reuters.com — (REUTERS) – Barack Obama requested that Congress raise the $12.1 trillion statutory debt limit on Friday, saying that it could be breached as early as mid-October. The latest request comes as the Treasury is ramping up borrowing to unprecedented levels to fund social programs. It is expected to issue net new debt of as much as $2 trillion in 2009.
I am sorry to inform you sir, Mr. President, but the debt ceiling is already above $12TRIL, at $12.104TRIL to be exact! Perhaps you should say above $15TRIL USD, Mr. President! It’s starting to sound like an Austin Powers movie … $1 BIL-L-L-LION-N-N DOLLARS-S-S!! Mr. Bigglesworth … Trillion is now passé … HERE is what must be going on in the Oval Office today! Now go HERE to see the Bush version … Way too funny! Both parties are the problem and that’s no joke!
The big news this week has been the price of gold and silver, but as you will see what the US Treasury issued in US DEBT this “week” would buy over 100 million ounces of gold, 12 times the COMEX inventory and this week was one day short due to Labor Day! The power of fiat is stupefying …
US TREASURY DAILY STATEMENT
September 4, 2009 – I have to point out the complete failure that the US INCOME TAX is … First of all taxes are not “earned” like we earn wages at our jobs, taxes are “confiscated” from US workers. Even though we are told that taxes are “voluntary” they really are not, otherwise there would not be a US Treasury department tied to the IRS known as CI-Criminal Investigation. My days at the IRS it was referred to as CID-Criminal Investigation Division. My point is why does the IRS need a CI unit if taxes are voluntary? Of course we have all heard of the many celebrities that went to jail for tax evasion, but it seems that the head of the US Treasury, Tim Geithner, is immune to such criminalities. Or did he dial 1-800-TAX-RELIEF?
Here is the line item from the September 4th US TREASURY DAILY STATEMENT that shows the total amount of taxes collect in FY 2009 so far.
Look down at the bottom right side and the total is $1.85TRIL USD … That is a lot!
Now look at how much the US Treasury paid back in tax refunds fro FY 2009 so far.
If I add the total for both business and individual it equals … $427.4 BIL USD.
So subtract that outlay from what the tax receipts were and we come up with a NET TAX RECEIPT for FY 2009 of $1.423TRIL USD.
Now lets look at what the amount of US DEBT is that was issued against those NET tax receipts. If I add up both long term (LT) US Treasuries, which would be Notes and Bonds as well as the short term(ST) US Treasuries, which are Regular Series and Cash Management Series Bills the total for FY 2009 is $8.4TRIL USD.
US DEBT $8.4TRIL/$1.423TRIL US TAX RECEIPTS = 5.9 times
So what that says is that for every $1 for tax receipts the US Treasury spends nearly $6 on DEBT to service existing debt and to maintain current spending levels in order to forestall Empire and street riots. In reality this DEBT is not for our benefit or for our kids benefit but instead it benefits those in power as they are able to stay in power only as long as the masses are sedated by the false wealth of currency and debt. If it were ever perceived by the masses that their safety net and “free lunch” (NOT) were gone then the two party political system that has been running the USA into the ground for the past five decades would be out of power in an instant.
What good is the US INCOME TAX system if it cannot cover the costs of government? What good is the US INCOME TAX system if it does not apply one dime to paying principal on the accumulated US DEBT? Why have a US INCOME TAX system if all it does is grow the US DEBT at a rate of 6:1 or 600%. When is the US DEBT ever shrinking? Look at “internal debt” and “external debt” and it never shrinks, it’s never paid off … all it ever does is expand. When has the US government ever lived within its means, which is, in this case, spending only $1.423TRIL instead of $11.2TRIL USD? In reality all a US Treasury security represents is a synthetic tax hike … an accounting receipt derivative. Rather than run the risk of political suicide by raising US taxes 600% the cowardly GANG OF 535 and whichever cowardly President is in the Oval Office at the time will just increase the US DEBT. It is like using Blackwater (hired mercenaries) during the Iraq War instead of restarting the DRAFT. How long would the Iraq War have lasted if politicians in Washington DC started up the DRAFT? Restarting the DRAFT only works in a “real war”. Let me show you what a “real war” looks like, socially and economically …
WW2
- FDR diverts 86% of tax receipts in 1945 to the Department Of Defense
- War Bonds
- Rations
- Draft
- Major Hollywood actors quit and enlist
- GM retools for tanks not hybrids
Since WW2, when was the last time those items listed were part of our “wars”?
You will notice that the two countries who suffered the most deaths during WW2 are now the two countries buying the most gold. Make note that those same two countries were our allies during WW2, both communists. So much for the Domino Theory.
Total Withdrawals (outlays)
There it is at the far right … $11.225TRIL USD total spending, including US DEBT cash redemptions, listed under Table III-B.
Think about it … $11.225TRIL … T-R-I-L-L-I-O-N … Don’t let them misrepresent the truth with deficit numbers. Look at the actual SPENDING and look at the actual RECEIPTS.
You know there are days when I look at the US TREASURY DAILY STATEMENTS and say to myself, “Well, I don’t see a whole lot going on here, just the usual $1BIL here and there and only $15BIL spent today … Not much to write about!” Then I have to shake my head to clear the BIL TRIL fog out of my head and realize that I can’t even count to 1 billion! Much less spend $15 billion in one day! How long before $1TRIL is meaningless?
September 7, 2009 – Labor Day holiday … I worked that day!
September 8, 2009 – What can I say except that spending never sleeps at the US Treasury. More than $1.5BIL was spent on Defense Vendors today. Look at that some $1.65BIL USD went to pay Federal Employees. Look at the FY 2009 total … around $167BIL USD.
Now let’s look at total Unemployment Benefits paid for a total of 14.9 million US workers who are unemployed. Total for FY 2009 is $107.3BIL USD.
According to the BLS total Federal employees as of August 2009 was 2.8 million. So that roughly averages $60,000USD per employee not including benefits like insurance.
Here is the FY 2009 cost for Federal Employee insurance payments, some $56.4BIL USD.
That works out to be just over $20,000USD per Federal employee. Add that to their pay and we are up to $80,000USD per Federal employee.
Now if we are spending that much insurance payment on each Federal employee right now then Obama’s healthcare would budget out to be $6.16TRIL USD per year, not $1TRIL, given 306 million people in the USA.
September 9, 2009 – Defense Vendor outlays moved up to $2.2BIL USD from the usual $1-$1.5BIL USD per day.
Look at the Two Horsemen here Medicare and Medicaid … Total for the day $2.44BIL USD.
Add Social Security and we have the Three Horsemen …
Total for all three today is $10.24BIL USD! Total for FY 2009 is $1.238TRIL USD.
Today some entity paid $176MIL USD back into TARP. Not sure who it was since there is no details. AUDIT THE US TREASURY!
September 10, 2009 – It was a BIG day for US DEBT … $115.3BIL USD in short term (ST) Bills was issued.
Let’s look at what that “one day” debt fest cost us in terms of gold ounces. $115BIL USD will buy 115 million ounces of gold, at $1,000USD per ounce, which is like buying the entire COMEX gold inventory 12.5 times over.
Of note also today was the US PUBLIC DEBT and that of the Government Account Series, which are the “non-marketable” securities that only us Americans are counterparty to. Well, have a look at the IOUs today, $178.6BIL …
Now look at the total FY 2009 Government Account Series over $42.8TRIL worth of “Non-marketable” IOUs issued. Add that into total “marketable” US Treasuries and we are over the $51TRIL USD mark as of this week.
No LINE ITEM REVIEW this week. I do not have enough research time.
Since I started reviewing these US Treasury Statements I have come to notice a trend of major intervention that Mises and Hayek spoke of. As the private sector spending slowed due to asset prices falling and correspondent debt attrition, the government sector spending increased to compensate. I call that essentially “Price Fixing” through government and bank interventions into the markets.
Interventionism … So says Hayek…
“The supposed chief weakness of the market order, the recurrence of periods of mass unemployment, is always pointed out by socialists and other critics as an inseparable and unpardonable defect of capitalism. It proves in fact wholly to be the result of government preventing private enterprise from working freely and providing itself with a money that would secure stability.”-Frederich Hayek
Here is what Ludwig Von Mises wrote on “Intervention” in his book Planned Chaos, first published in 1947.
“Nothing is more unpopular today than the free market economy, i.e. CAPITALISM. Everything that is considered unsatisfactory in present-day conditions is charged to capitalism. The aim of these interventionist policies is not to preserve capitalism …” – Chapter One-The Failure of Intervention; Planned Chaos
Keep that in mind when you go watch the new Michael Moore movie soon. HERE is his version of capitalism … CAPITALISM: A LOVE STORY!
Let’s move forward to more modern times now …
This report was written October 2008, by Richard C Koo, Chief Economist of the Nomura Research Institute in Tokyo, Japan.
HERE is the link … It looks like this is what the Obama administration and his Economic Team are trying to do.
Once again “Breaking the Vicious Cycle” is called “Fiscal Stimulus”. Is “fiscal responsibility” ever a consideration? How about smaller government?
Let me list the various problems and solutions that are presented here …
PROBLEMS
- Private sector bought assets with borrowed funds.
- Asset prices fell
- Private sector moves away from profit maximization to debt minimalization.
- Private sector paying down debt.
- No demand for funds
- Weaker economy and deflation
- More defaults
- More non-performing loans
- Central bank panics and dramatically eases monetary policy
- Nothing happens because private sector is minimizing debt.
SOLUTIONS
- Government procures funds at lower rates due to lack of borrowers
- Fiscal Stimulus
- Keep the aggregate demand from falling
- Allow private sector to pay down debt
- Government borrowings help maintain money supply in the absence of private sector borrowers.
According to the expert economists in Japan the main reason for their 20 year “recession” was that the private sector used “borrowed” funds and then asset prices fell. In one word then … DEBT!
Yet what is the basis of the banker’s version of the AMERICAN DREAM? Is it not DEBT? If you own a mortgage you are really only renting from a bank. You do not “own” anything.
So DEBT is not only the problem but it is the solution as well …
Now you see why I follow the DEBT of the biggest TOO BIG TO FAIL Nation on the face of the Earth.
The solutions are to PRICE FIX assets in hopes that the private sector will pay down debts so that afterwards the private sector will return to prior over-spending in order to restart another private sector debt bubble and more “false wealth” will be generated. Where are “capital goods” and “employment” in these SOLUTIONS? Where is the idea of fiscal responsibility and having a government that is small enough to live within its means?
ON ABX
One question on ABX … Where are the 19.125 million gold ounce “spot deferred” hedge contracts referred to in the Blanchard vs. Barrick/JP Morgan lawsuit? HERE is the lawsuit and look here … I have yet to hear an ABX news release disclosing that Barrick has delivered 10 million gold ounces to close those “spot deferred” contracts.
Here is a list of the gold producers listed in the Blanchard lawsuit that are involved in forward selling contracts, “spot deferred” back in September 2002:
Well a lot of those producers like Placer Dome and Sons of Gwalia are gone now and Placer Dome’s hedge book is now Barrick’s.
Isn’t there an accurate accounting of Barrick’s total hedging transactions since 2000 any where? I did not find anything at Barrick’s website. Lately Barrick only admits to 9.5 million gold ounces. Where is the SEC or CFTC?
What is “spot deferred”?
Spot-Deferred Contract
| A forward contract that gives the seller the option to roll the contract forward rather than make delivery on a specific date. Often used by gold producers to hedge gold price exposure. Also called Undated Forward. |
Barrick has always been a source of mistrust. That is what happens when you get in bed with the likes of JP Morgan and become a Wall Street gold miner.
Today I was thinking of humans and how voracious consumers we are. It lead me back to a time in 2001 when the Tech Market crashed and I was searching for an alternative place to put my Enron put option profits. I thought back to 1979 when I first bought a 100 ounce silver bar so I looked up a gold chart on Kitco and boy was that thing ever flat lining. I thought it was basing, forming a cup, so I decided to start buying gold and silver again. In my studies I ran across this graphic HERE. This is the graphic that set me off on my current path back in 2001(latest update is 2006).
So if this is for every American, what about every Brit, every Canadian, every German, every Russian, every Australian, every Japanese, Every Chinese and on and on? HUMANS CONSUME! That’s what we do …
You cannot escape concluding, after looking at this “metal baby” graphic, that mining will be in demand for a very long time, whether the industry is condemned by environmentalists or the US Congress. Whether a recession exists or not. Whether there is inflation or deflation. No human on Earth can ignore the fact that metals and minerals and fuels are vital and essential. Look around your own room where you sit and consider where those objects came from. A one word answer, the E-A-R-T-H …
Accordingly our Nation is a Nation of “consumers” and our GDP admits to that 70% fact and China’s rapid growth has been dependant. So what sort of equality do the Chinese and Indians ask for now? What do the emerging nations ask of America and its government?
I will let Mises answer that question …
“What those people who ask for equality have in mind is always an increase in their own power to consume.” – Ludwig Von Mises
GOVERNMENT IS ONLY AS HONEST AS ITS MONEY-ME
by Stephen Wellman
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