The U.S. Government will add nearly $8 trillion to the national debt over the next 10 years.

The U.S. Government will run a 2012 budget deficit $1.2 trillion (source 1 below).The CBO estimates that the Government will rack up an additional $6.4 trillion in deficits 2013 – 2022 (source 2 below).

Note 1:  The CBO generally bases its estimates on overly optimistic, ‘rosy scenarios’ – so the real deficit numbers through 2022 are likely to be greater than the officially anticipated ~$8 trillion.

Note 2:  The numbers quoted are what is known as the “cash deficit” numbers. The GAAP numbers, which account for the “net present value of unfunded liabilities” (also known as ‘real accounting’) are far worse.  The official GAAP deficit has been running, on average over the past 3 years, more than $5 trillion per year.  The 2011 GAAP deficit is likely to approach $6 trillion.

Note 3:  With a GAAP Deficit of $5 trillion on any given year, you could take all of the money earned by all Americans and all of the corporate profits (John Williams, Economist-Statistician, ShadowStats), and you’d still have a deficit. The real deficit is “beyond containment.”

Note 4:  The mounting U.S. government indebtedness will most certainly be accompanied by additional (direct or indirect) monetization of the debt – via Federal Reserve balance sheet expansion. This, in turn, will put additional stress on the value of the U.S. Dollar.

These actions will have very little, if any, direct liquidity benefits for American families.

The Leviticus 25 Plan, on the other hand, would involve an initial credit extension to American families of $12 trillion. The government would receive back 8-10% of that per year in the “recapture provisions,” along with additional general tax revenues from the certain economic recovery.

After 5 years the Government would have “recaptured” approximately $6 trillion of the $12 trillion original credit extension – again, with substantial additional general tax revenues from the economic rebound.

The ‘net cost’ of the Leviticus 25 Plan would be less than the projected cost ($8 trillion) of new debt America will take on over the next 10 years.

The Leviticus 25 Plan will deliver meaningful liquidity benefits and debt relief for American families.  It will reduce to scope of government and in the process restore basic freedoms for Americans.

……………………………………

Sources:

1. Estimate for 2012 deficit up $100B$1.2 trillion shortfall is seen for the year that ends not long before Election Day.

March 14, 2012|By Andrew Taylor, Associated Press

WASHINGTON – A new estimate from congressional economists says the government will run a $1.2 trillion deficit for the budget year that ends a few weeks before Election Day. It would be the fourth straight year of trillion-dollar-plus deficits.

2. March 2012: CBO’s Analysis of the President’s 2013 Budget

Each year, CBO analyzes the President’s budget proposals using CBO’s own economic assumptions and estimating techniques rather than the Administration’s. CBO estimates that enactment of the President’s proposals would:

  • Increase the 2013 deficit to $977 billion, or $365 billion more than the shortfall projected in CBO’s baseline estimates.
  • Increase total deficits between 2013 and 2022 by $6.4 trillion, or $3.5 trillion more than the cumulative deficit in CBO’s baseline.

Read the full analysis

 

$375 million… Here we go again. U.S. taxpayers on the hook for another round of ‘coordinated’ bailouts for Greece.

The International Monetary Fund and Greece’s euro zone partners last week approved a second 130 billion euro ($172.15 billion) rescue to keep the debt-choked country afloat through 2014.”   (Reuters March 20, 2012).

“We received 5.9 billion euros from the euro zone and 1.6 billion euros from the IMF,” a finance ministry official told Reuters.

Note 1:  This equates to $2.12 billion (U.S. Dollars) ‘contribution’ from the IMF. The U.S. funds 17.7% of the IMF budget, so the U.S. Government has just ‘given away’ another $375 million to Greece/Europe.

Note 2: The total funding package for Greece, through 2014, is listed above as $172.15 billion. This means that the U.S. Government will be giving away’ significant additional amounts to “keep the debt-choked country [Greece] afloat through 2014.”  

The U.S. economy is currently on a ‘dead crawl’ pace.  Instead of giving our (future) tax dollars away to foreign interests, the U.S. government should be moving to provide direct credit extensions to American families.

America needs the Leviticus 25 Plan.

February 2012 – largest monthly deficit in U.S. history – $231.7 billion. Risk is growing for the U.S. Dollar. A new course is needed – one with direct benefits for American families.

February is normally a ‘high-deficit month,’ due to a surge in tax refund payments.  February’s $231.7 billion deficit is the largest monhly deficit in U.S. history.  And through the first 5 months of the fiscal year (October – February) the deficit total stands at a hefty $580 billion.  Annualized, that projects out to about a $1.5 trillion deficit for the full year.

The monthly deficit reports in the financial news represent the “cash deficit” (the monthly “cash in / cash out” status).

The government also keeps a GAAP book (as of 2003).

The GAAP book fully accounts for the “net present value of unfunded liabilities (in other words the money that the government has borrowed internally from trust funds and pension funds, etc.) to fund its “cash out” obligations.

GAAP accounting is what the U.S.  government requires corporations to use when they file their taxes.  It is recognized as ‘true accounting.’

In 2008, the “cash deficit” came in at $438 billion.  The GAAP deficit on the other hand was actually $5.1 trillion. 

As a matter of perspective, at $5 trillion – you could take all of the money earned by all Americans, plus all of the corporate profits, and you would still have a deficit.  The true deficits are “beyond containment,” as economist / statistician John Williams has observed.

In 2009, the GAAP deficit came in at $4.3 trillion.  In 2010, it hit $5.7 trillion.

The 2011 numbers are not in yet, but the GAAP deficit is certain to hit close to the $6 trillion mark (since the “cash deficit” for the fiscal year ended September 30, 2011 was $1.3 trillion).

(Read more on the February’s deficithttp://www.zerohedge.com/news/us-rakes-largest-monthly-deficit-history-2012-tax-revenues-net-refunds-trail-2011 )

The Leviticus 25 Plan would provide massive liquidity gains and debt relief for millions of families in America.

It would reduce the cost of government at all levels and generate healthy tax revenues for state and federal government.  The Leviticus 25 Plan would reverse the debt slide America is on – and return America to a course of healthy, sustainable economic growth.

Were the TARP Bailout paybacks legitimate – or did U.S. taxpayers get ‘soaked’…?

Treasury officials like to claim that all of the funds ($245 billion) dispersed under the Capital Purchase Program (CPP) have been repaid with interest – and that U.S. taxpayers have actually reaped a profit of $10 billion.

There is more to this story.  When the Fed highlights their TARP profits, they are only counting the positive payers.  They are not accounting for the those parties who have not repaid their TARP bailout frunds.  And they are allegedly not accounting for the market value of some of the ‘crap’ Mortgage Backed Securities (and other) assets on their books  – which they purchased with trillions of dollars.

Furthermore, according to the calculations of one group called Ethisphere, the TARP payback shortfall stands at a tall $148 billion.  This averages out to a debt of over $1200 for every American.  (Source:  Taibblog 9-1-09)

Capital Purchase Program (CPP) is a leg of the TARP bailout, whereby “Treasury bought preferred shares in the nation’s banks” to rescue many of the banks from failure.

Here are some of the big ones:

Date

Financial Institution

City

State

Amount

10/28/2008 Wells Fargo & Co. San Francisco Calif. $25,000,000,000
10/28/2008 State Street Corp. Boston Mass. $2,000,000,000
10/28/2008 Bank of America Corp.1 Charlotte N.C. $15,000,000,000
10/28/2008 JPMorgan Chase & Co. New York N.Y. $25,000,000,000
10/28/2008 Citigroup Inc. New York N.Y. $25,000,000,000
10/28/2008 Morgan Stanley New York N.Y. $10,000,000,000
10/28/2008 Goldman Sachs Group Inc. New York N.Y. $10,000,000,000
10/28/2008 Bank of New York Mellon Corp. New York N.Y. $3,000,000,000

And here is the full list of the Bank recipients:   http://money.cnn.com/news/specials/storysupplement/bankbailout/

Remember that many of the ‘big players’ like Goldman Sachs, JP Morgan and others received sizeable credit extensions from the Federal Reserve at (near) zero percent interest, and were able to use those funds to purchase Treasury securities paying 3% interest – thereby gaining access to ‘free money’ to rebuild their solvency.  And pay back TARP disbursements to the Fed.

So, yes, many of the major players did repay the TARP disbursements – but they did it with the benefit of the ‘free money’ they had access to from other programs.  And that ‘free money’ giveaway by the Fed – does dilute the value of the U.S. Dollar.

And that ‘hits’ American families with higher prices for such things as food and energy.

Furthermore, some of the smaller banks actually paid back TARP bailout funds with other funds borrowed from the Small Business Lending Fund.  These included (July 14, 2011):

  • Eagle Bancorp of Bethesda, MD: $23.235 million
  • First California Financial, Westlake Village, CA: $25 million
  • Cache Valley Bank, Logan, UT: $4.77 million, plus $263,000 to buy back preferred shares granted to Treasury in lieu of warrants
  • Security Business Bancorp, San Diego, CA: $5.8 million, plus $290,000 to buy back preferred shares granted to Treasury in lieu of warrants
  • BOH Holdings of Houston, Houston, TX: $10 million, plus $500,000 to buy back preferred shares granted to Treasury in lieu of warrants
  • BancIndependent, Sheffield, AL: $21.1 million, plus $1.055 million to buy back preferred shares granted to Treasury in lieu of warrants
  • York Traditions Bank, York, PA: $4.871 million, plus $244,000 to buy back preferred shares granted to Treasury in lieu of warrants
  • Centric Financial, Harrisburg, PA: $6.056 million, plus $182

The shell games being played by our government on behalf of the banks is a disservice to U.S. citizens.

The Leviticus 25 Plan recapture provisions, on the other hand, provide an honest, straightforward mechanism for recapturing the funds extended, while providing direct benefits to American families..

 

“…printing money to a degree never [before] seen in human history”

The world’s “four largest central banks (the US, Europe, Japan, and China) and then four European central banks (Germany, England, France, and Switzerland) show a growth explosion in their balance sheets. Interestingly, China has seen the largest growth.  

Note their charts here:    http://www.ritholtz.com/blog/2012/01/living-in-a-qe-world/     

 
“Jim [Bianco] points out that central bank balance sheets, when taken together, have spiked recently in relationship to total world stock market capitalization. He concludes with these thoughts:…. ‘Massive central bank involvement in the markets risks returning us to a de facto centrally planned economy.'”
 
“Central banks are ruling markets to a degree this generation has not seen. Collectively they are printing money to a degree never seen in human history.”
 
“So how does this process get reversed?  How do central banks pull back trillions of dollars of money printing without throwing markets into a tailspin?  Frankly, no one knows, least of all central banks as they continue to make new money printing records.
Note the question above, “How does this process get reversed?”… Frankly, no one knows…”
 
Solution:  The Leviticus 25 Plan would extend credit directly to U.S. citizens, thereby expanding the Fed’s balance sheet by $11 trillion – $12 trillion. The recapture provisions, however, do specify a clear, credible mechanism to “reverse” the Fed balance sheet expansion – reducing it back down by 8-10% per year over a 5 year period.
 
And there would be considerable recapture ‘inertia’ in the following years to support  further contraction in the Fed’s balance sheet.
 
No other plan offers such a mechanism – while delivering immediate liquidity to American families.  The Leviticus 25 Plan.
 
This brief is a partial reprint of a weekly e-letter from “Thoughts from the Frontline” (www.johnmaudlin.com).  The whole piece may be viewed at http://www.ritholtz.com/blog/2012/01/living-in-a-qe-world/