. Money that goes into stocks is not investment. (AMC and GME are examples, these CEOs have no idea what to do with that money) The Marshallian K signal means liquidity is exiting from speculation and being put to work, (part of what hit gold last week?) creating a liquidity crisis in security markets. I think its more likely a liquidity trap, Yellen did the same thing in 2015 and crashed the energy markets The Fed is pushing both monetary and fiscal policy at the same time, (some historical precedent?) The sound money people have it wrong but they will get what they want, and they won’t like it.

    • Artem says:

      Yellen crashed energy markets in 2015? Really? Not shale and Iranian production?

      Not everything is FED-driven.

  28. Gabby Cat says:

    I am confused on how the members of the government make money, other then raises, if they mess with the debt ceiling in any way. Is there not a law that states the elected members are paid well enough to avoid being compromised? Can they not get arrested for breaking multiple antitrust laws? Most Americans know everyone that goes into politics does it for money. It’s one of the only rags to riches stories left in America. Therefore, if you want to be the change – run for office.

    • josap says:

      When you have political power lots of people want to do business with you/your company. Profits increase.

      When you leave office, for a year or so between serving in the House and running for Senate, you get a job as a lobbyist or other very high salary position. Then there are the Board positions that pay well for little work.

      You can get some sweet business opportunities, dabble in insider trading and enjoy worldwide fact-finding trips, conferences and extended campaign stops.

    • You referring to the 7 million Yellen made for speaking engagements? Her salary is bit less than 300K. Makes you wonder what she told those people, and was it part of the public record. The most famous insider information case is Loeffler and Purdue. Justice? You may recall Neil Bush and Silverado, a scam to inflate property values which by today’s standards would be a parking ticket. We live in the era of maximum corruption, compared to Reagan’s phony military buildup in the 80s ( when the national debt became an irresistible force), Biden’s spending package will lead to multiples of corruption , many more bridges to nowhere. Pork barrel spending on steroids, and the bipartisan fix is in. This is the point of free debt, as long as we expand the supply of American dollars and their (corrupting) influence.

      • historicus says:

        “You referring to the 7 million Yellen made for speaking engagements?”

        Deferred compensation.

        Who would go listen to her speak…and what could she possibly say?
        It is what she likely said to people while in position.

        • historicus says:

          and how many pension does she have now..
          University..
          Fed…
          Treasury…
          any more?

  29. Nick Kelly says:

    But the world will still give the US lots of stuff for US$. Put another way, the US makes 98 $ every time it prints a 100 $ bill.

    No doubt the US is getting a break. maybe biggest break in modern currency history, because the other SDR currencies have their own probs. If the euro had only the frugal five, and not Spain, Italy and Greece, the US$ would be a second- tier currency. It says something about the state of the laundry basket that the yen is considered a ‘safe haven’ currency.

    Sterling would look not too bad, if it wasn’t for that F@cking Brexit. The latest big mass grave: it looks like the EU is not going to renew a treaty by which internal EU commercial legal disputes ( e.g. Belgium vs Holland) are litigated with UK law. There are 300K well- paid people in the UK working on EU stuff.

    So what should be US strategy? Apart from living within its means, obviously. A strategy to delay the reckoning the US$ is heading for.

    How about this: every week or so we hear about Russia’s gold reserves, either from gold bugs or Russia bugs. Actually Russia is too poor to accumulate much gold; the German public, private citizens, hold much more than the Russian state. This Russian ‘gold talk’ has only one purpose, to help prop up the ruble, which needs all the lipstick it can buy cheaply.

    Outside Russia you can’t buy gold with rubles, but you can with US$.

    Wouldn’t it be funny if at the peak of US$ hegemony, it slowly started accumulating gold. The ultimate switcheroo on the competing fiats: the greenback secretly allies with its historical enemy: gold.

    Or maybe rapidly, putting out a bunch of orders through different channels. Of course this is a savvy market and the presence of a whale would soon show up on sonar, but being immune from law, the US Fed, could use all kinds of surrogates. The price will rise but using futures maybe a lot could tied up with counter parties who think the contracts will be rolled over, but then the mysterious crazy buyer wants delivery.
    Remember, it took the US gov intervening to stop the Hunt/ Saudi attempt to corner silver. The Comex was ordered to stop taking orders for accumulation.

    If the above doesn’t pass muster as an economic prediction. maybe as a novel?

    • Sams says:

      There are three main markets for gold. New York, Shanghai and London. The New York exchange is pure futures and paper. London and Shanghai also deal with physical gold someone are to receive. At times there have been an oscillation in prices with the time of day. Prices fall when the New York exchange open and rise when it close. Prices rise when the trade happen at Shanghai and later London where gold and not futures are traded.

      A story from a local newspaper several years ago. The local aluminium factory did reasonably well despite a very low aluminium price on the New York commodity exchange. The reason, the price difference between commodity exchange price and price on real aluminium of a quality to make something of had never been larger…

    • Auldyin says:

      NK
      “the EU is not going to renew a treaty by which internal EU commercial legal disputes are litigated in UK law”
      That could be a real doosey.
      EU is trying to screw UK at the moment by playing sour grapes with trade to Northern Ireland. But EU has signed up to minimum 15% multi-national tax with G8 cohorts. Eire will not like that at all, as they massively benefit from off shore residences eg Apple. Que a fight between EU and Eire which plays right into what I’ve thought was inevitable all along. Eire out, tax problem gone, NI border problem gone. Magic. I don’t suppose it matters what legal system they use for the paperwork.
      You saw it here first.

  30. OutWest says:

    I remember the debt ceiling sharade in 2011. 4 days after the debt ceiling was raised, S&P downgraded US debt to AA+. It was big news back then.

  31. Masked Ghost says:

    Debt Ceiling is just so much Kabuki Theater. Expect plenty of posturing in front of the cameras.

    Maybe Wolf should sponsor a contest? How low can we go before they change the ceiling ?

    I will throw my hat in the ring at $20 billion.

    Now if you want a really serious contest, how long before the Marburg virus with a fatality rate of 85% gets here from Guinea ? ?

    • Nick Kelly says:

      From book ‘The Hot Zone’ which I read 20 years ago before it was made into a movie

      The ‘beauty’ of Marburg and Ebola is they kill so fast they can ‘burn out’ before spreading. That’s the term the docs use ‘burn out’ They consume all the fuel. Which lead to the key question, where is the host for the virus, which it can’t kill fast because the virus would die out.

      The opposite of AIDS that can be asymptomatic but transmitted for years.

      When the team from CDC first headed to Zaire (or was it DRC?) they got off plane, got in Land Rover and headed to clinic. The entire staff was dead on the floor.

      In some respects more easily to deal with than C 19, in the same way a badly wounded soldier is more a liability to his side than a dead one.

  32. roddy6667 says:

    Does anybody remember the outrage the media faked when the national debt hit 1 trillion dollars under Reagan?

  33. Yamo says:

    US is debasing their debts, included their biggest debtor: China, in a robbery way.
    The question will be what will China, Russia and friends will do?

    • Sams says:

      Return the US dollars to sender.
      Inflating prices of raw materials and commodities. Then export high inflation to USA and slowly devaluate the US dollar until USA can no longer afford it’s military might.

      • RightNYer says:

        China’s been playing the long game for a while, and it’s working, probably better than they ever imagined.

    • MonkeyBusiness says:

      They will do nothing. It’s working out great so far. YOLO.

    • MonkeyBusiness says:

      Russia also no longer owns US Debts I think or they have mostly gotten out of them.

      • Nick Kelly says:

        The Russian economy is the size of Canada’s but supporting 4 times the population. It never was a significant holder of US debt because it can’t afford to lend US $.

        For reasons mainly of domestic consumption, Russia likes to announce weekly it is reducing US$ use, reserves etc., when it never had sizeable amounts of either.

        For some reason people are lumping China and Russia together as equal partners. China IS an economic superpower, albeit largely on oceans of low- tech Walmart stuff. Russia is a resource extraction economy with over 50 % of gov revenue coming from gas/oil.

    • Rowen says:

      Japan actually owns more Treasuries than China (1.26T vs 1.08T), even though China’s US trade surplus is much greater. Where are all those dollars going? Well, unlike the Saudis or Japanese, who tend to buy US financial assets, China has been using those dollars to pay for BRI projects globally. I think its peak holdings was in 2013, right when the BRI started, and the aggregate has been steadily declining.

      • Sams says:

        The belt and road innovative, BRI, also gives Chine the possibility to play a little financial game. Invest in infrastructure outside China, lend the money as Yuan and pay in US dollars.

        Now they have got rid of excess US dollars and they have become a lender in Yuan. If the US dollar is devaluated, their loans are not. They have also created a future demand for Chinese money as interests and loans have to be paid.

        • Nick Kelly says:

          The Chinese are having a hard time collecting from Venezuela. Their ships wait for oil while others jump the line cuz they are cash buyers while the Chinese are just collecting on debt.

          I wonder how long, or if, the Chinese military will get involved in collections, because given the clients, for sure a lot of their loans will go sour, and not everyone will hand over land leases etc.

          For sure it won’t be Venezuela: Monroe Doctrine.
          I believe this is named after Pres Monroe when Brit and France pre WWI, sent a naval force to pressure a defaulting SA country, and got told off by US.

  34. Petunia says:

    Mnuchin gave T the TGA as a way to battle against an adversarial congress. Historically, the TGA never had much money in it. Mnuchin filled it to the brim with FU money.

    Yellen is no Mnuchin, and furthermore, she is in lockstep with the democratic congress. She will support any crazy scheme they dream up.
    Expect the TGA to drop back down to almost nothing, probably less than 10B.

  35. gorbachev says:

    In real life, the last time I ran into a personal debt ceiling was when I abused my line of credit.
    No matter how much I pleaded they would not
    raise it. Such is real life.

    • Nathan Dumbrowski says:

      So different when it is your personal account. Beg, plead, cry or yell the bank has software that is built to ignore all of that and be factually based on debt to income.
      For this exercise they can make up the income portion of the calculus and ignore all the facts and merely state the limit WILL be increased. And like a fantasy the limit is raised to infinity

      What Ifs are fun. What if they do let it expire? What if Biden kicks out JPow? What if we had negative interest rates? Marvel is trying this genre maybe we should too. Never say Never

  36. Nathan Dumbrowski says:

    The truth is that the Democrats have enough votes to raise the debt ceiling without a single Republican vote.

    Democrats: Either they pass a debt increase on party lines or potentially own the toxic politics of a credit default as Republicans stand on the sidelines.

    Would you want to be the party that is going to own this toxic mess going into the next election??

    • gametv says:

      Once again, the supply of Treasuries is being unnaturally restricted, so the supply-demand point is being suppressed by the lack of issuance to the market. The market also tends to buy up Treasuries during times of uncertainty. So interest rates continue to be suppressed. At some point, interest rates are going to surge very rapidly, it is like a balloon being pushed further and further underwater. When it finally is released, it is going to move very fast.

      • Alku says:

        While I like the analogy, I doubt it – the balloon was not released in Japan for so long, why should it happen here?

      • historicus says:

        The federal reserve has suspended the greatest fundamental of a free market supply demand price discovery. Specifically in government debt.
        The Fed has placed their foot on the scale for 12 years now. All they touch is skewed by their policies.

        This is the great issue.

    • MonkeyBusiness says:

      Dems = Reps.

      You can have 99 Dems with 1 Rep senator and the outcome would still be the same.

      Best Kabuki on earth really.

      • polecat says:

        Well sure .. until someone finally throws that election audit sabot into those hellish CONned greased gears.

        Can’t wait!

  37. Micheal Engel says:

    1) The end of the world came under Bill Clinton. Dec 29 1999 was the end
    of the world. From year two thousands back to 1,900. The other Billie said no, Y2K is bs.
    2) In UK a large C/C machine crashed. It will shut power plants. It will
    start a nuclear war. On Jan 4 2000 we ate in Bruno. My C/C worked.
    3) The new sequence is : $2K, $2K, $2K…The TGA go to : (-) $0.1T, (-) $0.2T… Before Snake River. $2K trump the rest, trump cover mistakes.

  38. Micheal Engel says:

    1) NDX in moderation. NDX was muzzled. NDX weekly in total tranquility.
    2) Suppose there is some kind of warning a sign when tranquility is in
    the denominator.
    3) In the last three weeks this indicator will jump to infinity.
    4) It will force NDX to correct, before it’s too late.
    5) NDX deflate or crash.
    TA (skip) NDX weekly log :
    6) Sept 21 2020 low to Oct 26 close. // a parallel line from the half line : Aug 31 low.

  39. Mr. House says:

    This says to me that .gov is gonna have to gin up a crisis soon to sell the fed a bunch more tbills.

  40. ru82 says:

    That national debt graph plus if you look at the M2 money supply graph….we are in a high inflationary mode.

    Assets prices are accelerating. Housing, cars, stocks

  41. Mojer says:

    The good news is that Afghanistan now costs almost nothing after losing $ 2,000 billion in investment for liberty, sorry for expenses.

    • historicus says:

      Mojer…
      Let’s not forget the life and limbs of our brave soldiers.

      • 91B20 1stCav (AUS) says:

        historicus-don’t worry, other than lip service, the nation now, more often than not, does its best to forget them as much as possible- especially since we have made military service, practically speaking, into just another job opportunity…

        may we all find a better day.

  42. NotDeadYet says:

    The most obvious first step towards curing this debt problem is to raise taxes and reduce loopholes for corporate profits and for the 1%. We could begin by eliminating the ‘unpaid for’ tax cuts enacted several years ago. However, this will never happen.
    Why?
    Because the peasants will not let it happen.
    Why?
    Because much like talking parrots, the peasants have been trained by the media to chant, “Socialism! Communism!, Venezuela!” , whenever they hear such talk.
    Why?
    Because our REAL problem has become abundantly clear: There is no shortage of stupid in America.

    • historicus says:

      “The most obvious first step towards curing this debt problem is to raise taxes and reduce loopholes for corporate profits and for the 1%.”

      “There is no shortage of stupid in America.”

      You could take all the income from the 1%…100%, and it wouldnt dent the deficit.
      The RECKLESS SPENDING of money created with NO COST is the issue. Why no cost?
      A decision by an unelected committee serving whom? That is the issue. Fix that.

  43. George W says:

    But I live in a gated community…

    One main street driven Garbage truck can run right through any restraining gate I have ever seen.

  44. NotDeadYet says:

    Fix that? OK
    First: “A journey of 1000 miles begins with one step”… Remember that simple fact.
    Second: The fundamental Strategy to Increase Cash Flow and Net Worth: a) Decrease recurring expenses. b) Increase recurring income. c) Create new streams of income.
    Third: Develop a plan and implement tactics to execute that plan.

    Currently, there seems to be no plan, but plenty of tactics coming from all sides to no avail and with what seems to be disastrous results.
    And of course there are plenty of those fixated on single aspects of the problem, which is a problem in itself.
    I do have faith America will prevail. But a rocky road could lie ahead for America.
    All is not lost, however… as Billy Joel once crooned: “There’s a place in the world for the angry young man”. There always will be.

  45. Frank Simms says:

    Get rid of the debt ceiling and give every American $100 million dollars. I am in Canada so do this with every country around the world and get it over with. This way we stop this fake economy and let the UN, IMF, World Bank, WHO and every socialist power hungry organization show us the way we can live better, not. This money system is all BS, ridiculous.

  46. Auldyin says:

    “foreigners scratch their heads”
    Yup, I’m a foreigner. Two ways to look at it.
    1) It’s a quaint, amusing old American custom, like changing the Guard at Buckingham Palace. An ancient native ritual for tourist spectacle and photographs.
    2) How the Hell do 350m sensible people put up with this bunch of inept to**ers running their country into the ground and impoverishing them year after year?

    Leaving the Pantomime aside, when reality bites, it’s going to be back to selling Treasuries again, which in turn raises the question, are they going to QE it again?
    Some of you may remember quite a while ago I said a group of UK MP’s were on the case of QE.
    Well, I’m extremely pleased to say that, not only were they on the case, but they’ve got The House of Lords (the finest ‘old farts’ retirement club in the World) to do a critical report covering everything you could ever want to know about QE. It’s called “QE-A Dangerous Addiction”. Bailley was furious about the title. Google UK House of lords QE report. July21.
    It’s available as a 50+ page pdf to download.
    I recommend the evidence of Liam Halligan an excellent financial journalist who has been on this for years.
    Is there a chance their days could be numbered????

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