debt ceiling

Treasury Department Issues Reminder About Debt Limit Deal Expiration

“They are going to be in a crisis within weeks. The debt ceiling was suspended arbitrarily until March 15. When it comes back into effect there will be $20 trillion of debt. And before they can do anything on all of this stimulus they’re talking about they’re going to have to raise the debt ceiling and where are the votes going to come from? It’s going to make 2011, if you remember the debt ceiling crisis in 2011, look like a Sunday school picnic. We’re in bad shape.”

-David Stockman, Director of the Office of Management and Budget under President Reagan, speaking on the FOX Business Channel on January 25, 2017

Last Wednesday, the U.S. Department of the Treasury issued the following reminder about the March 15 expiration of the debt limit deal reached two years ago. From a press release on their website:

The debt limit places a limitation on the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. The debt limit does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past.

The Bipartisan Budget Act suspended the debt limit through March 15, 2017. If Congress fails to increase or further suspend the debt limit by March 15, Treasury can take certain extraordinary measures to continue to finance the government on a temporary basis.

Extraordinary measures will allow the government to continue to meet its obligations for a period of time after March 15. That said, it is impossible to provide a precise forecast as to how long the extraordinary measures will last. Treasury will provide greater clarity at a later date regarding how long extraordinary measures will allow Treasury to continue to borrow…

(Editor’s note: Bold added for emphasis)

So how is this setting up for the next couple of weeks?

According to MarketWatch’s Greg Robb on on February 1:

During the Obama administration, Republicans in Congress sought to use the debt limit vote to force spending cuts.

Treasury Secretary nominee Steven Mnuchin said he would like to see Congress act to raise the debt limit “sooner rather than later.”

But Trump’s choice to head the Office of Management and Budget, Mick Mulvaney, was a leader of the House Republican effort to use the debt limit vote as a lever to reign in spending…

(Editor’s note: Bold added for emphasis)

Stay tuned folks…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Robb, Greg. “Raising the debt ceiling is now Trump’s problem. MarketWatch. 1 Feb. 2017. (http://www.marketwatch.com/story/raising-the-debt-ceiling-is-now-trumps-problem-2017-02-01). 7 Feb. 2017.

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Peter Schiff: U.S. Will Become Either Greece Or Weimar Germany

“It’s hard to imagine what the country will look like when the dollar crashes. But one thing is certain; it will bear little resemblance to the America we know today.”

-Peter Schiff, CEO and Chief Global Strategist of Euro Pacific Capital, in an interview posted on The Daily Caller website, October 17, 2013

Yesterday we heard from two “crash prophets”– Dr. Marc Faber and Jim Rogers on finance and investing. Today, I want to bring up a third “prophet”- Euro Pacific Capital’s Peter Schiff- and talk about an interview he just did with Faith Braverman over at The Daily Caller website. Posted last Thursday, Braverman asked Schiff- who correctly predicted the U.S. housing crash and “Panic of ’08”- about what Americans should be on the lookout for as the real U.S. financial crash draws closer. Schiff advised:

You gotta follow the foreign exchange market, the value of the dollar vs. foreign currencies. The Federal Reserve keeps buying bonds to keep interest rates from rising. We have no choice but to default if creditors want their money back. If interest rates go up, we can’t afford that. That is why the Fed feels that it has to keep interest rates down at all costs. So the Federal Reserve prints more money to buy up bonds. That puts pressure on the dollar. Foreign central banks than buy those dollars to prevent their currencies form rising, which imposes costs on their own population, as they are forced to absorb our inflation.

There will be big spikes in commodity prices, like energy and food. Ultimately, we will be forced to make even bigger cuts than the ones we would have made now had the debt ceiling not been raised. Then we’ll be Greece, essentially. If we refuse, and keep spending, and the Fed prints even more money to buy the bonds no one else will buy, we’ll destroy the dollar and then we’ll be Weimar Germany. When the dollar collapses, what does that mean? Hyperinflation means you will have nothing. Your life savings will be worth nothing. We’re celebrating solving the debt ceiling, but we’ve only kicked the can down the road and removed the barrier between us and fiscal responsibility.

Later on in the exchange, the former U.S. Senate candidate suggested Americans should “get gold, silver, foreign assets, and buy up things that will have value after the dollar crashes.”

Braverman did a nice job on this interview, which can be read in its entirety on The Daily Caller website here.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Quote For The Week

“If you didn’t notice, gold shot higher by 4% in the wake of Congress announcing its non-solution to the government shutdown and the debt ceiling. The circus clowns did nothing more than agree to temporarily raise the debt ceiling and push the fight back a few months. The gold market sees this for what it is: a continuation of the same American fiscal imprudence that got us to this place to begin with. Nothing ever changes in Washington. Same crap; different day. Gold prices have come down in the last year because the speculators fled and the price fell to its natural level. But want to know why the price hasn’t crashed? Look no further than your local congressional chimp.”

-Erika Nolan and Jeff Opdyke in the October 20 issue of the Sovereign Digest, a weekly publication from The Sovereign Society, a Delray, Florida-based organization which provides its global membership trusted sources of information about overseas investing, asset protection, and currency trading

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Jim Rogers: ‘Possible That Gold Will Go To Between 900 and 1,000’

On September 18, investor, author, and financial commentator Jim Rogers chatted with host Lauren Lyster of Yahoo! Finance’s The Daily Ticker. Gold was one of the topics they discussed. From their exchange:

LYSTER: What about gold? Because you were dead on. You said gold could go to 1,200, gold could go to 1,100, it’s a 12-year bull market, that’s not normal. It did exactly that. It went to about 1,200. Now it’s above 13. Where do you think it goes though? Because you also said that it really needed to shake out all the faithful diehards. That it can go as low as 900- a 50 percent correction wouldn’t bee abnormal. So do you think gold still has a lot lower to go?
ROGERS: Well, I’m delighted you remember. My goodness. Wow, I’m very impressed. Yes, I have not bought gold- yet. I mean, I bought a little bit when it was at 1,200, in case. But, in my view, it’s likely, it’s probable, it’s even, well let’s say, possible that gold will go to between 900 and 1,000. If it does, if it does, I hope I’m smart enough to buy a lot more.

Lyster went on to say:

A lot of the bearish predictions that had people buying gold haven’t played out and don’t seem to be on the horizon anymore.

Regrettably, it sounds like Lyster has been partaking in the Kool-Aid being doled out by the politicians and central bankers.

Based on a waffling “recovery” marked by a federal funds rate still near zero, years of trillion-dollar federal budget deficits, a $16.7 trillion federal borrowing limit being reached, significant part-time as opposed to full-time national job creation, an unemployment rate falling because Americans are giving up looking for work, and the Fed’s refusal to take away the punch bowl just yet and sustain the massive money printing going on, one could argue that gold’s fundamentals not only remain intact, but keep getting stronger.

“Bearish predictions… haven’t played out and don’t seem to be on the horizon anymore.” Hogwash. The threats to our economy and larger financial system that made themselves known during the “Panic of ’08 still linger on 5 years later and have never been resolved- only papered-over for the time being.


“Gold Rallies on Fed’s Taper Delay: Jim Rogers Forecasts a Drop to $900 Ahead”
Yahoo! Finance Video

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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U.S. Treasury: Debt Limit Reached By Mid-October

U.S. Treasury Secretary Jacob Lew warned Congress yesterday that the United States will hit its $16.7 trillion debt ceiling in mid-October. Lew wrote in a letter addressed to Speaker of the House John Boehner:

I am writing to provide additional information regarding the Treasury Department’s ability to continue to finance the government, and the extraordinary measures we have undertaken in order to avoid default. On May 17, I wrote to inform you that the U.S. government has reached the statutory debt limit and had begun to implement extraordinary measures. As I stated in that letter, Congress should act as soon as possible to protect America’s good credit by extending normal borrowing authority well before any risk of default becomes imminent.

Based on our latest estimates, extraordinary measures are projected to be exhausted in the middle of October. At that point, the United States will have reached the limit of its borrowing authority, and Treasury would be left to fund the government with only the cash we have on hand on any given day. The cash balance at that time is currently forecasted to be approximately $50 billion…

You can read Secretary Lew’s entire letter on the Treasury Department’s website here (.pdf file).

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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U.S. Reaches $16.4 Trillion Debt Limit

You may have been distracted by events related to New Year’s Day and negotiations over the “fiscal cliff” to notice that the United States reached its authorized debt ceiling of $16.394 trillion on New Year’s Eve. Rich Barbieri and Jeanne Sahadi reported on the CNN Money website Monday morning:

It’s official: U.S. debt reached its legal borrowing limit Monday, giving Congress about two months before it must raise the debt ceiling or risk causing the government to default on its bills and financial obligations.

“I can confirm we will reach the statutory debt limit today, Dec. 31,” a Treasury Department official said Monday.

As for increasing the nation’s debt ceiling yet again, U.S. President Barack Obama doesn’t want debate from Congress on the subject. From Reuters this morning:

President Barack Obama vowed on Tuesday to avoid a repeat of last year’s divisive fight with Congress over an extension of the nation’s borrowing authority.

“While I will negotiate over many things, I will not have another debate with this Congress about whether or not they should pay the bills they have already racked up,” Obama said in remarks in the White House.

“I will not have another debate.” Hmm. Back on December 5, Zachary Goldfarb wrote on the Post Politics blog on the Washington Post website:

As part of the fiscal cliff negotiations, Obama has proposed effectively ending the need for Congress to periodically raise the debt limit, which Republicans have rejected.

I wonder if this proposal won’t be pushed again in the near future?

By Christopher E. Hill, Editor
Survival And Prosperity (http://www.survivalandprosperity.com)

Sources:

Barbieri, Rich and Sahadi, Jeanne. “It’s official: U.S. hits debt ceiling.” CNN Money. 31 Dec. 2012. (http://money.cnn.com/2012/12/31/news/economy/debt-ceiling/) 2 Jan. 2013.

“Obama Debt Ceiling Statement: Limit Increase Not Up For Debate After Fiscal Cliff Showdown.” Reuters. 2 Jan. 2013. (http://www.huffingtonpost.com/2013/01/02/obama-debt-ceiling-fiscal-cliff_n_2394164.html). 2 Jan. 2013.

Goldfarb, Zachary A. “Obama on debt ceiling fight: ‘I will not play that game.’” Post Politics. 5 Dec. 2012. (http://www.washingtonpost.com/blogs/post-politics/wp/2012/12/05/obama-on-debt-ceiling-i-will-not-play-that-game/). 2 Jan. 2013.

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Peter Schiff Warns Obama Debt Limit Proposal Could Shock America’s Creditors ‘Into Reality’

“The U.S. runs out of federal borrowing authority around the end of the year, but the Obama administration can use special measures to extend borrowing through late February or early March. As part of the fiscal cliff negotiations, Obama has proposed effectively ending the need for Congress to periodically raise the debt limit.”

-Washington Post website, December 5, 2012

Peter Schiff, President and Chief Global Strategist of Euro Pacific Capital, talked about the looming U.S. “fiscal cliff” and a White House proposal to give the President the power to raise the nation’s debt “ceiling” as needed in his December 3 entry on The Schiff Report YouTube video blog. Schiff, who correctly-predicted the bursting of the U.S. housing bubble and 2008 global economic crisis, zeroed in on the debt limit proposal:

This could be a moment where our creditors maybe get shocked into reality. To understand the situation that they are in, that we are in. That there is no limit. That we will borrow money until we can’t do it anymore. That we’re not going to do anything about this crisis. We’re not going to do anything to diffuse this ticking bomb. It’s simply going to go off. And I think our creditors are going to want to put as much distance as they can between themselves and the explosion. They’re going to want to sell dollars. They’re going to want to sell debt denominated in dollars. What is that going to mean? A weaker dollar and higher consumer prices for Americans. It ultimately means higher interest rates for Americans. It means the rug is going to be pulled out from the slowing economy. It means we’re going to go over the Mother of All Fiscal Cliffs, and one that is impossible to avoid.

So, my advice is don’t wait for that. Get out of your dollars. I’ve been saying this for a while, but I think the urgency, and the time with which to do it, is going to be running out. So you get out of your dollars. Get out of any debt denominated in any dollars. Because we’re not going to pay our bills, we’re going to inflate them away, which is the same thing as default. So you don’t want to ride out that inflation. You want to get out of U.S. currency. You want to look at foreign currencies where the governments are much less irresponsible. Look at real money. Look at gold and silver. Look at foreign stocks if they’re suitable that pay dividends. Do whatever you can to get out of Dodge, because just when the government assures you that there’s nothing to worry about, that’s the time where you need to worry the most.


“Debt Ceiling & the Fiscal Cliff”
YouTube Video

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

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Christopher E. Hill, Editor

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