March 13, 2017 – 5 Minute Forecast – Essential Insights on Time – Dave Gonigam
This is getting real old, real quick…
The USA Debt Reduced by More Than $ 60-Billion Since the Inauguration of President Donald Trump
The preceding appeared Friday (March 10, 2017), at one of the more infamous websites that belong to a portion of the mediasphere that one wag labeled “InfoTrump” — a funhouse mirror image of the blinkered mainstream in which the “outsider” president can do no wrong.
Now, it’s true that if you look at the U.S. Treasury’s “Debt to the Penny” website, the national debt has declined since Trump took office.
But as we said when this subject came up two weeks ago, the numbers fluctuate from day to day and week to week. Golly gee, the Treasury just happens to be taking in billions right now as people file their 1040s. And this year, in an effort to crack down on fraud, the feds are delaying refunds to people claiming the earned-income tax credit.
We’re confident the numbers will resume their usual trajectory soon enough.
But that’s not the whole story today. The rest of the story is far more interesting… and we daresay the president’s most loyal supporters ignore it at their own peril.
The rest of the story is this: The Deep State is monkeying with Uncle Sam’s books to push the government toward an imminent default and spark a crisis for Trump.
You won’t see that looking at the Debt to the Penny page. Our own David Stockman — who knows this stuff inside-out, having been Reagan’s first budget director — tells us you have to go to a more obscure portion of the Treasury’s website, the Daily Treasury Statement.
Under an entry that says “Federal Reserve Account — Closing balance today,” you find the Treasury’s cash balance. These are the liquid funds Uncle Sam has to work with on any given day.
For much of last year, the number had been rising. By Oct. 24, when it seemed Trump was toast, the total was $435 billion.
As of last Thursday, the most recent report available, the total had dwindled to only $34 billion.
If you’re wondering whether this drain on Uncle Sam’s funds has something to do with the pending expiration of the debt ceiling, the answer’s YES. It has everything to do with it.
Remember… President Obama cut a “zombie budget” deal with House Speaker Paul Ryan in October 2015, suspending the debt ceiling until after the election. The debt ceiling comes back into force on Wednesday.
Throughout 2016, the Obama Treasury Department was building up that closing balance on the Daily Treasury Statement. “The department’s bureaucrats,” David explains, “had been issuing debt hand over fist and piling up a cash hoard, apparently, for the time after March 15, 2017, when President Hillary Clinton would need to coax another debt ceiling increase out of the Congress.”
But since the election, the career civil servants have reversed the process. They’re tapping this cash hoard to pay down maturing Treasury debt.
“The bureaucrats,” says David, “have apparently decided to sabotage what they undoubtedly believe to be the usurper in the White House. To this end, they’ve been draining Trump’s bank account rather than borrowing the money to pay Uncle Sam’s monumental bills.”
What’s more, this drain on the Treasury’s cash hoard is one of the reasons stocks have been flying so high since the election.
Wall Street owns scads of Treasury debt. If the Treasury is paying that off as it matures, that’s a huge new pile of money Wall Street can put to work bidding up stocks.
“Uncle Sam pumped a veritable tsunami of cash into the canyons of Wall Street,” David says. “And it was that ‘stimulus’ which fueled the Trump-O-Mania rally — even as the talking heads peddled the Trump Stimulus meme and the second coming of Ronald Reagan.”
But that stimulus “begins to die on Wednesday, March 15” David explains, “and the screaming aberration of the past four months — that is, a broke Uncle Sam paying down his debt — goes into reverse.”
As always, the Treasury can perform further accounting tricks to stay under the debt ceiling… but David says those tricks will have run their course not long after Memorial Day. After that, if you’ve been reading us for a while, you know David expects an ugly showdown between the White House and fiscal “hawks” in Congress.
And don’t forget… Not only does the debt ceiling come back into effect on Wednesday, the Federal Reserve also meets on Wednesday to raise interest rates.
Result: “Both the Fed and the U.S. Treasury,” says David, “will be draining hundreds of billions from Wall Street on a recurring basis for the first time in 20 years.”
If you suspect that will send the stock market into a tail spin, David says you’re right… but it’s even worse than that.
The 5 Min. Forecast