Hyup:
100-year Treasury bonds? Sooner or later, this may turn out to be reality, as it becomes increasingly clear that the U.S. never has any intention of paying its $14 trillion national debt off.
As reported by Reuters, at a recent Treasury meeting discussing financing options for U.S. debt, “The Treasury also disclosed that it had discussed with big bond dealers the possibility of an ‘ultra-long’ bond with a maturity of 40, 50, or 100 years, as one of several options to broaden the investor base for Treasury debt.”
This is the ultimate “kick the can” strategy. Overall, doing this would be a strategy to put off refinancing U.S. debt as far into the future as is possible. Since the Treasury would be selling bonds, the interest owed would be paid at fixed intervals.
So, if all of today’s $14 trillion debt was refinanced 50 years into the future at 5 percent annually (their historic norm), taxpayers would owe $38.1 trillion in principal and interest. That averages $482 billion in interest owed every year, or $24.1 trillion over 50 years.
Which is about what we’re paying now. According to the Treasury, total interest owed in 2010 was about $413.9 billion, $217 billion paid to so-called “intergovernmental holdings” (i.e. the Social Security and Medicare trust funds and other accounts), and $197 billion to “debt held by the public” (treasuries held by individuals, financial institutions, and central banks).
So, there really would not be any apparent savings via interest payments. So why do it? Three reasons: 1) the Treasury may be estimating that interest rates will actually be far above their historic norms in the future, meaning they want to lock in the lower rates now; 2) It guarantees that the national debt will never be repaid; and 3) Doing so would free up the Treasury to focus its auctions solely on financing current budget deficits.
Which, if Congress cannot find a way to balance the budget, will increasingly become a problem in the first half of this century. By 2020, the national debt will total over $25 trillion. By 2030, it will be more than $40 trillion. There’s barely enough paper right now to refinance the current debt and borrow $1.5 trillion for the budget deficit.
But, if the Treasury can push all current debt owed 50 years into the future, or even a substantial portion of it, it would only need to worry immediately about financing new debt.
Unfortunately, this is nothing more than a very costly mortgage, which today’s Baby Boomers will never have to bear in their lifetimes. Instead, it will be borne by their children and grandchildren.
Temporary politicians causing generational damage — all while enjoying the trappings of power, from the salon culture to teeth whitening treatments and expensive haircuts.
I hope our great grand kids are able to figure out the physics and finally create a time machine. So that they can come back to now and kick some of these motherfuckers right in their carefully-managed pearly whites.
Violent rhetoric! Violent rhetoric!
Extremist rage-blogger Jeff Goldstein advocates destruction of the universe and supports Temporal Paradox Terrorism.
Do this, then inflate the money supply even more to pay for it. Won’t that be wonderful?
#1 – That is usable stuff that is! “Extremist rage-blogger Jeff Goldstein”
Jeff, I suggest using that as much as possible!
Oh, and I’d love to go back and club a few Boomers m’self.
Sooner or later somebody is going to figure out that all of these government mandated non-discretionary social obligations are analagous to indian treaties, and the recipients of all that government largesse are the indians. The only real question is who is going to figure it out first.
Not to mention union bennies being granted to folks whom, we were promised, would never be unionized after they were federalized.
Didn’t they teach these fuckwits in high school that making only the minimum payment on a credit card debt means it will never be paid off? Because that is exactly what they are talking about here.
Seriously, this isn’t rocket science.
If only a balanced budget amendment weren’t necessary…
Yep. And nobody is going to give up “their” State bennies, no matter their political leanings.
But here’s the thing. It’s not fourteen trillion. It’s a hundred and a quarter trillion.
Problem is nobody gives a shit. The nation would rather debate the relative merits of a potential candidate for national office two years in the future then how to deal with, as the linked article alludes, virtual national bankruptcy cropping up twenty or thirty years ago. As if s/he mattered.
But bankruptcy matters.
The system cannot be saved. It could never be saved.
It took decades to even begin to speak nationally about the debt. How many more decades will pass before we start talking about unfunded obligations?
Here’s a fun little one minute video, for perspective.
And by “fun” I mean “obscene” of course…
(It is safe for work, so, not really fun obscene)
If only all of us could do this, we could be living pretty high on the hog.
isn’t propaganda whore Viv Schiller’s National Soros Radio maybe a week behind on this particular meme?
they has a picture showing how our cowardly cocksucker president cuts a Reaganesque swath
well now would you look at that
That’s really cool I think I’ll have to re-evaluate my thinkings on this Barack Obama maybe.
Yeesh, ‘feets, comparing a picture of Obama and Reagan, walking in the White House, and concluding that they are so much alike may indicate a corky fuzzled brain fart that’s seen as an advantage in hiding Obambi’s non belief self marketing shiny forehead.
Cuz Reagan only cares about himself! He didn’t believe in anything … did he?
hey you could tell them apart?
Nah, teeth can ruin the finish on a good boot. I was thinking right in the onions, repeatedly.
“sn’t propaganda whore Viv Schiller’s ”
you do know sex is mostly about procreation? or are you a loser creationist?
While working for the Indian Health Service back in the 90’s, and trying to figure out ways to ‘bend the cost curve down’ this was a common point of discussion – that whatever methods we employed to stretch the budget would surely be visited upon the rest of us soon enough.
As you might expect, the bleeding hearts in our midst were mortified and could not understand that Uncle Sugar’s pot o’ gold did indeed have a bottom.