Blink! U.S. Debt Just Grew by $11 Trillion – Bloomberg
Dangerous Growth The U.S. fiscal gap, calculated (by us) using the Congressional Budget Office’s realistic long-term budget forecast — the Alternative Fiscal Scenario — is now $222 trillion. Last year, it was $211 trillion. The $11 trillion difference — this year’s true federal deficit — is 10 times larger than the official deficit and roughly as large as the entire stock of official debt in public hands. This fantastic and dangerous growth in the fiscal gap is not new.
In 2003 and 2004, the economists Alan Auerbach and William Gale extended the CBO’s short-term forecast and measured fiscal gaps of $60 trillion and $86 trillion, respectively. In 2007, the first year the CBO produced the Alternative Fiscal Scenario, the gap, by our reckoning, stood at $175 trillion. By 2009, when the CBO began reporting the AFS annually, the gap was $184 trillion. In 2010, it was $202 trillion, followed by $211 trillion in 2011 and $222 trillion in 2012.
Has The Debt Jubilee Already Started?
There are three fairly radical ideas floating around the monetary policy world right now. The first is economist Ellen Brown’s belief that governments should stop borrowing money and simply create the currency they need, thus bypassing central banks and government bond markets. The second is Australian economist Steve Keen’s debt jubilee, in which governments give newly-created money to individuals with which to pay back their debts, in the process resetting the system with lower leverage. The third is that trillion dollar platinum coin thing, where Washington just conjures that much money out of thin air and uses it to evade statutory debt limits — which looks like an ad hoc mash-up of the first two ideas.
Until yesterday these proposals seemed like provocative curiosities, fun to think about but too far off the mainstream radar screen to become official policy anytime soon. Then reader Bruce C responded to a DollarCollapse post about the impact of rising interest expense on US and Japanese budgets:
All of the Treasury bonds owned by the Fed are at effectively zero interest because all interest payments from the Treasury to the Fed are returned to the Treasury. That actually means that total net interest expenses for the Treasury are currently decreasing with time as the Fed buys about $85 billion worth of Treasuries each month (which is about 90% of all new issuances). As long as the Fed is willing to do this the current deficit spending by the US can continue for a lot longer than most analysts think possible (I mean for decades).
I don’t know if Japan’s central bank (the BOJ) reimburses the Japanese Treasury of its income from government bonds but if it does then there won’t be any need to sell JGBs to outsiders who may demand higher interest rates. For the same reason explained above the Japanese government could literally enjoy decreasing debt servicing costs despite rising price inflation. Again, that can’t last forever but I wouldn’t hold my breath.
This got me to thinking about the way in which the Fed buying bonds and returning the interest payments resembles the three proposals above – and wondering if they’re all really the same thing accomplished with different mechanisms. In the Fed interest repayment, debt Jubilee, and trillion dollar coin strategies, the money is filtered through various intermediaries, while in the Brownian scenario it is just created and spent. But in each case, the government creates and spends money without reference to the bond market or budget deficit or anything else.
Is this debt monetization? Or the elimination of the concept of government debt?
BBC News – Antibiotic ‘apocalypse’ warning
The rise in drug resistant infections is comparable to the threat of global warming, according to the chief medical officer for England.
Prof Dame Sally Davies said bacteria were becoming resistant to current drugs and there were few antibiotics to replace them.
She told a committee of MPs that going for a routine operation could become deadly due to the threat of infection.
Experts said it was a global problem and needed much more attention.
Antibiotics have been one of the greatest success stories in medicine. However, bacteria are a rapidly adapting foe which find new ways to evade drugs.
MRSA rapidly became one of the most feared words in hospitals wards and there are growing reports of resistance in strains of E. coli, tuberculosis and gonorrhoea.
Prof Davies said: “It is clear that we might not ever see global warming, the apocalyptic scenario is that when I need a new hip in 20 years I’ll die from a routine infection because we’ve run out of antibiotics.”
Egypt marks the second anniversary of the uprising that swept Hosni Mubarak from power with little to celebrate. Deeply divided and facing an economic crisis, the nation is bracing for more protests, but this time against a freely elected leader.
President Mohamed Mursi’s opponents plan to march to Tahrir Square on Friday to vent anger at the new Islamist leader and his Muslim Brotherhood backers, whom they accuse of betraying the goals of the January 25 revolution that galvanised Egyptians in a display of national unity that has not been seen since.
“We don’t see it as a celebration. This will be a new revolutionary wave that will show the Brotherhood that they are not alone – that there are other forces that can stand against them,” said Ahmed Maher, founder of the April 6 – a group that helped ignite the uprising by using social media to organise.
via Two years since uprising, Egypt braces for more protests – World News | TVNZ.
Senator Unveils Bill to Limit Semiautomatic Arms – NYTimes.com
WASHINGTON — During a lengthy and at times emotionally wrenching news conference, Senator Dianne Feinstein of California on Thursday announced legislation that would ban the sale and manufacture of 157 types of semiautomatic weapons, as well as magazines holding more than 10 rounds of ammunition.
The bill, which Ms. Feinstein said she would introduce in the Senate on Thursday afternoon, would exempt firearms used for hunting and would grandfather in certain guns and magazines. The goal of the bill, she said, would be “to dry up the supply of these weapons over time.”
Surrounded by victims of gun violence, colleagues in the Senate and House and several law enforcement officials, and standing near a peg board with 10 large guns attached, Ms. Feinstein acknowledged the difficulty in pursuing such legislation, even when harnessing the shock and grief over the shooting of 20 schoolchildren in Newtown, Conn., last month. “This is really an uphill road,” Ms. Feinstein said.
via Senator Unveils Bill to Limit Semiautomatic Arms – NYTimes.com.
President Barack Obama may need to delay his health-care overhaul or risk “chaos” when subsidized insurance plans go on sale in October, the head of the National Association of Insurance Commissioners said.
It’s unclear how well the federal government or any of the participating states will perform on Oct. 1, when millions of Americans are supposed to begin shopping at online markets created by the law, Jim Donelon, the NAIC’s president, said in an interview at Bloomberg headquarters in New York. While the administration has shown no sign of seeking a delay, it may be in the president’s best interest, he said.
via Obama Health Law Needs Delay, State Insurance Head Says – Businessweek.
The High Price Of Understated Inflation | Zero Hedge
The reliable data which policymakers and the public need if effective solutions are to be found is not available. As Tullett Prebon’s Tim Morgan notes, economic data has been subjected to incremental distortion; Data distortion can be divided into two categories. Economic data has been undermined by decades of methodological change which have distorted the statistics to the point where no really accurate data is available for the critical metrics of inflation, growth, output, unemployment or debt. Fiscal data, meanwhile, obscures the true scale of government obligations. While he does not believe that the debauching of US official data is the result of any grand conspiracy to mislead the American people; he does see it as an incremental process which has taken place over more than four decades. From ‘owner equivalent rent” to ‘hedonics’, few series have been distorted more than published numbers for inflation, and few if any economic measures are of comparable importance; and the ramifications of understated inflation are huge.
Vice President Joseph R. Biden’s claim that he heard the gunshots of a 2006 school massacre while playing golf is raising questions about his veracity or his memory.
Mr. Biden told a meeting of mayors in Washington Thursday that he was about a quarter-mile away from an Amish schoolhouse on Oct. 2, 2006, when a gunman shot and killed five students and wounded five others.
“I happened to be literally — probably, it turned out, to be a quarter of a mile [away] at an outing when I heard gunshots in the woods,” Mr. Biden recounted. “We didn’t know … we thought they were hunters.”
But a search of maps of the area in Lancaster County, Pa., shows the nearest golf course to the site of the shooting, Moccasin Run Golf Club, is about five miles away. Rodney King, the golf pro at Moccasin Run, said Friday he was working at the course on the day of the shooting and never saw Mr. Biden, who was then a U.S. senator.
“There’s a lot of things here that I find hard to believe,” Mr. King said. “I looked in my database, and he [Mr. Biden] is not in my database.”Even if Mr. Biden had played at the course that day, Mr. King said, “It’s very far-fetched that he would have heard it.”“
via Biden’s claim of brush with gun massacre questioned – Washington Times.
Student Kicked Out Of School For Refusing To Wear RFID Tracking Badge Following Failed Appeal | CNS News
Having lost her appeal, 15 year-old student Andrea Hernandez is leaving John Jay High School after school officials denied her request to allow her to continue her “education uninterrupted” by permitting her to use her old (chipless) ID badge which “does not signify participation in a program which I believe conflicts with my religious beliefs.”
In her handwritten letter, Hernandez writes: “I do not wish to wear the new badge, even without the RFID chip, because it signifies participation in the program.”
Hernandez, who has been threatened with expulsion for refusing to wear a chipless RFID tracking badge, had her request for a preliminary injunction denied by the Fifth Circuit Court of Appeals and the Western District of Texas. Rutherford Institute attorneys argue the school is violating her rights under Texas’ Religious Freedom Act and the First and Fourteenth Amendments to the U.S. Constitution.
Stealth Hoodie Hides Wearer From Drones : Discovery News
Surveillance cameras are ubiquitous, especially in the U.K.. and in the United States, Congress has already approved the use of drones for domestic surveillance. Then there’s the “Stingray” tool used by the FBI to track cell phones. It’s enough to make even those who’ve gotten nothing hide feel nervous.
New York-based artist Adam Harvey doesn’t like it one bit. So he’s taken it upon himself to design anti-surveillance clothing to foil government snoopers.
Harvey has been looking at the effects of such surveillance on culture for some time. Last year he designed a kind of face makeup called CVDazzle to avert face-recognition software.
In the spirit of fooling cameras – and messing with surveillance – Harvey has now come out in a set of hoodies and scarves that block thermal radiation from the infrared scanners drones use. Wearing the fabric would make that part of the body look black to a drone, so the image would appear like disembodied legs. He also designed a pouch for cell phones that shields them from trackers by blocking the radio signals the phone emits. For those airport X-ray machines, he has a shirt with a printed design that blocks the radiation from one’s heart.
via Stealth Hoodie Hides Wearer From Drones : Discovery News.
ARL News 