The Impending Financial Doom

In July the federal government had a $98 billion deficit which means the government spent 98 billion dollars more than it took in. People with even the most basic of math skills know that this means we incurred more debt and therefore, our debt amount went up by 98 billion dollars.

But that did not happen, at least on paper. The US Treasury reports that we had a 98 billion dollar deficit for July but the national debt remained EXACTLY the same every day of the month. They said we spent more than we took in but that the amount of debt we had did not increase. This is impossible and the accounting tricks being implemented will lead to catastrophic economic doom.

Treasury Secretary Lew said he has implemented the standard compensatory measures. Those generally involve stopping the government’s portion paid to employee’s retirement and using the money in employee’s Thrift Savings Accounts (TSP), at least the portion in government securities, to pay the bills (along with other hocus pocus measures). This could be offsetting the deficit numbers and making it look like the debt did not increase but it only looks that way.

This might look good on paper and it might solve a short term problem but the money must be paid back and when it is paid back it will be another huge hit to the national debt.

Another problem is that by doing this the Treasury Secretary is going above the debt limit established by Congress and signed by Obama. It might not look like it on paper but he has exceeded the limit and is using compensatory measures to make it look like he is not. The problem is that he is hiding the fact that the debt ceiling has been passed in hopes that it will be raised and he can pay back the money.

If there is a prolonged fight or the ceiling is not raised then we will be in default and all those places he moved money from will not get paid.

Yes, this has been done in the past. These compensatory measures are usually for a very short time while legislation is being worked out and signed.

The problem now is that the debt has been the very same since the first day of July. Not only did the debt not increase in July but it has not increased in all of August. This means he has hidden debt for a month and a half and if the course remains unchanged it will be well over two months (closer to three) before the situation is resolved.

In all that time nearly 300 BILLION dollars in debt will be incurred and need to be replaced.

Make no mistake folks, we are in default. The fact that the numbers on paper do not reflect it does not change the fact that we have spent more than we have and more than we are allowed to by law.

Treasury is robbing Peter to pay Paul right now but Peter will need to be paid back. A default on all that retirement money that employees have paid in will not be well received.

Right now the country is using fuzzy math to hide the fact that the debt ceiling has been crossed and we are in default.

When it comes time to pay the piper all hell will break loose.

Cave canem!
Never surrender, never submit.
Big Dog


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