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.


wh10 said...


I think I know what doubters would say though: it looks like the bulk is coming from debt issued to the govt (govt account series). (Is that correct?)

Because if we're issuing that much debt, yet public records only read $14T, then most isn't being issued to the private sector.

Could be wrong though.

mike norman said...

$215 Trillion was redeemed. What's left is $14t outstanding. So we "paid back" $215 trillion. No problem. Fed moved the funds from the securities account to the reserve account.

wh10 said...

Touche, sir.

Hamlet said...

Thanks Mike, that really puts things into perspective.

I checked the latest UK data a couple of days ago: about £64bn of gilt issuance since Feb 2011, against a Public Sector Net Debt of £944bn (excl bank bailouts) - accrued on a £1.2M investment made in 1694 to equip the UK naval fleet. Had sterling retained reserve currency status, no doubt it would have been our figures that would have been in the trillions.

Even as things are, our hapless politicians never miss an opportunity to insist gov't deficits lead to high interest rates and a Grecian fate. But of course, there's no sign of soaring rates here either.

With the Euro misconstruct getting ever more disorderly, we'll no doubt be pummeled with yet more pseudo economic drivel in the coming months.

Stephan said...

A very interesting post. So we can line up in front of the Boston University Department for asking Mister Laurence Kotlikoff (and NO we shouldn't refer to him as an economist) some serious questions about whether he is sane? And if obviously not he needs some help from us?

In his recent Bloomberg piece Why the Debt Crisis Is Even Worse Than You Think he claims the US is in the hole to the tune of 211 trillion US$. But this is his famous infinite horizon accounting ignoring any assets incurred over the infinite time horizon.

Even going along with his ridiculous assumptions the question now is: Hey Laurence what exactly is the problem? 211 trillion US$ debt over an infinite time horizon and the treasury can borrow 229 trillion US$ in only 13 years? Don't worry.

Anti said...


Here's a comment from today on one of my new youtube uploads:

"you post a video of schiff when the market is tanking, consumer prices rising, and gold climbing to the $1680 level. yeah, you really owned him."

I usually just block comments and users like this, but I decided to allow this one, given how utterly wrong it is.

I quoted five year inflation swaps, TIPS break evens, and the yield curve, all of which are falling fast.

This is undoubtedly part of the problem. There are people so ignorant, that they literally read exactly the opposite of the message markets are sending.

Mike, I'd rather see you on CNBC, because Steve Liesman's the only guy who ever seems to make sense on that network, though sometimes he gets it very wrong too. Haines died, so we need someone there who understands US solvency and uncertainty aren't the issue and that it's really all about the need for stimulus.

Anti said...

Oh, except don't bash QE. I say, give us a truly huge monetary stimulus effort(not necessarily QE though), and let's make the effect unambiguous as possible. That should've been done in the first place.

The same is true of fiscal stimulus. Why Obama'd start negotiating at a level well-below what Romer wanted is beyond me. He's a fool. They should've asked for far more, giving them some negotiating room. In retrospect, Romer and Bernstein think we actually needed about $2 trillion.

googleheim said...

So much for that "krass keynesian economics" spout from the krass kraut kook finance minister from germany.

let's bum rush that show and print up a rebuke on the Frankfurter newspaper in the business section !

Ryan Harris said...
This comment has been removed by the author.
Anti said...


How about that idiot Trichet. The moron is presiding over a failing currency, claiming they're better off than the US or Japan.

Bob said...

This fantasy currency game is coming to an end, I want wampum instead of Ben Franks. The system will reset , I am a practical person not a machine, my payments due to the milkman are not fantasy accounting entries. This reality is coming to our academians or should I say isolated, inulated bankers in charge. They better invest in ammo instead of printing presses, sorry to say.

SchittReport said...

rick santelli is only a follower. he only started ranting about these "issues" in 2009.

these predictions related to the aforesaid issues date back to 2002:

Anonymous said...

What's the term structure of the government account debt?

Tom Hickey said...

What's the term structure of the government account debt?

Distribution of securities maturing over time. Reserves and cash are zero maturity, and tsys are non-zero maturity —1mo, 3 mo, 60, 1yr, 2 yr, 3yr, 5yr, 7 yr, 10yr, 20 yr, 30 yr.

snowball1205 said...

I'm still not sure what these numbers represent. I thought is was the excess revenues replaced with non-marketable securities. But if the many trillions of excess are put into the general fund how is it used? It far exceeds any spending authorized by Congress.

snowball1205 said...

I'm still confused as to what all these trillions represent. I thought is is excess revenues received by the funds and replaced with non-marketable securities. but if the money is added to the general fund how is it spent? If far exceeds anything authorized by congress.

Anonymous said...

I meant, what's the term structure - not what is term structure.

And I meant specifically for the line item "government account series"

i.e. are they rolling over 1 months bills for government accounts or what?

something has to explain the massive number for that particular line item

where's the data on that line item?

Tom Hickey said...

Anonymous, bills get rolled over. Bills are commercial accounts. Large commercial accounts are not FDIC insured, so corporations use tsys instead. T-bills are the money thing closest to reserves and cash, but they pay a bit more interest. Even a bit more interest on large accounts adds up over time.

Anonymous said...

You're missing my question entirely.

The point is what is the maturity structure of the debt that is being rolled in the following line item account:


This is a line item that appears in the table in the post! It accounts for almost everything!

Tom Hickey said...

I don't know that. Mike or Matt will have to help us out on that one.

Unknown said...

Intragovernmental Holdings are Government Account Series securities held by Government trust funds, revolving funds, and special funds; and Federal Financing Bank securities. A small amount of marketable securities are held by government accounts.

What are Intragovernmental Holdings?