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  1. #1

    Discuss the implications

    https://www.zerohedge.com/news/2018-...d-133-trillion
    The US fiscal picture continues to darken as a result of rising social security costs, military spending and debt service expenses while corporate tax income is declining after last year’s tax reforms. As a result, the federal budget deficit is expected to reach $833 billion this year, up from $666 billion in the budget year ended last September, a number that is well below the net funding demands for the US Treasury.
    The new projections put total net borrowing at $769 billion for the second half of 2018 and a whopping $1.33 trillion for the whole year. The federal budget deficit totaled $607 billion through the first nine months of the fiscal year that ends Sept. 30, up 16% compared with $523 billion from the same period a year earlier. In late June, the CBO forecast that total government spending would exceed revenue by $1 trillion in 2020. That would suggest that the net financing need of the US in two years could be as high as $1.5 trillion.
    Yields on 10-year Treasurys rose to session highs of almost 2.98% following the release of the borrowing outlook according to Bloomberg data, although the bulk of today's move was in anticipation of a surprise announcement by the BOJ. Meanwhile, the 2-year yield was steady around 2.67%, near the lows for the day.
    “Because of surprising declines in corporate tax revenues, the federal deficit is constantly under discussion this month,” FTN rates strategist Jim Vogel told Reuters. Adding to the supply of bonds hitting the market, the Fed is also trimming its vast holdings of Treasury debt as part of Quantitative Tightening, with some $40BN in monthly reductions in the third quarter.
    * * *
    On Wednesday, as part of its quarterly refunding announcement, the Treasury will detail how it expects to spread the new supply across bond maturities ranging from one month to 30 years. As we discussed over the weekend, bond analysts expect faster increases in maturities out to five years, which could push their yields up at a quicker pace than those for longer-dated securities, resulting in further flattening of the yield curve.
    According to Reuters, the Treasury is expected to increase sales of 2 and 3 Year notes by $1 billion a month, similar to its increases in the second quarter. Securities maturing in 7 to 30 years should increase at a rate of $1 billion per quarter, resulting in ever increasing supply to fund Trump's fiscal program. Some estimate that five-year note sales could also ramp up by $1 billion more per month compared with the same amount for the whole of the second quarter.
    While one outcome of emphasizing short-dated supply will be further bond flattening, short- and intermediate-dated debt is seen as having strong demand and relatively attractive rates. Avoiding a similar sharp boost in supply of long-term rates avoids a large increases in yields that could create an economic drag.

    The market, however, is bearish on all Treasuries across the curve and as we showed over the weekend, the latest CFTC data showed that speculators last week have put on record aggregate Treasury short positions in five-year, 10-year and 30-year Treasuries futures, while also expanded to their short two-year note position.
    Boris- "He's famous, has picture on three dollar bill!"

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  2. #2
    Super Moderator Patriotic Sheepdog's Avatar
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    2017 CBO reports: https://www.cbo.gov/system/files?fil...017outlook.pdf

    Budget deficits will exceed $1 trillion by 2022 and stay there unless laws change.
    The national debt will climb significantly over the next ten years, reaching 90+ percent of gross domestic product (GDP) in 2027— more than double the 50-year historical average.
    Interest costs on the debt will rise sharply and become the third largest “program” by 2026. Over the next ten years, net interest will total $5.6 trillion.

    CBO warns that this imbalance puts our economy at risk over the long-term:
    “Such high and rising debt would have serious negative consequences for the budget and the nation:
    Federal spending on interest payments would increase substantially as a result of increases in interest rates, such as those projected to occur over the next few years.
    Because federal borrowing reduces total saving in the economy over time, the nation’s capital stock would ultimately be smaller, and productivity and total wages would be lower.
    Lawmakers would have less flexibility to use tax and spending policies to respond to unexpected challenges.
    The likelihood of a fiscal crisis in the United States would increase."


    But think about it, if we are having to spend $500+ billion on interest payments, then that money cannot be used for other line items (military/defense, programs to “run the government”, national park upkeep, education, etc.. Two major (non-interest) factors would be the aging population, that will drive up SS and medicare. The increasing cost of healthcare is the second major factor. The CBO estimates that healthcare program costs will increase 85% over the next ten years with it estimated to be $1.9 trillion by the year 2027.

    Everyone will have to draw their own conclusions on how this will affect them. I will turn 61 this year so it may affect me less then someone who is 30 or 40 today. I will say though, I am seriously worried about the survival of our nation, and how it will affect my children who are 21 and 23. Read the above linked CBO report from 2017 then start planning today for your future.....however that looks to you.
    Protecting the sheep from the wolves that want them, their family, their money and full control of our Country!

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    Administrator protus's Avatar
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    Is there a bad wheat harvest and has the green party taken over yet........
    Hey Petunia...you dropped your man pad!

  4. #4
    Quote Originally Posted by protus View Post
    Is there a bad wheat harvest and has the green party taken over yet........
    Worse- several years of bad harvest and the rainbow party took the white house in 2015
    Boris- "He's famous, has picture on three dollar bill!"

    Rocky- "Wow! I've never even seen a three dollar bill!"

    Boris- "Is it my fault your poor?"

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    Administrator protus's Avatar
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    Quote Originally Posted by 1Admin View Post
    Worse- several years of bad harvest and the rainbow party took the white house in 2015

    It's downhill from here then.
    Imho I think hyperinflation is almost the end goal,that Will lead to collapse and really separate the classes and allow communism to really Take hold. Allowing the swamp mongers to maintain control. But I'm sure it's only one part of their plan.
    Hey Petunia...you dropped your man pad!

  6. #6
    Super Moderator Patriotic Sheepdog's Avatar
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    The CBO, who by the way isn't predicting any depression for the next decade, has the annual interest payments hitting $1 trillion by 2028. What will it be like to have your highest line item in your budget the interest payments on your debt that continues to grow.

    Between March and May, Russia's holdings of US Treasury bonds plummeted by $81 billion, representing 84% of its total US debt holdings.

    And then you get the Russian Finance Minister Anton Siluanov stating that their aim is “to keep reducing its investments in American securities” and that the “U.S. dollar is becoming an unreliable tool for payments in international trade.”

    With statements like that, I think we are literally in the final innings of the entire U.S. dollar dominance.
    https://money.cnn.com/2018/07/30/inv...ury/index.html

    How high will our debt grow before this bubble pops? I think we won't know that answer til we wake up and say, "well, look at that, the economic bubble popped last night".
    Protecting the sheep from the wolves that want them, their family, their money and full control of our Country!

    Guns and gear are cool, but bandages stop the bleeding!

    ATTENTION: No trees or animals were harmed in any way in the sending of this message, but a large number of electrons were really ticked off!

    NO 10-289!

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