Friday, September 23, 2016

The U.S. Government Is 
About To Lose Its #1 Lender!
"Usually when government debt expands so rapidly it’s because they’re waging war, fighting a major recession, or financing some serious infrastructure projects. But none of these things are happening .. An absolutely astonishing level of spending (and waste) is built into the system now .. They have to go into debt to finance nearly everything we think of as government .. This approach has worked well for years. The US government has had an ample supply of lenders willing to fund its largess .. But that pipeline of suckers will soon be running dry. In fact, according to the Treasury Department’s most recent data, two of America’s biggest foreign lenders (China and Japan) are already cutting back on their $2.37 trillion of U.S. debt. Then there’s the Federal Reserve, another one of the government’s major lenders, which now owns $2.46 trillion of U.S. debt .. But one of the Fed’s major challenges is that they’re nearly insolvent, with a razor-thin capital ratio of just 0.8%. Simply put, if the Fed continues to conjure trillions of dollars out of thin air to feed the government’s insatiable appetite for debt, they’re risking a major currency crisis at a minimum. That leaves Social Security, far and away the single largest owner of U.S. Treasuries. Over the years, Social Security has loaned the government trillions of dollars, stockpiling entire warehouses full of IOUs from the Treasury Department. But here’s the thing– Social Security and Medicare are rapidly running out of money. The Trustees themselves explain that Social Security’s two biggest trust funds will start running terminal deficits in 2020 until they are fully depleted 14 years later. This means that in just four more years, Social Security will no longer be able to loan any more money to the federal government. Uncle Sam is about to lose his biggest lender. What’s more, the U.S. government is going to have to come up with trillions of dollars more to pay back Social Security in the subsequent years. There is no end to these liabilities that the US government has been pushing off for years. So in addition to losing its biggest lenders, they’ll need to come up with trillions of dollars more to pay for these looming obligations. Like it or not, this party starts in just four more years."
- Sovereign Man
link here to the commentary

No comments: