$2.5 Trillion Of Interest Payments YEARLY On Americans’ Horizon According To CBO’s Spending Projections

 Watch: http://mikenormaneconomics.blogspot.com/2023/04/maga-25-trillion-of-interest-payments.html

I haven't watched the video.  We will have $2.5 trillion of interest annually starting in 2040, maybe the video says it is sooner.

I think that even $1 trillion per year of interest is a big problem, and this should start in fiscal year 2029.

Update: I finally watched it.  The $2.5 trillion comes from a $50 trillion national debt * 5% interest.  Dave Brat said the CBO scored the budget deal at $50 trillion in 10 years.  I can't find that number but it looks like the debt held by the public could be $46.7 trillion in 2033 (GDP of 39,288 * 118.9%).  So by 2035, the debt held by the public will be over $50 trillion.  The CBO projects lower interest than that, with $1.44 trillion in 2033, but maybe they are underestimating the rates.  I think Dave is saying that the debt to the public will be higher than projected, and will reach $50 trillion by 2033.  And if interest is slightly higher than projected, you get the $2.5 trillion annually by 2033.

March 2023 Deficit was $376 Billion

 The federal government incurred a deficit of $376 billion in March 2023, CBO estimates— $183 billion more than the shortfall recorded in March 2022.  The federal budget deficit was $1.1 trillion in the first half of fiscal year 2023, the Congressional Budget Office estimates—$430 billion more than the shortfall recorded during the same period last year—and consistent with projections CBO released in February. 1 Outlays were 13 percent higher and revenues were 3 percent lower from October through March than during the same period in fiscal year 2022.

Net outlays for interest on the public debt increased by $90 billion (or 41 percent), mainly because interest rates are significantly higher than they were in the first six months of fiscal year 2022.  

Monthly Budget Review: March 2023 (cbo.gov)

Net Interest FYTD is $308 billion, thus March net interest was $68 billion.  I think this is the first month ever to exceed $50 billion of net interest in a single month.

On 3/31/23, the total national debt was $31.458 trillion.  On 3/31/2022, it was $30.401 trillion.  Thus it increased 3.5% from the previous year.

Interest Payments are up 29% YOY

 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).

Projected Defense and Interest Spending

 

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.

GDP is now $26.15 trillion

 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.

February 2023 Deficit was $263 Billion

 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.

=========

On 2/28/23 the national debt was $31.459 trillion.  One year earlier on 2/28/22 it was $30.290 trillion, so it increased 3.9%.

Sodium Triphosphate in Kraft Macaroni and Cheese

 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!

Off-Topic: Kraft Macaroni and Cheese is garbage

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.  

Jerome Powell is an American Hero

 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. 

The Point of No Return is October 1, 2028

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.

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.

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.

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.  

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.

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.

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.

There is a free lunch ... if you are a billionaire

 Just a short rant.  The stock market dropped about 15% over the last year.  The bond market dropped almost 40% in 2022.  Real estate has dropped about 10% since its high in mid-2022.

What if I told you that I had an investment that was guaranteed to earn you 5% per year, with absolutely no risk on your part.  Ok its not sexy, but a solid 5% year after year.  Would you be interested?  Do I have your attention?  Drum roll please ...

It's called a "reverse repo" which is short for "Reverse Repurchase Agreement".  If you are a mutual fund manager or hedge fund manager and you can't find good investments, or you own a bank and you are having trouble finding solid customers to lend to, all you have to do is call up the New York Fed and lend them the cash.  It's a little complicated to explain but not that complicated.  The Fed owns lots of government bonds.  You would buy a bond from them and they would agree to buy it back in the future, with interest, with no risk on your part.  It's essentially a secured loan - you lend them cash and they give you the bond to hold onto until they redeem it.  It's like you own a pawn shop and they are pawning you their junk (bonds) to get cash.  I probably didn't explain it properly, read this:  FAQs: Reverse Repurchase Agreement Operations .

Question:  why would the Fed do this?  They certainly don't need the cash.  The answer is because they feel sorry for you, you broke little rich kid and since you are part of the old boys club, they are helping you out.  Next question: how can they afford to do this?  Simple - they just print the cash out of thin air.  But doesn't this cause inflation?  Yes, but who cares, inflation is for the little people.  What does this have to do with capitalism?  Absolutely nothing.  It's crony capitalism, where the government absorbs all the risk.  It's perverted and corrupt and sick.  Bankers are scum.  

But .. you say I don't care if its sick and perverted, I want a piece of the action.  Tough luck, its a small club and you ain't in it.  The "minimum proposition size is $1 million,  and propositions must be submitted in increments of $1 million".  It's a rigged game.  The rich get richer and everyone else suffers the consequences.  

Deferred Assets and Hyperinflation

 The latest Federal Reserve Balance Sheet is very weird.  What is that negative amount for "Other Liabilities"?  Footnote 15 says: "Includes the liability for earnings remittances due to the U.S. Treasury".

This is a violation of accounting theory, where everything is either a debit or credit, with no negative balances.  So how should this be presented?  It is really an offset to amounts that are to be paid in the future to the US Treasury.  I think that it should show up on the asset side of the balance sheet as an intangible asset, similar to Goodwill.  But it really is a loss, because the Fed had to pay out so much interest because of rising rates.  All the Reverse Repurchase Agreements and Deposits show above, more than $5 trillion, are interest bearing.  If the rate is 5%, then that is $250 billion of interest a year paid.  Would any other bank present it this way?  No way, that would be fraud.  Anyways, legalities aside, the Fed effectively is covering its losses by printing more money.

Now, read this old article I wrote: "What causes hyperinflation? Quasi-fiscal deficits".  

"What is a quasi-fiscal deficit? A quasi-fiscal deficit is the deficit of a central bank. From Germany to Argentina to Zimbabwe, the hyper or high inflationary processes have always been fueled by such deficits. Monetized fiscal deficits produce inflation. Quasi-fiscal deficits (by definition, they are monetized) produce hyperinflation. The only losses that can meaningfully affect central banks stem from flows (i.e. deficits), like net interest losses. These losses result from paying a higher interest on their (i.e. central banks’) liabilities than what they receive from their assets. These losses leave central banks no alternative but to monetize them, in a deadly feedback loop. They are like black holes: Once trapped into them, there is no way out, because (fiscal) spending cuts are no longer relevant, unless they produce a surplus material enough to offset the quasi-fiscal deficits. And that, by definition, is impossible."

So, the thought for the day is that we are already in hyperinflation.  Maybe it is only 8% right now, but it is caused by a systemic breakdown in our financial system as opposed to an external shock like occurred in the 1970s.  We are already in a doom feedback loop.  Inflation will continue because it is CAUSED by the Fed.  That $250 billion a year is created out of nowhere.  Granted, it is mostly offset by interest received, but that doesn't change the fact that it is hyperinflationary.  The Fed is trying to fight inflation, but they are actually causing it.  Inflation will continue to rise and the Fed will continue to raise rates which will cause inflation to go even higher.  The solution is for the Fed to cut rates, but this will force losses on the big banks.  The big banks are really the owners of our economy.  The ship is taking on a slow leak, like the Titanic after it hit the iceberg.  And all the lifeboats are for the rich cats, with none for the women and children.

Deficit of $82 Billion in December 2022

The federal government incurred a deficit of $82 billion in December 2022, CBO estimates—$61 billion more than the shortfall in December 2021.  Revenues were lower in December 2022 than they were a year before, and outlays were higher.  Net outlays for interest on the public debt increased by $45 billion (or 44 percent), mainly because interest rates are significantly higher than they were in the first quarter of fiscal year 2022.  Fiscal YTD net interest is $149 billion. (Note that net interest accounted for more than half of the deficit).

Remittances from the Federal Reserve decreased from $26 billion to less than $1 billion. Higher short-term interest rates raised the central bank’s interest expenses above its income, eliminating the profits of most Federal Reserve banks.

The federal budget deficit was $418 billion in the first quarter of fiscal year 2023, the Congressional Budget Office estimates—$41 billion more than the shortfall recorded during the same period last year.

Armstrong predicts collapse in 2044

 Martin Armstrong is an interesting character with a blog that I follow here -  ArmstrongEconomics.com/blog .  He just wrote this: "We have reached such a moment in history and the election of Kevin McCarthy spells the doom that we face ahead for the nation is more than just the deep divide between left and right, we are looking at the absolute vile corruption of Republican forms of government. This is why Caesar crossed the Rubicon. Six Waves of 31.4 years from 1856 brings us squarely to our model’s forecast for the total collapse of republican governments – 2044."    From https://www.armstrongeconomics.com/international-news/politics/kevin-mccarthy-wins-but-at-the-cost-of-the-nation/

I don't understand his model.  The 31.4 comes from Pi.  I don't know the significance of 1856.  So I don't endorse his theory, but I would like to understand it better.  I just find it interesting that he pegs 2044 as a year of collapse and I predicted 2043.  What will happen in 2044?  I think Armstrong is predicting a civil war or a communist revolution but it isn't clear.