Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

U.S. Debt Dangerous Situation

Interest-Rates / US Debt Oct 24, 2013 - 12:04 PM GMT

By: Fred_Sheehan

Interest-Rates

In May 2013, the U.S. Treasury had spent up to its statutory debt limit. Treasury Secretary Jack Lew wrote House Speaker Boehner that the Treasury would "begin implementing the standard set of extraordinary measures that allows the Treasury to continue to borrow and spend even after it has hit the legal debt limit."

Through October 16, 2013, the Daily Treasury Statement showed "Total Public Debt Subject to Limit" at $16,699,396. The "16" is trillions; the numbers are in millions. The "Statutory Debt Limit" (the next line on the Daily Treasury Statement), showed, day-in and day-out: "$16,699,421. The difference was $25,000,000: This figure adds back the zeros not shown on the daily posting.


The Federal government continued to spend money, aside from showy pockets of austerity: the World War II memorial, for instance, and, aberrations unintentionally demonstrating the vast federal government waste that should be shut.

The October 17, 2013, Daily Treasury Statement shows the Statutory Public Debt Subject to Limit rose to $17,027,544. Adding in the zeros, this was an overnight increase of $328 billion. Except, it is not. That is, the Statutory Public Debt Subject to Limit is not subject to any limit. The October 17, 2013, Daily Treasury Statement listing for Statutory Debt Limit is *, or "*". Following the "*" we read: *Statutory debt limit temporarily suspended through February 7, 2014."

Of course, we know this is an artificial construct, as is the debt limit itself. The form it takes was explained in the October 22, 2013, King Report. Bill King quoted Seeking Alpha: "Up until yesterday, Congress had to approve of any increase in the debt ceiling. Theoretically it gave Congress leverage to negotiate with the President before approving of an inevitable debt ceiling increase. Now, if Congress refuses to pass a debt ceiling increase, the President has the power to veto the rejection. In order for Congress to override the President's veto, 2/3's of both Houses of Congress would have to approve of the rejection of the President's veto. There's no way both the Senate and the House would be capable of doing this. In other words, the President now has the ability to unilaterally get rid of the debt-ceiling limit. QE to infinity."

This may change or it may not. More important than the voting parameters is the knowledge there never was a debt ceiling. Through winks and nods among the Treasury Department, Congress, and the media, buffoonery held the public's attention, when it was all show.

Of the eye-opening exhibition of government waste, none will be canned, so a single example follows.

On October 2, 2013, that is: one day into the government shutdown, Air Force Lieutenant General (retired) Clapper, now Director of National Intelligence, testified before the Senate Judiciary Committee:

"I've been in the intelligence business for about 50 years. I've never seen anything like this. From my view... this seriously damages our ability to protect the safety and security of this nation and its citizens..... This affects our global capability to support the military, to support diplomacy, and to support our policymakers.

"The danger here, of course, that this will accumulate over time. The damage will be insidious. So each day that goes by, the jeopardy increases."

The danger, in General Clapper's view, is probably not what you expect: "This is a dreamland for foreign intelligence service to recruit, particularly as our employees, already many of whom [are] subject to furloughs driven by sequestration, are going to have, I believe, even greater financial challenges. So we're spending our time setting up counseling services for employees to help them manage their finances. So from my stand point this is extremely damaging and it will increase so as this shutdown drags on." [End of testimony].

Our intelligence agents, for whom General Clapper is responsible, are (were, until October 17) about to sell top secret information to the Enemy. The Evil Empire, it turns out, is that America's best and brightest, defenders of the faith, have hit their credit card limits. Reds under the Bed made for more stimulating drama, even if it was a screenwriter slipping subversive jokes about Stalin's dacha into the Milton Berle Show.

While the media was talking rot about budget and Treasury coupon payment such-and-such, the Director of National Intelligence for the United States made a clear statement the U.S. intelligence establishment is untrustworthy. Clapper's testimony leads to one solution: the entire intelligence bureaucracy should be fired. Alternatively, it is possible that General Clapper has lost his mind, and should treated as top secret intelligence chiefs who may switch sides at any moment are handled.

In any case, this should have been front page news. Americans should know the imminent danger they face.

The point was made above about "the public's attention." There can be a difference between "public" and "popular" opinion. Public opinion, orchestrated by such parties as the Treasury, Congress, and the media, is generally successful in molding popular opinion. Examples being the people's willingness to cheerfully buy War Bonds, send their sons, and march off, "over, over there," in the two World Wars.

A dangerous situation may develop when popular opinion falls flat with the people. This, the entire staff here agrees, was true of the debt ceiling and sequestration debate. Opinion polls do not measure depth of feeling. The media - some of it - seemed to sense this, with a "hey guys, this is important! Wake up! Get scared!" The disengagement contrasts to the high anxiety mood in July 2011, when the same topics cornered attention. In other countries, at other times, when the people stopped believing, they disbelieved everything, true or false.

By Frederick Sheehan

See his blog at www.aucontrarian.com

Frederick Sheehan is the author of Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession (McGraw-Hill, November 2009).

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Frederick Sheehan Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules