Exploring Hydrocarbon Depletion
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QUOTE O’ THE DAY
"All we can do is analyze, aggregate, and synthesize bad news.
Fishman wrote:Oil, you state two conflicting points. For person A (government) to write a piece of paper $100, without $100 of something to back it up (perhaps gold), is debasing their currency. Because as you state later,In their case, their problem is they cannot debase their own currency, because the currency they use is not their own. If they had their own currency, they could always do the cheesy-but-true-and-tried method of debasing their currency, which makes their debt load easier to pay off
Fishman wrote:Anyone with half a brain would see that the recipients of the checks or cash would be the recipients of a windfall of new assets.
Anyone with half a brain would see that the recipients of the checks or cash would be the recipients of a windfall of new pieces of worthless paper. Somebody failed history and economics class and still calls themselves an economist
OilFinder2 wrote:The US government can never have that problem because they're the entity which creates the money in the first place. If, on a certain day, there are more bonds maturing than the Treasury has in "cash on hand," they can always create the additional money "out of thin air."
The Fed creates the money out of thin air and loans it to the government (they buy t-bills)
Too sad for commentary, but here is some math: total US debt has increased by 41.5%, or $4.4 trillion, from $10,626,877,048,913 on January 20, to $15,033,607,255,920, under Obama as president.
WASHINGTON — President Barack Obama's Republican foes pounced Wednesday on news the US national debt passed $15 trillion for the first time to assail his economic policies one year from November 2012 elections.
Republican House Budget Committee Chairman Paul Ryan said on his official Twitter feed that the figure "marks an infamous day in U.S. history. You deserve leaders willing to tackle this problem."
Texas Governor Rick Perry, a candidate for the Republican nomination to take on Obama next year, took to Twitter to blame "Obama's socialist policies" for "bankrupting" the country, and declared it was "time to overhaul Washington."
"This astounding debt is a heavy pair of cement shoes for our children and America's economic future," he added in a statement.
"America has crossed an unthinkable threshold: our national debt now exceeds $15 trillion. That's more than $48,000 per citizen," scolded Republican National Committee Chairman Reince Priebus.
Are you suggesting the government could default on its Treasuries held by the Fed? I hope not.
ZeroHedge -- US debt, net of all settlements for all already completed bond auctions, is now at precisely $15,182,756,264,288.80.
Why is this relevant? Because the latest annualized US GDP, according to the BEA, was $15,180,900,000.00. Which means that, as of today, total US debt to GDP is 100.012%. Congratulations America: you are now in the triple digit "debt to GDP" club!
OilFinder2 wrote:The Fed creates the money out of thin air and loans it to the government (they buy t-bills)
That's technically true, but since most people consider the Fed to be part of the government, the distinction is trivial. Are you suggesting the government could default on its Treasuries held by the Fed? I hope not. If the government had insufficient funds to pay off maturing Treasuries held by the Fed on a certain day, it's not like the Fed would care. If you borrow $100 from your sister and don't have the money to pay her back when you said you would, it's not like she's gonna take you to court and make you file for bankruptcy (unless she's a jerk). She'll just let you pay it back whenever you've got the money.
joewp wrote:OilFinder2 wrote:The US government can never have that problem because they're the entity which creates the money in the first place. If, on a certain day, there are more bonds maturing than the Treasury has in "cash on hand," they can always create the additional money "out of thin air."
No they can't. The Fed creates the money out of thin air and loans it to the government (they buy t-bills). That's why every sovereign government is in debt up to their eyeballs these days. There is plenty of debt and the writer of the article is a fool .
AgentR11 wrote:I think you'll find that OF2 is in fact correct here; the deal is that although the Fed creates the money as you describe, it does so as a result of authority delegated to it by congress. That is an authority that can be withdrawn, expanded, or left as is, as it suits the needs of the government.
joewp wrote:Theoretically you're correct, but do you think that Congress would do that, being that they're fully in the banker's pockets? They'd just continue to do what they have always done in the past 100 years, borrow more from the Fed.
While not news to Zero Hedge readers who knew about the final debt settlement of US debt about 10 days ahead of schedule, it is now official: according to the US Treasury, America has closed the books on 2011 with debt at an all time record $15,222,940,045,451.09. And, as was observed here first in all of the press, US debt to GDP is now officially over 100%, or 100.3% to be specific, a fact which the US government decided to delay exposing until the very end of the calendar year. We wonder, rhetorically, just how prominent of a talking point this historic event will be in any upcoming GOP primary debates. And yes, technically this number is greater than the debt ceiling but it excludes various accounting gimmicks. When accounting for those, the US has a debt ceiling buffer of... $14 billion, or one third the size of a typical bond auction.
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