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Has the U.S. Treasury Already Exceeded the Debt Limit?


July 25, 2013
Ron DeLegge, Editor

U.S. federal debt has been stuck at $16,699,396,000,000.00 for 68 straight days, according to the Daily Treasury Statement on July 24. That amount is exactly $25 million less than the legal borrowing limit of $16,699,421,000,000.00 set on May 17, 2013. But that’s only part of the story.

A closer look at the numbers actually shows the U.S. Treasury has already blown past the federal legal borrowing limit! And the mainstream media, as usual, is out to lunch. The table below shows how “Total Public Debt Outstanding” is already $38.82 billion above the statuary debt ceiling and now at $16,738,106,000,000.00.

The yield on 10-year U.S. Treasuries (^TNX) has surged 51% over the past three months and 84.07% over the past year alone. That move has taken the 10-year yield from 1.40% to 2.61%. And bond investors – especially owners of long-term debt - are beginning to see something they haven’t seen in a while; hefty losses. 

AUDIO: Winning the Battle of Excessive Debt and Rising Rates

Joining these bond losers is the all-wise, all-knowing Federal Reserve, who, courtesy of its massive Treasury holdings (NYSEARCA:TLT), suffers paper losses of approximately $3 billion for every 0.01% rise in interest rates. Maybe the omnipotent Fed isn’t so omnipotent after all.

Meanwhile, leveraged short Treasury ETFs like the ProShares UltraShort US Treasury 20+ Bond ETF (NYSEARCA:TBT) and the Direxion Shares US Treasury 20+ 3x Bear Shares (NYSEARCA:TMV) have jumped between 12% to 16% over the past few months. Not bad when considering the total U.S. bond market (NYSEARCA:AGG) has lost around 3% while long-term U.S. Treasuries have fallen an even harder 10% year-to-date.

As the next debt ceiling debate takes center stage, we can’t help but wonder why bother? If Detroit D.C. has already subversively exceed its legally mandated borrowing limit what’s the point?

The ETF Profit Strategy Newsletter uses a combination of technical analysis, market sentiment, and common sense to be on the right side of the market. Since the beginning of the year, 78% of our ETF picks have turned a profit and 525% was our biggest gainer. (through 6/30/13)

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P.S. Our just released August 2013 newsletter covers the rising yield curve and its meaning, our mega investment theme report, and our popular global equity map.  

CommentsAdd Comment

Brooklyn said on September 30, 2013
  I stated brfoee, the stock market rally over the past 14 months may have spurred economic growth more than monetary and fiscal policies, although the recovery has been weak.Over the next year, home prices may need to rise to maintain the expansion, or accelerate growth, which would reflect increased demand and eventually more homebuilding. Also, there may be a wealth effect and a strengthening of weak household balance sheets.Median home prices up in 1Q4 hours agoThe NAR is projecting prices will increase "very modestly" in the second half of this year, assuming unemployment and the economy don't take a turn for the worse.The national median price was $166,100, or 0.7 percent below the first quarter of last year. Sales of foreclosures and other distressed properties made up 36 percent of all sales.With the housing tax credits now over, many experts anticipate home sales will soften in the near term, and that could syphon some of the momentum in home price increases.Prices also could be hurt as banks unload their backlog of foreclosed homes. And despite rising prices, nearly a quarter of all U.S. homeowners with a mortgage still owe more on their loans than their homes are worth.That's why many housing experts project home prices will remain almost flat for the next two years, according to a survey of leading economists by the Associated Press last month.
Susa said on September 30, 2013
  ARMEGEDDONNNNNNN!!!!! Run for the hills. Get out while you can! OK I've got that off my chest now. Being out here on the west coast is really wacky. I can't hdalne the market's day being over by the end of lunch hour. Needless to say, I was a little shocked when I got back to my hotel room around 2 pm this afternoon (SEA time). I just looked to see if my UYGJQ's had dropped to the point where I could take an 80% profit to try to follow your line of thinking, but they are still at 70 cents. I cleared $1.95 after commissions, so I need them to drop a little further and I will consider a buy back. Of course, the market may just as well rise 500 points tomorrow when they announce some NEW bailout plan that is even better than the last one!
Flangerty said on August 05, 2013
  Don't forget to add in the Medicare and Social Security liabilities to the US Government's tab. In reality, the Federal Debt load is over $50 trillion in financial liabilities when we include this into the mix.
CRANKY said on July 31, 2013
  Tim Geither should go directly to jail. He's a traitor.
Narlly CPA said on July 29, 2013
  The numbers are so big everyone including the US Treasury has lost count. Nobody at the Treasury even has a calculator that goes that high. It's the beginning of the end. Higher rates will cripple the ability of world governments to service their excessive debt. It's the biggest no brainer in the history of mankind.
Brent said on July 27, 2013
  It's the end of the world as we know it, and I feel fine. Oh well, it was fun for a while there.
chuck sedlacek said on July 27, 2013
  collapse is not a matter of if, but when.
dallasdan said on July 26, 2013
  Americans are the biggest suckers in the world. The Obama administration acts with impunity, breaking any law it chooses and the country lays back and takes it in the ass.
Alan Beasley said on July 26, 2013 says today the debt is $16,877,975,000,000 and climbing
Karl said on July 26, 2013
  Why should this surprise anyone. If you vote Republican or Democrat you get the same people who went to the same schools and hobnob together at the same parties and fundraisers. This is an extension of the crony capitalism forged years ago.

The insanity required to have faith in the "full faith and credit" of the United States is in no way different than the kind of insanity/faith required to strap a bomb on your chest and walk into a public place and blow yourself up.

The plain and simple truth is that once anyone has even a glimmer of understanding of how the Fed works and their rational mind does not begin to scream with the insanity of it all, that person is either mentally incapacitated in some grievous way or they are so pathetically stupid that their continued existence is based solely on the kindness and charity of others as well as a good ER staff at their local hospital.
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