Thursday, August 4, 2011
Total Gov't debt issued since 1998: $229 TRILLION! And guess what? Rates are at zero!!
The daily Treasury statement is a fascinating document. Each day at 4pm on the dot you get a look at the Treasury's checkbook. Every item of expenditure (withdrawals) and every item of revenue (deposits) is shown in detail down to the dollar. And it's compiled to give daily, monthly and fiscal year to date totals.
Also included in that statement are the total amount of public debt that the Treasury has issued. This includes bonds and notes along with T-bills, savings bonds and whatever other debt the Treasury sells.
The numbers are really unbelievable and they shed light on how we really just live in a world of "Monopoly money." I don't mean that in a pejorative sense; I simply mean that this is all just a matter of accounting and record keeping, that's it. Nothing more than that. And the reason you know that's true is because the trillions $$ that come in and out on this statement are just mind boggling. There's not that much money in the whole, entire, world, yet there it is, in black and white, right on the Treasury's books.
For example, here's one crazy number: $53.7 Trillion. That's the amount of public debt that has been issued by the Treasury so far this fiscal year. (Less than 10 months.) Fifty-three T-R-I-L-L-I-O-N!
See for yourself by looking at the statement below:
I bring this up because the only thing we hear about, every day, is what a huge debt we have ($14 trillion) and that we ought to be scared because there is massive "supply" of Treasuries (usually only 10s of billions $) about to be auctioned off. (This usually comes as a rant from resident CNBC imbecile, Rick Santelli).
We are also told that this supply is going to cause rates to spike or that no one is going to buy this paper. OMG, what if the Chinese don't step up and buy?
Yet the fact is, the government has already sold nearly $54 trillion of debt in the last 10 months with no trouble or consequence. That is nearly four times the outstanding national debt (which took 220 years to accumulate). We sold four times that in 10 months and what happened? Nothing. Rates are at ZERO!
Even more enlightening is the fact that over the past 13 years (as far back as this data goes) the Treasury has sold a mind-numbing $229 trillion of debt and rates have gone down to zero.
I went back and jotted down the total annual debt sales that the Treasury has conducted from 1998 until now. (All came from the archives of the Treasury Statement.)
Here it is:
And finally, here's what interest rates did over that time when we issued $229 trillion of debt:
Fed funds 5.5% to zero
2yr note 5.5% to 28 basis points
5yr note 5.5% to 1.15%
10yr note 6% to 2.5%
30yr bond 6% to 3.7%
So my question is, when are we going to stop with this ridiculous hysteria about gov't debt issuance, spiking rates, our national debt "problem," and all the other nonsensical talk that we have been hearing? It's really worse than any warped myth.