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Thread: You cannot ignore economic reality.

  1. #521

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    Quote Originally Posted by brutus2 View Post
    I am not saying it is inaccurate or not, simply stating it does not make sense without additional information or clarification. Just me being me.
    My reasoning is this. Over the 17 year period or so stated, the total Defense Vendor budget was around 6.8 trillion and the total Housing and Urban Development was 1 .4 trillion.

    ( I approximated using Treasury from 2010, but I am guessing those figures are on high side. )

    So if you owned a business and your accountant came to you and said I think your sales staff is fudging their expense accounts by 10 million dollars when you only paid them 4 million,
    you might ask your accountant how that could be. It does not matter if they had no evidence, or took 100% of that 4 million and put it in their pockets. You would still have that question.
    How did you arrive at 10 million in fraud?

    Obviously some of the money would have been legit or had receipts so the figure shrinks even more.

    Perhaps there is a perfectly sound argument to back up the study.
    You being you is what makes you you and I for one, and probably many others, like the you you are.

    I'm probably missing some commas in there but I bet you, being you, can get the drift

  2. #522

    Thumbs up

    Quote Originally Posted by ynot2k View Post
    You being you is what makes you you and I for one, and probably many others, like the you you are.

    I'm probably missing some commas in there but I bet you, being you, can get the drift
    brutus is the Man..
    x3

  3. #523

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    Quote Originally Posted by Last time View Post
    Amen. With out faith, there's only fear!

    Sorry for the peoples who's faith is in the fed dollar.

    Best to you and all!

    Thank you bugs.
    Westerner - how are you? Glad you started coming around again and hope you have not exited quickly. We need good people like you!

  4. #524

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    For those that are gold and gold stock bulls ( now and near future) and not so big on stocks and bonds, this is a great validation presentation.
    This presentation by Tavi Costa is packed with information and charts and rational for his forecast.
    Made me at least think about the long bond trade in the near future, as well as my weighting of gold bullion and PM Equities.
    Apparently the IMF asked for this guy to show his presentation and explain it to them.

    It is long so you might have to do a few miles on the treadmill, but some of it very compelling. ( bulk of gold stuff in first third.)

    https://www.youtube.com/watch?v=0QofRgn-MZg

  5. #525

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    It is hard to believe a country needs to borrow 9% of its GDP ( or probably about 3% real debt growth if no recession happens by Sept. )
    That is just crazy, as according to the government stats we are going to have a reasonable economic year ( 2%) and have unemployment sub 4%
    I am using inflation at 4% which I am pretty sure the government stats will have it at by Sept ( maybe lower)
    September 30th is government year end in the US


    So the Treasury has borrowed or spent down in its kitty, 1,541 billion since 09/30/2022
    That is almost exactly 70% of year.
    That might sound that the government debt growth will only be 2 trillion or 7.5% of GDP ( I will use 26.75 trillion)
    However the good month of April is over, and each remaining month will probably average 250 billion, at least, and rest of June say 125 billion.
    So 875 billion plus 1.541 trillion is 2,416 or a touch over 9% of GDP. In a purported normal year. That is emergency levels.

    Why am I so confident that the debt will be so high

    Well look at defense spending. ( just payments to vendors, you know companies like Raytheon etc. )
    It is slightly lower in the last 12 months then it was in the 12 month period before that. Does that make sense to you? Not to me. Just think about inflation let alone Ukraine.
    I am guessing some deferrals in this account.
    Here is another stumper. Total interest expense is only at about 1% on the 24 trillion plus of net debt ( lets not count the gross public debt which is SS etc that makes up the rest of the 32 trillion). We are 70% through the fiscal year and there is no way that the total interest paid on what will average at least 24,500 billion will not be at least 2.25% and probably higher.
    That means that at least 300 billion more in debt will have to come in the 30% of year left, significantly more than that already charged covering 70% of the year.

    Who knows what the other accounts look like. In short I think the Treasury is trying to put on as much lipstick on this pig, for as long as possible.
    It knows the only reason that the markets and economy have held up is massive fiscal stimulus, counteracting the higher rates and minimal QT.


    Tick Tick. Every day that goes by the Deficit gets worse in REAL terms, and a few households and especially a few more companies have to keep paying higher rates. (renewals and new loans). It may take 1 day, or it may take 2 years but it is going to happen unless something significant changes.

  6. #526

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    ^^^ Thanks brutus2. As usual I enjoyed your post.

    I don't get this part "...at least 300 billion more in debt will have to come in...". I understand it is the difference between the 1% and the 2.25% interest on 24 trillion mentioned.

  7. #527

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    Quote Originally Posted by ynot2k View Post
    ^^^ Thanks brutus2. As usual I enjoyed your post.

    I don't get this part "...at least 300 billion more in debt will have to come in...". I understand it is the difference between the 1% and the 2.25% interest on 24 trillion mentioned.
    Bad wording on my part Ynot2k. I meant at least 300 billion more in debt raised just to cover the additional 300 billion in interest yet to be accounted for by September 30th 2023.


    So to date ( 70% of year) Treasury has expensed just 265.8 billion for interest on roughly 24.5 trillion of NET debt. They do not expense the interest on the other 6.5 trillion of
    intragovernment debt but that is another topic. So 265.8 divided into 24.5T = 1.08%. average rate on debt. I figure it will come out higher then 2.25% by fiscal year end ( probably higher) so 551.3 billion. Just rounded up a touch for 300 billion ( probably will be higher in any case. ) I know this rate sounds really low in today's environment but it does take a while
    to walk the rate up.

    It will keep getting higher and higher ( next Fiscal Year and on) as long as rates stay roughly where they are, without even factoring in all the new debt coming on.

    My whole point ( poorly communicated) was to show how a lot of the Treasury's expenses are back year loaded. In other words the deficit/debt is going to look worse and worse, each month that goes by, even with their shifty accounting ( my opinion) and supposed good economy. Imagine what it will look like if we have a significant recession later this year.

    Hope that helps a bit.

  8. #528

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    Late to the thread.

    I think Conan said it best.

    You can ignore economic reality, but not the consequences of ignoring it.
    Politicians and diapers must be changed often, and for the same reason. -Mark Twain

    The purpose of life is to matter, to be productive, to have it make some difference that you lived at all. -Leo Rosten

  9. #529

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    Quote Originally Posted by brutus2 View Post
    Bad wording on my part Ynot2k. I meant at least 300 billion more in debt raised just to cover the additional 300 billion in interest yet to be accounted for by September 30th 2023.


    So to date ( 70% of year) Treasury has expensed just 265.8 billion for interest on roughly 24.5 trillion of NET debt. They do not expense the interest on the other 6.5 trillion of
    intragovernment debt but that is another topic. So 265.8 divided into 24.5T = 1.08%. average rate on debt. I figure it will come out higher then 2.25% by fiscal year end ( probably higher) so 551.3 billion. Just rounded up a touch for 300 billion ( probably will be higher in any case. ) I know this rate sounds really low in today's environment but it does take a while
    to walk the rate up.

    It will keep getting higher and higher ( next Fiscal Year and on) as long as rates stay roughly where they are, without even factoring in all the new debt coming on.

    My whole point ( poorly communicated) was to show how a lot of the Treasury's expenses are back year loaded. In other words the deficit/debt is going to look worse and worse, each month that goes by, even with their shifty accounting ( my opinion) and supposed good economy. Imagine what it will look like if we have a significant recession later this year.

    Hope that helps a bit.

    Yep it does. Thank you.

    just thinking out loud: Treasury has to borrow the money to pay the interest on the money it borrowed previously (and still owes) Tricks are played by delaying accounting using fake rate on an below actual amount of debt, which fake rate will later be adjusted to a higher rate but the trick will be repeated with new fake rate and a new higher but still below actual amount of debt. No doubt I have these specifics somewhat or completely wrong but the general idea of the cartel using accounting tricks AND under actual debt amounts perhaps is in the ball park.

  10. #530

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    Quote Originally Posted by Miteysquirrel View Post
    ...You can ignore economic reality, but not the consequences of ignoring it.
    Nice summary! It seems though that the consequences continue to get kicked down the road... perhaps to be washed clean at some point in time by some form of 'reset'.

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