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Wednesday, August 12, 2015

Fed Never Intended to Raise Rates or an Intentional Treasury Crash is Dead Ahead???

http://econimica.blogspot.com/2015/08/fed-never-intended-to-raise-rates-or.html

Need to put a couple pieces together here to give a full picture...


1- US federal debt reported by the Treasury has not officially increased for over 150 days...it has been locked at $18T,151B.  This is being done as congress has not authorized a new legal debt ceiling limit.  In these "extraordinary" times, the secretary of the Treasury borrows from federal pensions and other available "trust funds" to avoid issuing new debt for the ongoing deficit spending (on track for about $600B this year).  This avoids breaching the debt ceiling.  Mr. Lew has stated he can do this until Oct 30 at which time all available funds will be depleted and a debt ceiling hike will be necessary to enable ongoing deficit spending.  Lets assume the ceiling is raised by Oct 30 and treasury debt is again sold to the "public".  The Treasury will need to sell the $300 to $400 billion to pay back the borrowed funds plus the new debt.

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