2,000,000,000,000... That is a lot of zeros for the Federal Reserve Debt.

[Moot]

The left isn't worrying about it because no one should worry about it. The federal deficit is the amount of money in the economy. You pay the interest only so The Fed gets a return on the loan, but the rest doesn't really matter. It is spent through the economy and is retracted through interest rates. The reason why the government is able to spend indefinately is because the way the banking system works money is created out of thin air on a per loan basis. For as much money that is owed to The Fed, that amount is created as well as treasury bonds which can be used as an asset. The Fed is getting rediculously rich, banks are getting richer on a per loan basis through the creation of money and financial instruments. Meanwhile, money is pumped through the government in projects which in theory are for the best interest of the common good while adding money to the money supply to satisfy the increasing demand for money because of continual economic growth.

The debt isn't a big deal. What is a big deal is people not knowing how the banking sector works and the overall flow of money. As the debt increases public confidence will decrease. If the government prints money to pay it back, which is perfectly fine because the money is removed from the money supply because it is going to the banks. This will also essentially give banks more power, will also decrease confidence and affect trading. The way things work also undermines the whole system. Why does the government have unlimited credit when the average citizen does not? Why can banks and the government just create money to eliminate their debt and we cannot?

It's a sticky situation. But as long as things run and people get their products, services, and entertainment everything should be okay.

You seem to have forgotten the trillions in cash the wealthy are still sitting on. TRILLIONS. But you're right, money has to circulate but if trillions are being sucked out of the economy and just sat on, then the Feds have to pump money out of thin air into the economy to circulate to keep it going and check inflation.

We are a debt driven economy and the economy can't grow unless money circulates through borrowing. Thats just the way it is. So if trillions aren't being circulated and the banks don't lend, then businesses can't borrow or create jobs, then people don't have income to spend, then the economy spirals into a recession. So the Feds lend to banks to encourage them to lend to businesses and consumers because borrowing is what makes a debt economy grow.

The deficit is not the public debt, they are two different things. Currently the deficit is showing a budget surplus and the public debt is the lowest it's been since post WW2. Why? Because the government isn't spending on a war in Iraq and the stimulus kept people working and the Feds are lending to banks at near zero interest and the banks are loosening up their lending to business and home buyers and people feel more confident to borrow again and have money to spend and circulate in the economy.

So what do you think is going to pay down the public debt that the right is so worried about, a growing economy creating jobs and tax revenue coming in...or... the government stop spending to stimulate the economy which will put millions out of work and no tax revenue coming in? Could you pay your mortgage if you didn't have income coming in? Unless you're sitting on trillions then probably not.

It's the uncertaintly that makes investors and people nervous. Uncertainty if congress is going to stop spending to stimulate the economy........uncertainty if they are going to default on the debt.....uncertainty if they are going to rein in Wall Street....uncertainty if they are ever going to create jobs...uncertainty if they are going to shut down the government....uncertainty what monkey wrench they are going to throw into the economy next.

Congress is creating the uncertainty. Who controls congress? The right does. You say the left doesn't care about the debt? I say the right doesn't care about the economy. To quote James Carville... "It's the economy, stupid."

 

[joG]

If only it were $2T it wouldn't be as serious.

You mean that at 8 times that, it is a problem? Or were you referring to total debt?

 

[AliHajiSheik]

You mean that at 8 times that, it is a problem? Or were you referring to total debt?

I see no distinction between your questions. Yes, $2T is not the total debt and that at 1X GDP it is a problem.

 

[joG]

I see no distinction between your questions. Yes, $2T is not the total debt and that at 1X GDP it is a problem.

Total debt is somewhere around $ 60 T.

 

[Fenton]

Your brain on
Obamaphobia and the debt fetish.

I wonder if there is a third alternative between tea party lunatic austerity and "spending more." Hmm, makes you think.

You need to stick to posting nonsense about Liberals holding racist signs HOJ.

 

[AliHajiSheik]

Total debt is somewhere around $ 60 T.

No, you are including liabilities and other unfunded obligations in with the Debt which is slightly under $17T. Future obligations are not debt.

 

[Fenton]

Any "spike" in interest rates REDUCES the cost of previously sold
bonds.

Proportion and chronology are missing from your calculation.

And future debt obligations are missing from yours. The CBO has forecasted a quadrupling of our debt service amount in 10 years. Are you saying as interest rates rise we can in 5 years borrow at todays cost ?

I mean its bad enough you're in here celebrating low interest rates when all of Bernakes "credit" is going into the asset markets and not the economy.

Its bad enough your too partisan and ignorant to realize that untold amounts of interest payments have been kept out of the economy and that QE has basically amounted to a massive tax as the banks and the Hedge Fund managers ( you know , the lefts evil nemesis ) make out like bandits.

Its bad enough you defend monetary policy that allows banks to be paid interest by the FED on their massive reserves so risk in the Stock Market can dissappear.

Hey, its a great time to be a bank in America. Free money while the economy's on life support.

 

[Kushinator]

PS.....here are the real interest rates for US T notes:

Daily Treasury Real Yield Curve Rates

5 year notes are -0.13%.

Oh noes.

Those are TIPS!!!!!!!!! Treasury inflation protection securities have had shorter duration maturities at negative yields since Oct 2010.

 

[joG]

No, you are including liabilities and other unfunded obligations in with the Debt which is slightly under $17T. Future obligations are not debt.

It has been so long that I would have to look up the exact composition. The $ 60 T is total debt in the economy. The $ 17 T number is total government debt in marketable and non-marketable securities. If you want the whopper including unfunded stuff like Social Security and health you get somewhere North of $ 120 T. Here we are talking real Money. Last I looked it was just shy of a Million Dollars a taxpayer. But it will take years before that debt falls due. But when it does it will gobble up a lot of growth.

 

[Gimmesometruth]

And future debt obligations are missing from yours. The CBO has forecasted a quadrupling of our debt service amount in 10 years.

and the CBO based this on an assumption of current policy, assuming no change in borrowing.

Are you saying as interest rates rise we can in 5 years borrow at todays cost ?

Gee, what is going to cause interest rates to suddenly take off, are you expecting a massive shift in world wide demand countering the 30 year world wide trend of declining REAL interest rates? Are you also expecting US borrowing to continue at current (declining) levels?

I mean its bad enough you're in here celebrating low interest rates when all of Bernakes "credit" is going into the asset markets and not the economy.

Asset markets....are outside of the economy!

Its bad enough your too partisan and ignorant to realize that untold amounts of interest payments have been kept out of the economy and that QE has basically amounted to a massive tax as the banks and the Hedge Fund managers ( you know , the lefts evil nemesis ) make out like bandits.

Funny, returns less than the rate of inflation....is making out like a bandit!

Its bad enough you defend monetary policy that allows banks to be paid interest by the FED on their massive reserves so risk in the Stock Market can dissappear.

Oh noes! We should not be encouraging investment.....in a recession/depression/recovery....no no no no!!!!

Hey, its a great time to be a bank in America. Free money while the economy's on life support.

Yes! we should be instead allowing credit markets to collapse! We need a man like Herbert Hoover again!

 

[Linc]

No I don't think they are.

They are concerned about their obamaphone, free health insurance, EBT, section 8 and increased disability payments (11 million strong) and whatever it takes to buy the votes of enough electoral votes!

And tomorrow you'll know what to say in response to General Powell after Limbaugh speaks. All Repups are breathlessly waiting.

 

[head of joaquin]

Take your blinders off and get out of the defend Obama at all costs mode and see it for what it is...look at the facts...Get down from your Obama alter of worship long enough to see what is really going on. Simply follow the money.

Facts are not your friends, are they?

The Fed is pretty independent of politics. It's set up that way. That was the whole purpose of the Fed, to avoid the politicization of our money supply. The 14 year term of the governors, staggered over even years, insures that a sitting president never has control over a majority of appointees.

So keep ranting nonsense. It suits you.

 

[Imnukingfutz]

Facts are not your friends, are they?

The Fed is pretty independent of politics. It's set up that way. That was the whole purpose of the Fed, to avoid the politicization of our money supply. The 14 year term of the governors, staggered over even years, insures that a sitting president never has control over a majority of appointees.

So keep ranting nonsense. It suits you.

Thank you so much for sharing. Again you make my point that there are no difference between the Dems & Repubs. They both select their big banker friends to sit on the board of governors...they cant be thrown off the board no matter what they do .... policy wise.... so who better to stack up than your very own private ATM machine.

None of the money they spend for the President goes on the Federal books, none of it is seen by the public or even Congress for that matter. The Fed refuses to be audited by Congress. Its the best of it for the political parties.

If you dont get it then you really just need to not be chatting about politics and go listen to Justin Beiber....it would be more your speed.

 

[Born Free]

You seem to have forgotten the trillions in cash the wealthy are still sitting on. TRILLIONS. But you're right, money has to circulate but if trillions are being sucked out of the economy and just sat on, then the Feds have to pump money out of thin air into the economy to circulate to keep it going and check inflation.

Now this is an interesting comment you made. Let me ask you where are these TRILLIONS you speak of that the rich bastards are sitting on. Where is this money, in their mattress? Or maybe the money they are sitting on is under their ass? We all know it's not in their mattress or under their ass so where is it?

 

[Moot]

Now this is an interesting comment you made. Let me ask you where are these TRILLIONS you speak of that the rich bastards are sitting on. Where is this money, in their mattress? Or maybe the money they are sitting on is under their ass? We all know it's not in their mattress or under their ass so where is it?

Savings accounts, mostly. Really, I'm surprised you had to ask since you seem to know so much about mattresses.


"...How much cash do the wealthy hold? There is no hard data. But a study from the Harrison Group and American Express Publishing last year found that the American affluent—those with at least $100,000 in disposable income—had at least $6 trillion in savings. Harrison said that number could balloon to $12 trillion by 2014. Unless, of course, the wealthy start putting that money into the market.
Why Millionaire Investors Are Holding On to Cash

U.S. Companies Stashing More Cash Abroad As Stockpiles Hit Record $1.45T - Forbes

The $5 Trillion Stash: U.S. Corporations' Money Hoard Is Bigger Than the GDP of Germany - Jordan Weissmann - The Atlantic

[The $2 Trillion Corporate Cash Hoard Is Only Getting Bigger - Business Insider

BBC News - Tax havens: Super-rich 'hiding' at least $21tn

 

[washunut]

Savings accounts, mostly. Really, I'm surprised you had to ask since you seem to know so much about mattresses.


"...How much cash do the wealthy hold? There is no hard data. But a study from the Harrison Group and American Express Publishing last year found that the American affluent—those with at least $100,000 in disposable income—had at least $6 trillion in savings. Harrison said that number could balloon to $12 trillion by 2014. Unless, of course, the wealthy start putting that money into the market.
Why Millionaire Investors Are Holding On to Cash

U.S. Companies Stashing More Cash Abroad As Stockpiles Hit Record $1.45T - Forbes

The $5 Trillion Stash: U.S. Corporations' Money Hoard Is Bigger Than the GDP of Germany - Jordan Weissmann - The Atlantic

[The $2 Trillion Corporate Cash Hoard Is Only Getting Bigger - Business Insider

BBC News - Tax havens: Super-rich 'hiding' at least $21tn

It is interesting that folks keep pointing to the amount of overseas cash held by corporations. I do not have the figure, but know that many companies have cash overseas, but issue debt in America rather than repatriate that cash and dole out the extra tax dollars.

Apple is an example. Everyone talks about their $150 billion cash hoard. Some know that the money is almost entirely overseas. So when they announced a big dividend increase and stock buyback they actually raised debt here to pay for it.

 

[Cecil900]

I know of a way to get money flowing.

 

[Born Free]

Savings accounts, mostly. Really, I'm surprised you had to ask since you seem to know so much about mattresses.


"...How much cash do the wealthy hold? There is no hard data. But a study from the Harrison Group and American Express Publishing last year found that the American affluent—those with at least $100,000 in disposable income—had at least $6 trillion in savings. Harrison said that number could balloon to $12 trillion by 2014. Unless, of course, the wealthy start putting that money into the market.
Why Millionaire Investors Are Holding On to Cash

U.S. Companies Stashing More Cash Abroad As Stockpiles Hit Record $1.45T - Forbes

The $5 Trillion Stash: U.S. Corporations' Money Hoard Is Bigger Than the GDP of Germany - Jordan Weissmann - The Atlantic

[The $2 Trillion Corporate Cash Hoard Is Only Getting Bigger - Business Insider

BBC News - Tax havens: Super-rich 'hiding' at least $21tn

I'm sorry but any money that is in savings is put to work by the banks or any money put in a brokerage account the same thing. Money does not stand still. Period. Where ever it is put it is going to work. You put money in a savings account and you get interest and for that institution to give you interest it is using your money to make money to pay you interest. To think billions is stashed in a mattress and not working is nonsense.

 

[Moot]

I'm sorry but any money that is in savings is put to work by the banks or any money put in a brokerage account the same thing. Money does not stand still. Period. Where ever it is put it is going to work. You put money in a savings account and you get interest and for that institution to give you interest it is using your money to make money to pay you interest. To think billions is stashed in a mattress and not working is nonsense.

You're the one who brought mattresses into the equasion. I agree, that was pure nonsense but here you are still ranting about mattresses as if the wealthy are some 'ma and pa kettle' throwbacks from the 1930s. lol


Banks are "lending institutions" but if they aren't lending, then they aren't making the money "work". Why aren't banks lending? Because they have enough in excess reserves to park it with the Federal Reserve and earn risk free interest on their excess reserves. In other words, they make more money letting their money sit earning interest at the Federal Reserve than they would lending it. The other reason is lending requirements have tightened and banks are leary to lend to even the most qualified borrowers....and why should they, if they don't have to? Earning interest is not making the money work, it's just making money from money with little or no effort whatsoever. So while the rest of the economy struggles to make ends meet, the banks are getting wealthier from doing absolutely nothing.

"....One reason that the excess reserves grew to an extraordinary level is that in October 2008, one month after the financial crisis when Lehman Brothers went bankrupt, the Bernanke Fed began paying interest on bank reserves. Although it has been 1/4 of 1 percent interest, this risk free rate was not low compared to the Fed's policy of keeping short-term market rates near zero. The interest banks received was and is an incentive to hold the excess reserves rather than lend to consumers and businesses in the risky environment of the major recession and the slow recovery....."
The Fed Is Paying Banks Not To Lend | Zero Hedge

Banks are required to keep some of their reserves at the Federal Reserve. Amounts kept above required amounts are referred to as excess reserves and since the banking crisis and Mr. Bernanke’s zero interest rate policy, the Federal Reserve has been paying banks 25 basis points or ¼ of one percent on these excess reserves. The government paid out over $4 billion to banks in 2012 under this program. If rates go up these payments could rise to a level many times this amount. Is this a subsidy for banks and a disincentive to lend?.....
Banks Are Not Lending Like They Should, And With Good Reason - Forbes

http://www.globalresearch.ca/excess...n-history-a-whopping-us1-794-trillion/5339221

 

[Fenton]

You're the one who brought mattresses into the
equasion. I agree, that was pure nonsense but here you are still ranting about mattresses as if the wealthy are some 'ma and pa kettle' throwbacks from the 1930s. lol


Banks are "lending institutions" but if they aren't lending, then they aren't making the money "work". Why aren't banks lending? Because they have enough in excess reserves to park it with the Federal Reserve and earn risk free interest on their excess reserves. In other words, they make more money letting their money sit earning interest at the Federal Reserve than they would lending it. The other reason is lending requirements have tightened and banks are leary to lend to even the most qualified borrowers....and why should they, if they don't have to? Earning interest is not making the money work, it's just making money from money with little or no effort whatsoever. So while the rest of the economy struggles to make ends meet, the banks are getting wealthier from doing absolutely nothing.

"....One reason that the excess reserves grew to an extraordinary level is that in October 2008, one month after the financial crisis when Lehman Brothers went bankrupt, the Bernanke Fed began paying interest on bank reserves. Although it has been 1/4 of 1 percent interest, this risk free rate was not low compared to the Fed's policy of keeping short-term market rates near zero. The interest banks received was and is an incentive to hold the excess reserves rather than lend to consumers and businesses in the risky environment of the major recession and the slow recovery....."
The Fed Is Paying Banks Not To Lend | Zero Hedge

Banks are required to keep some of their reserves at the Federal Reserve. Amounts kept above required amounts are referred to as excess reserves and since the banking crisis and Mr. Bernanke’s zero interest rate policy, the Federal Reserve has been paying banks 25 basis points or ¼ of one percent on these excess reserves. The government paid out over $4 billion to banks in 2012 under this program. If rates go up these payments could rise to a level many times this amount. Is this a subsidy for banks and a disincentive to lend?.....
Banks Are Not Lending Like They Should, And With Good Reason - Forbes

Excess Reserves at the Federal Reserve. One of The Biggest Financial Scams In History: A Whopping US$1.794 Trillion | Global Research

They are getting paid interest on their reserves (since 2008) for one reason. To manipulate the overnight rates, which affects short term interest rates.

 

[Kushinator]

They are getting paid interest on their reserves (since 2008) for one reason. To manipulate the overnight rates, which affects short term interest rates.

No. Why do you continue to push this nonsense?

Paying interest on excess reserves essentially eliminates volatility in the overnight market, creating what is known as a "channel-corridor" system. In essence, the overnight rate cannot fall below the target, and cannot rise above the discount. It is no different than what they can earn in the overnight swap/repo markets.

 

[Moot]

They are getting paid interest on their reserves (since 2008) for one reason. To manipulate the overnight rates, which affects short term interest rates.

For what "one reason"?

 

[Born Free]

You're the one who brought mattresses into the equasion. I agree, that was pure nonsense but here you are still ranting about mattresses as if the wealthy are some 'ma and pa kettle' throwbacks from the 1930s. lol


Banks are "lending institutions" but if they aren't lending, then they aren't making the money "work". Why aren't banks lending? Because they have enough in excess reserves to park it with the Federal Reserve and earn risk free interest on their excess reserves. In other words, they make more money letting their money sit earning interest at the Federal Reserve than they would lending it. The other reason is lending requirements have tightened and banks are leary to lend to even the most qualified borrowers....and why should they, if they don't have to? Earning interest is not making the money work, it's just making money from money with little or no effort whatsoever. So while the rest of the economy struggles to make ends meet, the banks are getting wealthier from doing absolutely nothing.

"....One reason that the excess reserves grew to an extraordinary level is that in October 2008, one month after the financial crisis when Lehman Brothers went bankrupt, the Bernanke Fed began paying interest on bank reserves. Although it has been 1/4 of 1 percent interest, this risk free rate was not low compared to the Fed's policy of keeping short-term market rates near zero. The interest banks received was and is an incentive to hold the excess reserves rather than lend to consumers and businesses in the risky environment of the major recession and the slow recovery....."
The Fed Is Paying Banks Not To Lend | Zero Hedge

Banks are required to keep some of their reserves at the Federal Reserve. Amounts kept above required amounts are referred to as excess reserves and since the banking crisis and Mr. Bernanke’s zero interest rate policy, the Federal Reserve has been paying banks 25 basis points or ¼ of one percent on these excess reserves. The government paid out over $4 billion to banks in 2012 under this program. If rates go up these payments could rise to a level many times this amount. Is this a subsidy for banks and a disincentive to lend?.....
Banks Are Not Lending Like They Should, And With Good Reason - Forbes

Excess Reserves at the Federal Reserve. One of The Biggest Financial Scams In History: A Whopping US$1.794 Trillion | Global Research

You kinda got off track, the point was, big money is parked and I said when this money parked it is still working. It has to work to pay interest. You got on the banks, not all big money is in banks, big money is invested in venture capital, mutual funds, LLC's of anything you can think of. The point is big money is never parked nor is small money, no one put their money in a mattress or berry it in their back yard. This parked money as you call it is actually invested in bonds that fuel businesses, venture capital, banks that pay interest for their money. You can't ignore a bank taking in your money and paying you interest and to do that they have to work that money to pay you interest.

So in ending, parked money is just a myth, money is never just parked. Any money that is not stored in your mattress is working. Period. You or anyone else is not going to put money into a bank or any other institution and not expect a return on your money. That is a fact. Therefore money is always at work, it is not just sitting there.

Further you may be thinking that big money is not in a risk mode. Meaning big investors are not taking on big risk for big gains. That is surly true in a down economy. And in this sense I agree. But money is always moving and being invested even at small rates of return. But like anything, when the time is right big money take on more risk for bigger gains. In a bad economy big money take less risk in investing. That is the nature of the beast. But in no case is money just parked. Never. It's always working but at different degrees of risk, pending the financial environment.

 

[American]

Everything is relative. Our GDP is about $15T. $2T is not a big deal in context. I guess if the US had the economy of Slovakia it would be alarming. But we don't.

So debt fetishists can calm down: the sky isn't falling.

Really, how about $17T in debt? No problem, right? Heh, after all it's not your money.

 

[rhinefire]

During 2012 the federal government spent $15,000,000 to help the Russian weapons institutes recruit nuclear scientists.
Over the past fifteen years a total of approximately $5,250,000 has been spent on hair care services for the U.S. senate (mostly on Joe Biden's weave.)