1. Same story, different day...........year ie more of the same fiat floods the world
    Dismiss Notice
  2. There are no markets
    Dismiss Notice
  3. Week of 6/24/2017 Closing prices & Chg Over Last Wk---- Gold $1256.40 Silver $16.64 Oil $43.01 USD $96.94
  4. "Spreading the ideas of freedom loving people on matters regarding high finance, politics, constructionist Constitution, and mental masturbation of all types"
    Dismiss Notice

The US government now has less cash than Google

Discussion in 'Topical Discussions (In Depth)' started by Goldhedge, Mar 13, 2017.



  1. Goldhedge

    Goldhedge Modal Operator/Moderator Site Mgr Site Supporter

    Joined:
    Mar 28, 2010
    Messages:
    26,807
    Likes Received:
    29,310
    Trophy Points:
    113
    Occupation:
    Tech
    The US government now has less cash than Google
    Simon Black

    March 13, 2017

    Sovereign Valley Farm, Chile
    In the year 1517, one of the most important innovations in financial history was invented in Amsterdam: the government bond.

    It was a pretty revolutionary concept.

    Governments had been borrowing money for thousands of years… quite often at the point of a sword.

    Italian city-states like Venice and Florence had been famously demanding “forced loans” from their wealthy citizens for centuries.

    But the Dutch figured out how to turn government loans into an “investment”.

    It caught on slowly. But eventually government bonds became an extremely popular asset class.

    Secondary markets developed where people who owned bonds could sell them to other investors.

    Even simple coffee shops turned into financial exchanges where investors and traders would buy and sell bonds.

    In time, the government realized that its creditworthiness was paramount, and the Dutch developed a reputation as being a rock-solid bet.

    This practice caught on across the world. International markets developed.

    English investors bought French bonds. French investors bought Dutch bonds. Dutch investors bought American bonds.

    (By 1803, Dutch investors owned a full 25% of US federal debt. By comparison, the Chinese own about 5.5% of US debt today.)

    Throughout it all, debt levels kept rising.

    The Dutch government used government bonds to live beyond its means, borrowing money to fund everything imaginable– wars, infrastructure, and ballooning deficits.

    But people kept buying the bonds, convinced that the Dutch government will never default.

    Everyone was brainwashed; the mere suggestion that the Dutch government would default was tantamount to blasphemy.

    It didn’t matter that the debt level was so high that by the early 1800s the Dutch government was spending 68% of tax revenue just to service the debt.

    Well, in 1814 the impossible happened: the Dutch government defaulted.

    And the effects were devastating.

    In their excellent book The First Modern Economy, financial historians Jan De Vries and Ad Van der Woude estimate that the Dutch government default wiped out between 1/3 and 1/2 of the country’s wealth.

    That, of course, is just one example.

    History is full of events that people thought were impossible. And yet they happened.

    Looking back, they always seem so obvious.

    Duh. The Dutch were spending 68% of their tax revenue just to service the debt. Of course they were going to default.

    But at the time, there was always some prevailing social influence… some wisdom from the “experts” that made otherwise rational people believe in ridiculous fantasies.

    Today is no different; we have our own experts who peddle ridiculous (and dangerous) fantasies.

    Case in point: this week, yet another debt ceiling debacle will unfold in the Land of the Free.

    You may recall the major debt ceiling crisis in 2011; the US federal government almost shut down when the debt ceiling was nearly breached.

    Then it happened again in 2013, at which point the government actually DID shut down.

    Then it happened again in 2015, when Congress and President Obama agreed to temporarily suspend the debt ceiling, which at the time was $18.1 trillion.

    That suspension ends this week, at which point a debt ceiling of $20.1 trillion will kick in.

    There’s just one problem: the US government is already about to breach that new debt limit.

    The national debt in the Land of the Free now stands at just a hair under $20 trillion.

    In fact the government has been extremely careful to keep the debt below $20 trillion in anticipation of another debt ceiling fiasco.

    One way they’ve done that is by burning through cash.

    At the start of this calendar year in January, the federal government’s cash balance was nearly $400 billion.

    On the day of Donald Trump’s inauguration, the government’s cash balance was $384 billion.

    Today the US government’s cash balance is just $34.0 billion.

    (Google has twice as much money, with cash reserves exceeding $75 billion.)

    This isn’t about Trump. Or even Obama. Or any other individual.

    It’s about the inevitability that goes hand in hand with decades of bad choices that have taken place within the institution of government itself.

    Public spending is now so indulgent that the government’s net loss exceeded $1 trillion in fiscal year 2016, according to the Treasury Department’s own numbers.

    That’s extraordinary, especially considering that there was no major war, recession, financial crisis, or even substantial infrastructure project.

    Basically, business as usual means that the government will lose $1 trillion annually.

    Moreover, the national debt increased by 8.2% in fiscal year 2016 ($1.4 trillion), while the US economy expanded by just 1.6%, according to the US Department of Commerce.

    Now they have plans to borrow even more money to fund multi-trillion dollar infrastructure projects.

    Then there’s the multi-trillion dollar bailouts of the various Social Security and Medicare trust funds.

    And none of this takes into consideration the possibility of a recession, trade war, shooting war, or any other contingency.

    This isn’t a political problem. It’s an arithmetic problem. And the math just doesn’t add up.

    The only question is whether the government outright defaults on its creditors, defaults on promises to its citizens, or defaults on the solemn obligation to maintain a stable currency.

    But of course, just like two centuries ago with the Dutch, the mere suggestion that the US government may default is tantamount to blasphemy.

    Our modern “experts” tell us that the US government will always pay and that a debt default is impossible.

    Well, we’re living in a world where the “impossible” keeps happening.

    So it’s hard to imagine anyone will be worse off seeking a modicum of sanity… and safety.

    https://www.sovereignman.com/trends...2f543300a31932a4b4f28b85fc798c058489cf96409e5
     
    Eyebone and Mujahideen like this.
  2. Mujahideen

    Mujahideen Black Member Midas Member

    Joined:
    Mar 31, 2010
    Messages:
    7,648
    Likes Received:
    10,784
    Trophy Points:
    113
    Gender:
    Male
    The public exists only to supply the cronies with tax money. They spend money and we are all on the hook for it.

    The politicians job is to convince us to do it, the bankers job is to keep the system from collapsing for as long as possible while looting us dry.

    We are nothing but cattle.
     
    Goldhedge and GOLDZILLA like this.
  3. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

    Joined:
    Mar 25, 2010
    Messages:
    23,580
    Likes Received:
    24,858
    Trophy Points:
    113
    there it is
     
    Goldhedge likes this.
  4. nickndfl

    nickndfl Midas Member Midas Member Site Supporter ++

    Joined:
    Jan 7, 2011
    Messages:
    10,246
    Likes Received:
    7,481
    Trophy Points:
    113
    Location:
    Florida
    Apple is the cash king with $200 billion.
     
  5. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

    Joined:
    Mar 25, 2010
    Messages:
    23,580
    Likes Received:
    24,858
    Trophy Points:
    113
    us govt budget is $3.8T

    he states they have $34B cash

    that equates to $10.4B per day, each day spent

    so without any intake of cash, that is basically 3 days of cash

    think about that

    or another way, he states they have went from $384 to $34B just since the inaug, or $350B negative burn rate over the period (53 days to today)

    that would be $6.6B per day

    which would make the value above about 6 days of cash

    tic fookin' toc
     
    Mujahideen likes this.
  6. madhu

    madhu Silver Member Silver Miner

    Joined:
    Apr 2, 2010
    Messages:
    738
    Likes Received:
    360
    Trophy Points:
    63
    Interesting

    Default on promises to its citizens that is the easy part. Blame it on Bushnobama
    Stable currency, second salvo, with the Chinese manipulation of the currency, President Trump is going to make it clear to the chinese premier in Mar de lago, that game is over.

    Creditors are going to be paid, whatever pennies? but on President Trumps terms. Otherwise he is goin to declare bankruptcy.
     
    nickndfl likes this.
  7. gliddenralston

    gliddenralston Gold Member Gold Chaser

    Joined:
    Apr 1, 2010
    Messages:
    1,124
    Likes Received:
    898
    Trophy Points:
    113
    Teflon Don at the wheel, that should make you sleep well!
     
    nickndfl and madhu like this.
  8. nickndfl

    nickndfl Midas Member Midas Member Site Supporter ++

    Joined:
    Jan 7, 2011
    Messages:
    10,246
    Likes Received:
    7,481
    Trophy Points:
    113
    Location:
    Florida
    Trump should make all those foreign held T-bills payable immediately @ $0.50 on the dollar. That will wake the chinks up. Japs too.
     

Share This Page