April 25, 2006

Wanna freak yourself out?

Visit the real-time National Debt Clock

Whoops! There goes another million!
04/21/2006 $8,349,970,836,065.88
09/30/2005 $7,932,709,661,723.500
9/30/2004 $7,379,052,696,330.320
9/30/2003 $6,783,231,062,743.620
9/30/2002 $6,228,235,965,597.160
9/28/2001 $5,807,463,412,200.060
9/29/2000 $5,674,178,209,886.860
9/30/1999 $5,656,270,901,615.430
9/30/1998 $5,526,193,008,897.620
9/30/1997 $5,413,146,011,397.340
9/30/1996 $5,224,810,939,135.730
9/29/1995 $4,973,982,900,709.390
9/30/1994 $4,692,749,910,013.320
9/30/1993 $4,411,488,883,139.380
9/30/1992 $4,064,620,655,521.660
9/30/1991 $3,665,303,351,697.030
9/28/1990 $3,233,313,451,777.250
9/29/1989 $2,857,430,960,187.320
9/30/1988 $2,602,337,712,041.160
9/30/1987 $2,350,276,890,953.00


Anonymous said...

Meaningless. We aren't going to pay it off. EVER. We will eventually tell the world, 'too bad, we aren't paying you back'. What are they gonna do?

keith said...

deflate our dollar to 10c on the current $1 and pay it off with worthless paper


Opened Eyes said...

No, the debts must be deflated. Too much credit (the housing bubble was caused by this) always leads to deflation. The dollar will strengthen.

The Fed cannot allow hyper-inflation. That would lead to politicians hanging from lampposts.

Anonymous said...

Sure, the dollar will strengthen when all the central banks start selling them tomorrow. They are hiding the M3 money supply because they don't want you to know how fast the supply of dollars is shrinking. OK, I'll put the bong down now.

keith said...

opened eyes - I see no scenario where the dollar strenghtens. Please lay yours out


1) foreign banks dump dollars for more secure reserves (gold, euros, whatever)

2) record trade imbalances cause other currencies to appreciated and ours to depreciate to bring the imbalance more into balance

3) out out of control debt, deficits and spending cause need to print wild amounts of dollars (M3) thus depreciating their worth and increasing inflation

4) We have to pay off the soon to be $10 Trillion debt somehow. Best way? print 'em up!

Opened Eyes said...

If you believe in inflation, then you should buy as many houses as you can, and stop smoking that stuff.

If the politicians have a choice in inflation, which hurts them and their rich friends, who buy treasury bonds, or hurting the hoi polloi thru deflation, which will they choose?

A house paid off with no plans to sell it isn't hurt by deflation.

Anonymous said...

The bond king says it's inflation - I agree. To the moon Alice!


Anonymous said...

Sorry - the link got truncated - it's Bill Gross' March commentary. Anyway - the gist of the inflation argument follows, after which he gets one last dig in, reinforcing his claim that the Bush folks are the gang that can't talk straight:

"Instead, our solutions more likely will pursue an easier trail, characterized by currency devaluation, the inflating away of long-term pension liabilities, and the payment of rising healthcare expenses via higher personal and corporate taxes. Investment markets in the United States will not ultimately prosper under such an increasingly odorous environment. It is only sensible, therefore, to diversify globally. Sorry for the straight talk folks, but don’t you think it’s about time?"

cereal said...

what's the problem? we'll just refi and pull a little cash out

chicote said...

If the politicians have a choice in inflation, which hurts them

That's some kind of joke, right?

Inflation benefits those closest to the source of the newly created money - the government and the large banks.

Anonymous said...

"If the politicians have a choice in inflation, which hurts them and their rich friends, who buy treasury bonds, or hurting the hoi polloi thru deflation, which will they choose?"

Are you joking? That's why the powers that be love FIAT. Debts to high? Just hit "Print". It is by far the less painful solution. Besides, the rich are not fooled by the inflation gambit and have positioned their assets to benefit from it (oil, metals, foreign assets).

Anonymous said...

You guys are right that housing is going to crash -- in REAL terms -- i.e., in terms of today's dollars relative to some benchmark like gold.

Yet in NOMINAL terms -- actual U.S. dollars -- real estate will just keep on rising.

All those waiting for the "crash" are going to be sorely disappointed to wake up in 2011 and find that housing prices are up another 50%, while the value of the dollar has been wiped out by relentless inflationary money creation by the Fed.

In this environment it actually makes sense to own real estate and borrow against it to the hilt -- as many have done -- and then just hang on and pay it back in inflated worthless dollars down the road.

You guys are banking on DEFLATION, which is a possibility, but by no means a certainty as you're assuming. It's my guess that with trillions and trillions of dollars in debt, the U.S. has no choice but to continue on its course of huge inflation. And if that's the case, it makes sense to borrow right along with them, in today's dollars, and pay it back later in tomorrow's worthless dollars.

If you're really a dedicated "housing panic" acolyte, then the price of gold has to enter into your equation. If it's not, then I'm afraid you're going to be the bag-holder, not all those who own real estate, who already are sitting on a great inflation hedge.

foobeca said...

Our debt is a lot higher than that. It's more like $48 TRILLION if you include unfunded liabilities like socialist stupidity and mediscare.

Anonymous said...

Deflation of any asset is a strenghening of the dollars power.

My housing and gasoline dollars are worth half or less than what they were 5 years ago.

My labor dollars are worth roughly the same. I have taken a raise in volume of orders I process. (work harder for less and pay more taxes)

I have twice as many dollars from labor and selling dollar assets during the inflation.

I am in the metals bubble play trying to time that market.

I need recession to win long term as all my assets eventually end up in cash.

Playing the economy is no different than puting it all on black in Vegas.

Joe Zychik said...

Another reason for deflation:

Taking the GATA scenario that the Central Banks sold off their gold, then to protect themselves from being replaced by gold, the Central Banks will raise interest rates until gold crashes as it did in the last peak up to $850.

Also, in 1980's gold runup, US was a creditor nation, the world owed the US money. The rest of the world profited by our inflation because they paid us back in cheaper $.

The US is a debtor nation now and issuer of the world's reserve curreny. Any attempt at hyperinflation, (gold at $3k per ouunce, etc.) would be the equivalent of world war. We would be destroying entire nations with our printing presses. Won't happen any time soon.

Bubble, bubble, bubble. The consumer was blind to the housing bubble. Now the consumer is blind to the commodities bubble. After housing crashes, bye, bye commodities because commodities are going up in reaction to consumer spending.

When the G-7 says the world economy is healthy, I read it to mean, "We can raise interest rates without causing a recession." Or, "We can crash the gold market without creating a recession."

Very storng likelihood that interest rates will continue to rise until the commodities market crashes.

Anonymous said...

Man the printing presses - full speed ahead!

Inflate or die!

Take yer pick.

keith said...

Death, taxes and gold

Everything else is suspect

chicote said...

Anon 8:56 am said:

You guys are banking on DEFLATION


It's called a crash. Inflation of the money supply and manipulation of interest rates is the primary cause of booms and busts. The boom/bust rotates around to different asset classes, keeping the overall average of all prices on a relatively steady increase. We're now rotating out of housing. It will crash, and it will hurt.

Opened Eyes said...

Rich people don't buy gold; the market is too small. The rich buy bonds.

Speculators buy gold, and have run up the price. All the gold in the world is equal to one mid-sized company.

Anyone who sees inflation in the future should be buying houses.

I know betting on inflation or deflation seems like playing red or black in roulette, but it is the most important question in the world today.

Austrian economics makes the most sense to me, so I'll have to go with deflation, even tho' its been wrong so far. At least I sold my house for a double.

I wish good luck for all those who value freedom on this board, and ruin on the flippers and statists who look to gov't to save them.

keith said...

opened eyes - I'm just not following your argument

House prices are crashing because of supply and demand issues. Do we agree on that?

If you believe a house is a store of value, where it'll take more depreciated dollars to buy one, I'm ok with that idea too.

However, it'd be a wash for a US buyer. His paper currency falls by x, and the house rises by x, it's a net zero.

that's why historically houses have indeed been a bad investment - they've just kept up at best nationwide with inflation. Inflation adjusted they're a non-event.

Help me out here. Why buy a US house with US dollars as a hedge? Why not buy a worldwide commodity (gold, oil) or foreign stocks or currency?

chicote said...

Anyone who sees inflation in the future should be buying houses.

Ugh. It just doesn't work that way. There will be a bust, BECAUSE of inflation in the money supply.

You say:

Rich people don't buy gold

Yet in the same post, you say:

Austrian economics makes the most sense to me



Opened Eyes said...

Wishing gold were a medium of exchange right now doesn't make it so.

Maybe it will be in the future, but right now it is a commodity whose price has been raised by speculators.

I won't pretend gold is money when it isn't, at least right at this moment. In the future, after some sort of economic collapse, gold no doubt will be money. But for now:


(I do own gold coins just in case I am wrong)

Anonymous said...

The politicians will never allow deflation to take hold in the U.S. economy. It is much easier to inflate away their debts and that is what governments throughout history have done in similar circumstances. People with fixed rate debt will make out like bandits as they can pay it off with inflated dollars. If the feds devalue the dollar by a factor of 10 and wages adjust similarly, that $4000 mortgage only costs $400 a month.

The downside is gasoline might run $20 a gallon and that Toyota Corolla will cost $150K.

borkafatty said...


Doing away with the taxes that go to build and maintain highways is stupid, even for a couple of months! Eliminating freebies for the oil companies won't "pay" for this tax holiday, because WE DON'T HAVE THE MONEY TO BEGIN WITH!!

Tax credits and subsidies for big oil is senseless, they should be permanently repealed and big oil should pay higher taxes on profits from oil purchased at over $40 per barrel.

The only way the oil companies should get any sort of a break is if they are using profits to further research and developement of alternative, renewable energy.

autofx in Phx said...

I am in the metals bubble play trying to time that market.

Metals bubble? hahahahaha

Dude, apparently you wouldn't know a bubble if it rode up behind you on a big white horse and smacked you on the butt with a banjo!

We're nowhere near a metals bubble yet!


autofx in Phx said...

What I'm trying to say is: buy metals on dips for several years to come, watch for the classic signs of a bubble top, then sell.

If that's what you're talking about when you say "bubble play", then you're cool.

Peter Schiff does a nice job of outlining the signs of a bubble top, and it's even a little funny.

autofx in Phx said...

Here's the link again, since the original post truncated it.


Anonymous said...

people have been "freaking out" over this since the 1980's and the doom forecasters have been wrong.

brokersleaveyoubroke said...

"Meaningless. We aren't going to pay it off. EVER. We will eventually tell the world, 'too bad, we aren't paying you back'. What are they gonna do?"

Well, the first thing they would do is stop accepting US dollars for anything. We would then lose most of our oil supply and the economy would collapse. All American assets in other countries would be siezed which would cause most large companies to collapse. The world bank and the IMF would surely collapse. The world economy is based on the American consumer. If the American consumer doesn't have money that's worth anything in the rest of the world then the world economy goes into severe depression. I hardly think the national debt is meaningless.

Anonymous said...

"Well, the first thing they would do is stop accepting US dollars for anything. "

Umm, the U.S. dollar is the reserve currency in most of the world (for now), so many countries have no option to "stop accepting" it because it's vital to THEIR economic well being.

That said, we could eventually see a move away from the dollar, but it will not be sudden. If China, Japan, and Korea stopped buying our debt, THAT would cause a crisis because it would shoot interest rates here through the roof very quickly.

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