Wednesday, August 19, 2009

Update on the "Right Side" of the DTS

I've been following the "Withdrawals" side of the Daily Treasury Statement this year to detect any Y0Y increases in Government spending on non-financial assets.

The chart below is a comparison of the DTS as of August 17, 2009 vs. August 18, 2008.

I posted this amount as of July 30 and it came to around $542B, so this number has about increased $30B in a few weeks (fairly substantial).

I've heard news reports that the GSE's are going to need another $10B but I have not seen that withdrawal in the DTS yet and will adjust when or if it posts.


googleheim said...



"The United States economy is now out of the emergency room and appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself."


To understand this threat, we need to look at where we stand historically. If we leave aside the war-impacted years of 1942 to 1946, the largest annual deficit the United States has incurred since 1920 was 6 percent of gross domestic product. This fiscal year, though, the deficit will rise to about 13 percent of G.D.P., more than twice the non-wartime record. In dollars, that equates to a staggering $1.8 trillion. Fiscally, we are in uncharted territory.



Matt Franko said...

Yes Buffet is back making the rounds (and making no sense), it all starts with the NYT piece and then the TV interviews, etc... It seems like these folks almost are taking turns going out and demagogueing this issue. Today it's Buffet, two weeks ago it was Walker, a month ago it was Judd Gregg, next week someone from Obama Admin, etc...I wonder if they coordinate? They are relentless.

Glass half full: If one were on a path to eliminate Treasury issuance, the first step would probably be to pay interest on excess reserve's hoping!

mike norman said...

Yes, precisely!

I am starting to come full circle with my views as a result of all the nonstop ignorance being spewed by guys like Buffett.

I have gone from deep pessimism on the belief that these misinformed rantings would affect policy in a manner that brings on the very disasters they are taking about.

But now I am now starting to believe that their crazy, uneducated ideas actually will provide the fuel for a massive move in the other direction.

For example, they're all shorting the dollar yet their Armageddon forecasts may actually be causing policy to shift in a manner so as to create a global scarcity of dollars.

We saw the first hint of this last year and early this year when the Fed had to take unprecedented action to supply dollars via the forex swaps. This dollar lending went right over the heads of guys like Buffett, Gross, Schiff, etc. They never even mentioned it. They never understood it and its implications. How smart are they?? Really???

The U.S. current account deficit is dropping, probably in reaction to the rants of the aforementioned. As a result I see the dollar rising, not falling. In fact, their entire argument for a weaker dollar is based on the "debtor nation" idea; that we import more than we export. That's slowly going away.

The short positions of these guys or the short positions of those who follow them will fuel the long-term run higher, I am absolutely certain.

On the debt/inflation front, they have managed to drum up an inordinate fear of deficits, which keeps stimulus to a minimum, which keeps unemployment higher than it otherwise would have been, which keeps inflation low.

There will be no inflation, nor will there be an interest rate spike or massive exodus from Treasuries.

The bad news is, in the long-term, all of this NECESSITATES a lower standard of living for every American--no matter whether they are of the current generation or future generations. What a terrible shame it is for our kids and grandkids.

But if you are a savvy investor you can protect yourself and your families from the outrageous "confiscation" of your wealth and prosperity by these idiots. This is without question a form of tyranny--the tyranny of the ignorant--but you do not have to accept it!

Turn the tables on these cretins who wish to enslave you: cretins like Buffett, Paul Tudor Jones, Pete Peterson, David Walker, Schiff and his followers, and other, ordinary yet misinformed and zealous Americans who believe in this tripe.

It is your duty, no, YOUR RESPONSIBILITY, to do that. All that is asked of you is patience.

You cannot stop the forces that auger for outcomes based upon the REAL fundamentals. The REAL fundamentals are not the ones spoken about by the terrorists. Even THEY cannot stop those fundamentals.

Doing so is like trying to stop the movement of the earth's tectonic plates.

I am convinced that if you take a position against ignorance (i.e. against the rantings of Buffett, Gross, Roubini, Schiff, etc) it will result in you becoming rich beyond your wildest imagination. It WILL happen; it'll just take time.

For those who are patient, the rewards will be great, believe me. Quality rises to the's the law of the Universe.

In the end this will be, "The greatest wealth transfer in the history of the world," not like that phony sound bite Boone Pickens used to throw around.