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News Link • Economy - Economics USA

The Black Swan In Plain Sight---Debt Out The Wazoo


The black swan in plain sight does emit the Donald's orangish glow, but at the end of the day its true color is actually red.

That is, monumental towers of rapidly rising debt loom everywhere on the planet. For the moment, the artificial cash flow from this unsustainable borrowing spree is keeping a simulacrum of growth and prosperity alive. Yet this whole outbreak of debt madness—-represented by $225 trillion outstanding on a global basis—-is careening toward a financial and economic dead end that will soon crush today's fiscally profligate politicians and heedless financial punters, alike, in a devastating reset of bond yields.

For our first case in point, the always excellent Wolf Richter published a great chart over the weekend on the exploding US public debt. To say the least, it constitutes a clanging wake-up call amidst the absolute fantasy world that prevails on both ends of the Acela Corridor. That's because during the mere 8 weeks since the public debt ceiling was suspended by the Donald's end-run with Nancy and Chuckles in September, the national debt has spiked by $640 billion.

That's about $16 billion per Federal business day, and they are not done yet. The US Treasury will continue to borrow heavily until the current debt ceiling "suspension" expires on December 8—-at which time it will repair to the old game of divesting trusting funds and employing other gimmicks which circumvent the ceiling, while waiting for Congress to blink and raise the ceiling or authorize a new "temporary" suspension.

As Wolf pointed out, this pattern played out during the debt showdowns of 2013 and 2015, as well, when the resulting "temporary" suspension resulted in borrowing spikes of $464 billion and $650 billion, respectively.

Accordingly, Washington has suspended it way into a $5.7 trillion increase in the public debt in just six years since October 2011. That is, during a period which supposedly constitutes the third longest business expansion in US history.

1 Comments in Response to

Comment by Ed Price
Entered on:

All this is the great reason why Trump has changed his tactics and operations from the things that he said in his campaign. What do I mean? There is ONE BASIC THING that keeps the banking industry from collapsing right now. What is it? The ability of people and governments to continue making payments. Where do people and governments get the money to make the payments? Because of the way the system works, they borrow their payment money from the banks. When the payments stop being made, the banking system will collapse. Trump knows this, now. He is doing everything that he can do to keep borrowing more money for payments on the outstanding loans of the world, so that the whole banking and economic operation doesn't collapse. Since he doesn't know as much as he would like, he follows the plan that the one-worlders have, because they know how the banking Ponzi works, better than anyone.

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