Trillions of sounds go by so quickly that it’s hard to watch.
Written by Wolf Richter of Wolf Street.
According to Treasury Department statistics this afternoon, the total U.S. national debt has increased by $1.58 trillion since the debt ceiling was lifted and $2.16 trillion from a year ago to $33.04 trillion. Ta.
Even though the economy is growing at a reasonable pace, a huge amount of new debt has been accumulated in a surprisingly short period of time. Congratulations, America π₯
This $33.3 trillion debt consists of two piles of Treasury bills.
$6.8 trillion in non-marketable Treasury securities. They are not traded on the market. These are held by U.S. government pension funds, Social Security trust funds, and others, and some are held directly by Americans in the form of popular I bonds and less popular EE savings bonds. This balance has remained largely unchanged since the debt ceiling, and is up $210 billion from a year ago.
Marketable securities amounted to $26.2 trillion. These are held and traded by people all over the world, from ordinary people to financial institutions, including large funds and central banks. After releasing $783 billion under QT, the Fed is now down to $4.98 trillion.
Since the debt ceiling was lifted on June 2, the amount outstanding of marketable securities outstanding has surged by $1.51 trillion, the largest additional issuance in three and a half months, and an increase of $1.9 trillion from the same period last year. .
Average interest rates rise to highest level since 2011. Newly issued Treasury securities to fund new deficits and replace maturing securities have a lower value than securities issued many years ago that are now maturing and need to be replaced. It comes with a high interest rate.
As a result, the average interest rate paid on all interest-bearing Treasury securities rose to 2.92% at the end of August, the highest average interest rate since 2011, according to the Treasury Department. But wait… Since 2011, his debt has more than doubled. It has jumped 120% since September 2011.
However, this average rate is still cheap considering that Treasury bills currently yield about 5.5%, 2-year bonds yield over 5.0%, and 10-year bonds yield 4.3%.
$2.2 trillion in additional debt incurred in the past 12 months It reflects the current tsunami of deficit spending. Deficit spending stimulates the economy, so while this is great news for economic growth on its own, this additional demand also fuels inflation, making the debt mountain an unmanageable horror show for the future. Masu.
When a government runs a deficit, with debt soaring by $2.2 trillion in 12 months, the deficit typically widens even more as spending increases and tax revenues plummet, but in the event of a recession, What will happen to the debt? It was a rhetorical question.
How much will interest payments eat up tax revenue? That is the most important measure. The measure of tax revenue in the table below (total tax revenue less social insurance contributions and other factors) is the amount available to pay for regular government expenditures, including interest. This ratio jumped to 36.2% in the second quarter. We discussed this and other factors in interest burden here.
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