A: The national debt threshold we just passed

June 19, 2009 – 9:13 am

Q: What is $11.4 trillion?

(Click image to enlarge in new window)

And today Treasury announced it will sell $104 billion of debt next week, a new record.  CNBC:

The Treasury announced Thursday a record $104 billion worth of bond auctions for next week, part of its herculean efforts to finance a rescue of the world’s largest economy.

The sales will exceed the previous record of $101 billion set in auctions that took place in the last week of April and consist of two-year, five-year and seven-year securities. That record was matched by another $101 billion week in May.

Though next week’s total was broadly in line with expectations, worries about supply have weighed on the U.S. government bond market, which will see a mammoth $2 trillion worth of new debt issued this year.

By the way, the Fed’s balance sheet ticked up again this week, by $29.4 billion.  The increase was due to more quantitative easing.  In particular, Treasury holdings increased $10.9 billion, agency debt holdings increased $4.0 billion and MBS holdings increased $27.9 billion.  (These increases were offset by Central Bank Swap Lines, which fell $15.6 billion).

  1. 12 Responses to “A: The national debt threshold we just passed”

  2. The only way this debt will be repaid is through inflation. Otherwise known as repudiation.

    By Richard on Jun 19, 2009

  3. Can’t wait to see where mortgage rates will be once the quantitative easing is over. Even if they “double down”, it will someday be over. The Fed’s balance sheet swelled by $32 Billion of mortgage debt this week whilst mortgage rates climbed back up. Take the Fed out of the mix and rates would be much higher. Even more importantly, take the Fed out of the mix and other retail buyers would not be buying at these yields. What will a home bought in 2009 (with 4.5% rates and an $8k tax credit) be worth in 2010 or 2011 with 8% interest rates? Hmmm…

    By John on Jun 19, 2009

  4. The Saganesque ( billions and billions) in our national debt is horrific enough but isn’t the shrinking of the swaps number equally bad news?

    I had thought these swap arrangements with other
    central banks were for the purpose of providing
    dollar liquidity,i.e., they needed dollars to finance their own banks and industry dollar denominated obligations. If that is no longer the case then wither the dollar?

    By sangellone on Jun 19, 2009

  5. Another record? Yay! We’re #1! We’re #1! We’re #1!

    Well, someone has to make light of this…

    By K T Cat on Jun 19, 2009

  6. 8% ineterest rates in 2010-2011 would have a negetive impact on housing assuming wages stay constant. But interest off of bank accounts should soar with deposits paying much higher rates.

    But w/ equilibrium demand/supply selling a house for $250,000 w/ rates at 4 1/2% doubling this to 9% should cause prices to halve. But lenders can give out adjustable arms at 5% to soothe over this fall in value.

    Lenders can also use an option arm loan which could quelch this precipitous drop in value. The option arm allows the borrower to pay only a 1/4 of the fully amortized payment.

    Lenders have a variety of options also interest only payments.

    By Dave Triol on Jun 19, 2009

  7. I heard counties will now allow you the option of foregoing the payment of taxes, while putting a lien on your house for up to 7 years they figure the will get their money back with 12% interest should you not pay them. They will auction the house off for the highest value to get their money. They take seniority over bank lien holders.

    I think a reverse mortgage is better for the county then the bank.

    By Dave Triol on Jun 19, 2009

  8. The charts shown above suggests that we can anticipate a $10,000.00 loaf of bread in the grocery stores rather soon. Provided, of course, any of them are open for business.

    The emperors are naked… and Old Coyote Knose smells $moke. The $moke says that Rome is burning… all the way to Zimbabwe (via Iraq-nam, Afghanistan-nam, Pak-a-nuke-nam, etc.). Ewe fat arse, corn-syrup consumer folks in corp-rat-fasicst Amerika are witnessing a classical example of hubris and imperial over-reach.

    WHY 9-11 happened might be far more important than WHAT and WHO dunnit.

    Two things:

    1. WHERE THERE IS NO INSIGHT, THE PEOPLE PERISH!

    2. WHOM THE GODS WOULD DESTROY, THEY FIRST MAKE MAD(off)!

    By RICHARD RALPH ROEHL. Los Angeles, CA. on Jun 21, 2009

  9. It really all comes down to spending..

    That is the demand side of the equation, and really what economics is all about.

    This is the tool(GNP) that measures everything.

    The bubble popped in internet stocks because

    people didn’t want to buy these high priced

    stocks anymore. The housing market the buyers

    disapeared, they didn’t want to shovel out the big bucks for a house.

    It all comes down to demand. bubbles will come and go, this has always been known.

    The notion that the stock market is always effiecint . or the market efficiency hypothesis is bullshit. Just some professor that gets paid to write crap. The assumption that everybody has perfet knowledge is silly. Insiders, bookkeepers always have the inside scoop./\

    By Dave Triol on Jun 21, 2009

  10. If more US companies go belly up. This is what could take down our country and wealth. If the Governm keeps bailing out or taking over bankrupt companies , our system is doomed.

    But the Govern didn’t create this problem it was business. CEO”s and insiders decided to sabatoge their companies for quick greed. The fastest way to get rich is to lie. Lie about profits give out as many options as possible and sell at the peak and let the Goverment pick up the pieces. If this mentality keeps up we are all doomed.

    By Dave Triol on Jun 21, 2009

  11. To fix corporate america we should enact claw-back laws.

    If someone makes a ton of money at the companies expense, the law should be able to claw back all the money that was made. All the Gross money which should wipe out these clanestine executives.

    By Dave Triol on Jun 21, 2009

  12. We know the dollar’s value will be nil – the Zimbabweans are using it as their currency. And they’re some of the unluckiest folks around. When Zimbabwe adopts your currency, you know you’re hosed.

    By John on Jun 21, 2009

  13. Dave this problem stems from government interference with the economy. The
    “booms” would never have been possible
    without government money printing and other acts of violence against private property.
    “To fix corporate America we should enact claw back laws”
    – with respect, to fix corporate america you should enact government claw backs, starting with the fed, HUD and freddie and fannie. You should take the power over the economy away from the federal and state governments.You are proposing to expand these incompetent monstrosities based on some idea of justice rather then a desire to return to sound business practices. clawbacks etc will simply discourage legitimate enterprises from doing business in america. As does the administrations recent contravention of bondholders “secured creditor” status btw.

    By Chris F on Jun 24, 2009

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