Read: https://www.zerohedge.com/personal-finance/interest-payments-treasury-debt-29-yoy
Interest payments on the national debt during the current fiscal year (October to February) are up 29 percent y/y, one of the fastest-growing expenditure components of the Federal budget.
Interest payments were $238 billion from Oct 2021 to Feb 2022, and they are now $307 billion from Oct 2022 to Feb 2023. (These are gross payments instead of net payments).
Source: https://www.cbo.gov/system/files/2023-02/58848-Outlook.pdf
I didn't come up with these numbers. In FY 2029, for the first time ever, net interest on the debt will exceed defense spending.
Read: https://www.bea.gov/news/2023/gross-domestic-product-fourth-quarter-and-year-2022-second-estimate
"Current‑dollar GDP increased 6.7 percent at an annual rate, or $421.1 billion, in the fourth quarter to a level of $26.15 trillion."
Debt Held By the Public is now at $24.65 trillion. So the ratio is 94.3%. I see the 100% ratio as a red flag, because whatever the percent of interest is paid on the debt is even bigger as a percent of GDP. In 2023, net interest as a percent of GDP is expected to be about 2.3% ($600 billion / $26 trillion). But if the interest rate increases (which it has, the short term rate is at 4.3%) and the amount of debt increase, which it obviously will, then it won't take much for the net interest as a percent of GDP to be even higher than the rate. If we paid 4.3% on $26 trillion, that is $1,118 billion per year.
I expect the next recession to push us over the edge, because this will decrease the GDP slightly, and the government will spend trillions to counteract it. Even without a recession, the debt to GDP ratio will exceed 100% by 2026, and the Fed will not cut rates. I just said that I saw October 1, 2028 as a point of no return. I now think this could be a couple of years earlier. I will wait for the next forecast by the CBO, which should happen in July or August, to change this forecast.
But it is clear that the situation is rapidly worsening. Not because of the Silicon Valley Bank collapse, that is just a symptom of the problem, but because the entire system, anchored by the "infallible" United States Government, is imploding. And I don't see anyone talking about this.
We are not past the point of no return yet, and there is still a slim chance that things could change. But nobody seems to recognize the problem or care.
The federal government incurred a deficit of $263 billion in February 2023, CBO estimates— $47 billion more than the deficit recorded last February. Revenues were lower this February than they were a year ago; outlays were higher.
The federal budget deficit was $724 billion in the first five months of fiscal year 2023, the Congressional Budget Office estimates—$248 billion more than the shortfall recorded during the same period last year. Outlays were 8 percent higher and revenues were 4 percent lower from October through February than during the same period in fiscal year 2022.
https://www.cbo.gov/system/files/2023-03/58938-MBR.pdf
Net interest fiscal year to date was $240 billion, thus February net interest was $42 billion.
On the bright side, interest was only a small portion of the deficit.
This is an update to my last post about mac and cheese. On the label of the box it lists the ingredients for the cheese sauce mix: whey, milkfat, salt, milk protein concentrate, sodium triphosphate, contains less than 2% of tapioca flour, citric acid, lactic acid, sodium phosphate, calcium phosphate, with paprika, turmeric, and annatto added for color, enzymes, cheese culture.
Bingo, its right there in tiny letters - sodium triphosphate, sodium phosphate, calcium phosphate. What do these things do, why does Kraft use it and should I consume it?
Sodium Triphosphate aka STPP is added to detergents, but "many countries have stopped using STPP in detergents as it causes environmental problems. Phosphates, being essential nutrients, cause excessive fertilization [eutrophication] in stagnant waters and slow-flowing rivers, which leads to excessive growth of algae." Ok, I don't care about algae growth, but something else concerns me - it is water soluble. I am trying to lose weight, not retain water.
Let's see what else I can find (from the Wikipedia page). STPP is a preservative .... It is common in food production as E number E451. In foods, STPP is used as an emulsifier and to retain moisture. "Whilst phosphate is present in the body and food in organic forms, inorganic forms of phosphate such as sodium triphosphate are readily absorbed and can result in elevated phosphate levels in serum."
It is also used in noodles (from a different random page): "Food additive sodium tripolyphosphate as an anti-caking agent can increase the water absorption of noodles and make the noodles white, strong gluten and good elasticity".
Why does Kraft use it? I haven't looked at their website, but I am sure it is because STPP / E451 is a preservative and it makes the cheese creamier.
Is STPP bad for you? "The US Food and Drug Administration lists STPP as General Recognized as Safe (GRAS)". However, there is a similarly named compound called Trisodium Phosphate (TSP), which is poisonous. But read this: "Trisodium Phosphate is surprisingly used as a food additive. It is called E339 when used for food purposes. Main utilizations include its functions as a thickening agent, acidity regulator, emulsifier, and nutritional enlargement product."
"Trisodium phosphate in food is deemed problematic by many health experts because of the potential health risks it can cause. It is believed to cause kidney damage, soft tissue calcification, and bone calcium remova." The US FDA also says that TSP is generally recognized as safe.
There is more. I don't feel like researching this more. I know that I am ultra-sensitive to some things. I know that STPP is problematic at least in detergents and that TSP is a poison in large quantities. It doesn't improve food nutrition, instead it is added to make the cheese creamier. I choose not to put it in my body. I plan on throwing away all the cheese sauce mixes. Just say no to STPP and TSP!
This is an economic blog that I, who am not an economist, rarely write to. And of course nobody reads it, so sometimes I post about other topics, in particular, diet and food.
I recently have become a connisseur of cheap food, to try to eat healthy on a budget. I have been eating a lot of ramen noodles, which I won't talk about here. I have also been eating pasta. Which brings me to my topic today. I bought like 8 boxes of Kraft macaroni & cheese because they are on sale for $1 or $1.50 per box.
Last night I used only 1/2 box and cooked it with about the same quantity of Banza Cavatapi. The cavatappi made it much more enjoyable. But what happened was a few minute after I finished my meal, I felt very sleepy, and then groggy. I kind of feel like I was mildly poisoned. I am pretty much over it a few hours later. I am not a food scientist but I can think of 3 possibilities.
First, that the macaroni had some kind of poison in it, like glyphosate (weed killer). I am talking parts per billion here and maybe I am more sensitive to it than most people. I am not saying its poisonous as such, just that something is present in very small amounts that shouldn't be there. And Kraft probably knows this and justifies it because the amount is so low.
Second, that the product, including both the mac and the cheese, has a very high glycemic index, which makes my insulin spike, similar to eating sugar. (You might think that all pasta does that but no, good quality pasta can be a complex carb that is very slowly digested).
Third, that there are phthalates in the cheese sauce. I wasn't even thinking about this, I was thinking about the glycemic index, but this brought up what other people think. Phthalates are added to plastics to increase their longevity. And apparently these are present in the cheese sauce mix in very high (relatively speaking) amounts. They are used as a preservative to make the shelf life last longer and to make the sauce creamier. Again, we are talking parts per billion, and maybe I am just ultra-sensitive to it.
I think this is the most likely explanation. So just avoid the cheese sauce mix and use real cheese.
But separate from all this, lets look at the ingredients of just the macaroni itself. From the box: Enriched macaroni (wheat flour, durum flour, niacin, ferrous sulfate, thiamin mononitrate, riboflavin), cheese sauce (list of ingredients omitted).
I also have a bag of Delallo Penne Rigate, which cost $2.99 per bag. This is the ingredient list: Durum wheat semolina. That's it, I also have a box of Good & Gather Yellow Lentil Penne and this is the list: yellow lentil flour. That's it. Now look at the Banza cavatappi: chickpeas, pea starch, tapioca, xanthan gum.
Life is too short to eat bad pasta. The better stuff isn't that much more expensive.
I half-way think that the Kraft macaroni & cheese is just totally garbage and I should just throw it away. But instead I think I will just avoid it for awhile and in a month or so do another experiment and see if I react the same way.
I like macaroni and cheese, but it can be better than this. Use whole wheat elbow noodles. Use cavatappi or rotini. Buy Annie's organic mac and cheese. And use real cheese. Rant off.
Update: The problem is the sodium triphosphate in the cheese mix, about which I am posting more. Annie's has the same problem with sodium phosphate.
Read this: https://www.zerohedge.com/markets/luongo-war-dollar-already-over-part-i
The Fed is now ready, I think, to go to war with Davos over the future of money and they aren’t ready to hand over the keys to the candy store to a bunch of European commies, at least while also cutting Wall St. out completely of the New World Order…
I recently posted that I thought the Fed should cut rates so as to make it easier to pay interest on our enormous debt. This article changed my mind.
First of all you have to think like an American banker. We need to put America, or at least the US dollar first, screw the Davos crowd. Put up a big middle finger to those promoting the Agenda 2030 and the Covid nonsense. Jerome Powell is our man, the Paul Volcker of our time. We need to stop kicking the can down the road and rally around the flag and the US dollar.
Raising interest rates means pain, enormous pain. To the Davos crowd, to the stock market, to the housing market, to the government deficit, to the interest on the national debt. It will probably cause a deep recession, a real one, not the fake lockdown recession of April 2020 (which the government spend $5 trillion to recover from). There is no appetite for another $5 trillion in stimulus. But bring it on, we need some tough love from the only adult in the country, Jerome Powell.
Tom Luongo's blog is here: https://tomluongo.me/.
More from that article on top:
SOFR knocked out the Eurodollar because that was the Fed’s and New York’s ultimate goal; to replace the global rate for dollars with a domestic one where the capital would have to trade here. The globe takes its cues, not from what Europe or Hong Kong wants, but what America needs. This stabilizes our banking system, taking back power the Fed had ceded under Greenspan, Bernanke and Yellen and reminding everyone else just who runs Bartertown. Most importantly, it pulls liquidity from around the world back into US markets, providing a foundation for a future where Davos doesn’t control DC.
In my opinion, the Point of No Return is October 1, 2028. Why? And what does this mean?
First, that date starts a new fiscal year 2029 for the US Government. It will be a transition year, with the new President (Jill Biden?) sworn in on January 20, 2029, and during the transition year, nobody takes responsibility. The old President sets the budget but isn't around to implement it, and the new President says that isn't his fault. (This is assuming there is a change in Presidents, which is likely). So expect a surge of spending in FY 2029.
Second, on this date the Debt Held by the Public will exceed 100% of GDP. The GDP is currently $25.5 trillion and the Debt Held by the Public is currently $24.6 trillion, so the current ratio is 96.5%. (The 100% ratio will actually be reached before this, maybe as soon as 2026, but it will for sure reach 100% by that date).
Third, and most important, the amount of net interest paid will exceed $1 trillion per year for the first time in FY 2029. It will of course continue to increase every year after that. This $1 trillion per year will surely shock some people. As a point of reference, the net interest paid in FY 2022 was $534 billion. So this number will double in just 7 years.
Fourth, the net interest paid will exceed the primary deficit. This may happen earlier in FY 2027.
Fifth, the Debt/GDP ratio will increase at least 2% every year. (This also may happen earlier).
So what does this mean? The interest of $1 trillion+ per year will increase the debt, along with the primary deficit. (We have a huge debt and we aren't even paying the interest on it). It means that voting will be useless because no matter who is in power, they will be almost helpless to change the situation. It means that the debt percent to GDP will continue to rise rapidly. (It is rising now, but it will rise even faster as a percent of GDP).
What do I think will happen? I think it should be obvious to everyone that the national debt will never be paid off or even partially paid. We will never have a surplus in a year again. (The last year with a surplus was 2001). The biggest thing is I think there will be a digital currency introduced, and the Fed will start quantitative easing by buying the debt with digital currency. So the US will have 2 currencies and there will be an exchange rate to transfer between them. (They won't have the same value, or at least there will be fees to transfer between them). This will have the effect of monetizing the debt, which will cause even more inflation.
It is possible this date could be delayed. If GDP grows more than expected, or if the deficit is less than expected, then maybe there is more time. I also think the Fed should cut interest rates now even if inflation is high, because this will lower the amount of interest that needs to be paid. And the Fed may actually be causing inflation by raising rates, as I have mentioned before.
The point of no return doesn't mean the system will immediately collapse. Indeed there may be another 20 or 30 years before this happens. It just means that it is inevitable. I think there is still a tiny bit of hope now to change things, but by the date above, this will be impossible.
Bonus Question: What will the Debt to the Public be on October 1, 2028? I project it to be $34.6 trillion. What is it currently? $24.6 trillion. Is there any way to avoid going another $10 trillion in debt in the next 5.5 years? I don't think so, and that is why I am being alarmist. If we could spend only, say $8 trillion by that date, maybe we could push it out a little.
