The one day explosion of $328 billion to the U.S. debt load smashed the previous record of $238 billion in one day, set two years ago. These are figures that would normally be seen in banana republics. - Goldcore.com (LINK)Well, I certainly was way off the mark on my prediction for the outcome of the Broncos/Colts game last night. And the comments on the blog post were sure to let me know it! But the game attracted a lot of interest, as it posted the highest tv ratings for an October football game in 15 years. It also was NBC's highest Sunday night prime time tv rating since February's Academy Awards.
But I digress with useless boob-tube trivia there...The most interesting data point of the last week was the one-day jump in the United States' Treasury debt outstanding, which soared by $328 billion the day after the debt ceiling agreement was reached. Hell, the ink wasn't even dry on the deal and the total amount of Treasury debt increased overnight by 2% (source: www.treasurydirect.gov, edits in red mine):
Given that there were not any Treasury auctions held to sell more debt, the only way I can think of that the debt loaded exploded like that is that all of the funds borrowed from places like the Federal pension fund and the Social Security Trust - you know, the accounting games that Jack "I'm A Thief" Lew referenced back in the spring - were converted into Treasury IOU's aka Taxpayer liability Treasury bonds.
But that's okay. Keep issuing debt and printing up paper money to fund that debt and everything will be alright. At least that's the message the stock market gave us last week. In fact, now that everyone knows there's no actual debt ceiling in place for the time being we may as well just borrow and print our way into nirvana, right?
While Obama gets on television and lies through his teeth by telling us he's cut down the size of the deficit, in reality the amount of money borrowed over the last 5 months - funded by $400 billion in borrowing since May - actually implies deficit spending at an annual rate of $960 billion. However, the last 5 months also include some one-time, non-recurring payments back to the Treasury from Fannie Mae and Freddie Mac. So, in reality, the deficit spending "ex" those payments is back on track to be occurring at a rate well in excess of $1 trillion. It also means that over the next 12 months we can expect the debt outstanding to approach, if not exceed, $18 trillion. Still feel good about the latest agreement between Harry Reid, John Boehner and Barack Obama to kick that old can down the road?
But hey, at least there's not a debt ceiling limit in place right now so at least the Government can fearlessly issue the amount of Treasury bonds required to fund that deficit spending - even it the Fed has to print the money to make it happen...