Tuesday, February 28, 2023

The Point of No Return

 

Source: https://www.cbo.gov/publication/58946

What is the Point of No Return?  When net interest on the national debt exceeds the primary deficit.  At this point, the system is out of control, with the deficit increasing every year with no way of stopping it.  When will this point be reached?  In 2027.

You won't be able to cut the budget anymore because there is nothing to cut, other than killing the sacred cows - Social Security and Medicare.  And Defense.

We have had a free lunch for many many years in this country because of our natural blessings from Providence, from the Bretton Woods conference, and from petrodollars.  Our free lunch is about to completely run out.  I don't think this is the end, I think there still may be time to stop it, but our window of opportunity is rapidly slamming shut.

Saturday, February 25, 2023

Updated CBO Projections

 Read: https://www.cbo.gov/publication/58848

So the CBO just released a report acknowledging that conditions were worse than previously projected.

CBO’s projection of the deficit for 2023 is now $0.4 trillion more than it was in May 2022; the projection of the cumulative deficit over the 2023–2032 period is now $3.1 trillion (or about 20 percent) more. CBO now expects both short- and long-term interest rates to be higher, on average, over the next five years than forecast last May, mostly because of higher projected inflation.

In their projections, the Federal Debt will be 151.5% of GDP by 2043.  This is the same year I previously identified as being the breaking point.

And some commentary ...

What is so special about the 150% figure?  Nothing, it is arbitrary on my part.  But right now, we still maintain the fiction that the national debt can be repaid, even if it would take 100 years or so.  At some point, this fiction will be impossible to maintain, and the debt will start soaring upward.  I think this would be about the 150% area.  Once debt gets beyond this, it will start soaring another 4% of GDP per year.  So the actual danger area is probably less than this, say 120% of GDP.  When will this number be reached?  In 2034.  And this is the same year the Social Security trust fund will be exhausted.  So maybe 2034 is really when things start to quickly fall apart, and we should countdown to that year.  We have 11 years left of semi-normalcy.

Monday, February 20, 2023

The Genius of the Warrior Diet

 I started the Warrior Diet (this is day 4 for me), and I think it is ingenious.  I first heard about this a few years ago when I read about a Pentagon General:

"When I was a lieutenant in Special Forces many many years ago, I thought I was getting fat," said [Gen. Stanley] McChrystal. "And I started running, and I started running distance, which I enjoyed. But I also found that my personality is such that I'm not real good at eating three or four small disciplined meals. I'm better to defer gratification and then eat one meal." For McChrystal, the one meal he eats is dinner after he is finished with work, which he said was usually around 8 to 8:30 p.m. "I sort of push myself hard all day, try to get everything done, and [then] sort of reward myself with dinner at night."   https://www.businessinsider.com/why-star-us-general-stanley-mcchrystal-only-eats-one-meal-per-day-2015-7

The Warrior Diet was invented by Ori Hofmekler, who based it on his experience in the Israeli Special Forces.  It is simple to describe - you just eat one meal per day in the evening.  What makes it ingenious?  First, carbs make you sleepy, so it makes sense to eat them right before you go to bed.  Second, you are burning fat every single day (the period of intermittent fasting in 20 hours).  Third, you get to cheat - every single day! You can have whatever you want.  The diet encourages overeating - within your eating window.  Fourth, because you overate, your stomach is satisfied, and while you do have to deal with hunger a little, you are also recovering from the previous night's meal.  So hunger is much less of a concern.  Fifth, you have to exercise and this is right in the name of the diet.

In the official guide (I will link to it later), there are 3 phases, each which lasts 1 week. First, detox.  In this phase, you eat only vegetables, with no cheese, no wheat and of course no sugar.  (This is similar to the Whole30 diet, but you can eat beans on this, and Whole30 bans beans).  Second, keto - just do a regular keto diet with mostly meat and cheese, but only eat once per day.  And third, freestyle - just eat anything.  (It says alternate two days of high fat with two days of high carb, but I think that it is too picky).

Before I post this, are there any celebrities who have tried this?  I can only find a few.  There is General David Petraeus who only eats once per day, the article didn't say when.  There is mention of Tom Hardy's Warrior diet, but that was in preparation for the movie "Warrior" ("To look like the rough yet vulnerable MMA fighter required a strict diet that was mostly chicken and broccoli everyday.").   Jack Dorsey, former president of Twitter, does it - ("In an interview with Wired, Dorsey states that he only eats one meal a day — just dinner — which he has seven times a week. In a previous interview, he says this is a “really big meal” that consists of protein like fish, chicken or steak, and “a lot of greens“. He then has “mixed berries as a dessert, maybe some dark chocolate.”).  Herschel Walker - ("Walker has never followed the fitness norms. He eats once a day, skipping breakfast and lunch. After a long, intense day of training, he eats salad and bread for dinner. He doesn't care for meat or fuss about getting enough protein. Walker's a vegetarian).  Kohei Uchimura, (the greatest male gymnast of all-time, might have the weirdest athlete diet yet. In an interview on Japanese television, the two-time Olympic all-around champion and six-time world all around winner—he’s going for his seventh straight title next week in Montreal—was asked to share a secret. His admission: He eats only one meal a day, which comes after his two workouts. Uchimura claims he only fuels himself with coffee until his evening meal.)

So here is to the Warrior Diet - cheers.  



Tuesday, February 14, 2023

Janury 2023 deficit was $38 Billion

 And net interest was $49 billion, up 41% ytd from the previous year.  Fiscal YTD interest is $198 billion.  (Note that the deficit was entirely because of interest).

The federal budget deficit was $459 billion in the first four months of fiscal year 2023, the Congressional Budget Office estimates—$200 billion more than the shortfall recorded during the same period last year. Outlays were 9 percent higher and revenues were 3 percent lower from October through January than during the same period in fiscal year 2022.  https://www.cbo.gov/system/files/2023-02/58882-MBR.pdf

Outlays are up and revenues are down ... maybe they should cut outlays? Oh they can't because most of the increase is Social Security and Medicare.

Note that in January 2022 the surplus was $119 billion, and the ytd deficit as of the end of January 2022 was only $259 billion.

Thursday, February 9, 2023

Central Bank losses don't matter

 I don't agree with the following opinion, but I don't have time to write a rebuttal.

Read: http://bilbo.economicoutlook.net/blog/?p=51243

Central banks are racking up losses due to their own policies. But those losses are meaningless. What is more important is the massive income transfers that the central banks are now making to commercial banks (and indirectly their shareholders) through the returns they are paying on excess reserves. And further, the massive income losses the central banks are inflicting on low-income mortgage holders as a consequence of the rate hikes. They should immediately go back to a state of zero support rates on excess reserves and stop hike rates.

I do agree with the last sentence.

Saturday, February 4, 2023

Recession Watch

 Source:  https://fred.stlouisfed.org/series/T10Y3M#

I think we about to into a recession.  The 10-year Treasury yield is over 1% less than the 3-month rate.  Every single time this has happened in the past, with one possible exception in the 1960s, the economy goes into a recession shortly thereafter.  The Fed should be cutting rates, not raising them.

See: https://www.dollarcollapse.com/the-fed-is-already-flashing-signs-its-done-raising-rates/

"The economy has been so fragile and so based on little more than easy money since 2006, that it only takes some minor tightening to throw a major monkey wrench into financial markets—and then the larger economy.

Indeed, the signs of recession are everywhere. Money supply growth actually turned negative for the second month in row in December. The yield curve is more inverted now than it’s been in forty years. Home prices are slowing. The Leading Economic Index is well into recessionary territory."

See also: https://www.chicagofed.org/publications/chicago-fed-letter/2018/404

Note that the yield-curve slope becomes negative before each economic recession since the 1970s. That is, an “inversion” of the yield curve, in which short-maturity interest rates exceed long-maturity rates, is typically associated with a recession in the near future.