As markets reach for new highs, no one–especially the financial media– is seeing the debt storm on the ground.
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The U.S. has crossed the debt Rubicon of no-return yet all we see in the headlines is, well… gibberish.
In the spooky world of intel and clandestine services, we are trained to spot liars not by what they tell us, but mostly by what they don’t tell us.
It’s a fairly common trick used as well by the Fed’s PR department, namely the mainstream financial media, which has as much to do with investigative journalism as Dr. Seus has to do with complex brain surgery.
This cadre of financial media prompt readers, left, right and center, learned long ago to tow the “be calm, carry on” line by ignoring the obvious (i.e. a massive national debt cancer) while focusing on the hype (i.e. the latest stock to hit new highs).
The rest of the mainstream financial media is little better. They deal in distraction and infotainment not realism.
As the financial media ruffle its collective feathers making opinions, rather than analysis, their top priority on everything from the Impeachment hearings to Prince Andrew’s party plans, they are literally ignoring the most dangerous headline of all: The US is drowning in debt.
In fact, “drowning” is not the right word— “sunk” is a better description.
The Debt Truth
I know. Debt is boring. It’s just a number. Billions here, trillions there. Whatever. It can’t be all that bad, right? The financial media gives it no real attention.
The interviewed experts on the financial media must know what they’re doing, because, hey, they wear nice suits, speak well on TV and went to fancy schools. Besides, the stock market is ripping. Everything is fine. Be calm, carry on, right?
Wrong.
What those financial media prompt readers and politically-appointed experts are failing to tell you is very simple: No country with debt levels as high as ours can thread this needle safely; in fact, no country (or empire) in the entire history of the world ever has. Period. Full stop.
So, what do the financial media “experts” do instead?
They ignore both history and math, and look to a magical money printer to bail us out of every problem, from mounting and unpayable pension plan benefits to a war here, bailout there, and broken repo market somewhere in the middle.
But most of us know that printing money out of thin air to solve any and every budgetary, military, monetary, and social woe is not a long-term solution but a short-term fantasy masquerading as a recovery.
Meanwhile, and in this backdrop of renewed calm, we melt-up straight for a perfect storm of debt-driven complacency enjoying the Phase 3 Fantasy Cycle that always precedes the Phase 4 Moment of Uh-Oh..
But here at Signals Matter, we spend our time doing the math rather than the spin from the financial media.
Basic Math is Better than Financial Media Adjectives
Over the weekend, we sat down to do a little year-on-year number crunching, which I’ll share with you now.
First, the October 2018 to October 2019 budget numbers just came out, and folks they tallied an increase of 34% year-on-year. Twelve-month deficits just crossed the trillion-dollar mark of red-ink for the first time since 2013.
Headline response from the financial media? Crickets. Nothing. Nada. Nichts.
Instead, our esteemed financial media was taking sides on everything from the Jeffery Epstein suicide to presidential impeachment odds, while our national deficit slumped with a gun to its ignored head.
Meanwhile, our country just borrowed another $1 trillion dollars without fanfare.
This latest trillion is dangerous, not just for its sheer size, but also for its bad timing.
You see, the stock markets in October were reaching new highs thanks to renewed money printing to bail out our Treasury markets.
Furthermore, by October, we were already in month 124 of the longest business expansion ever recorded.
With the financial media headlining record-high markets and “business expansion,” why then, did the U.S. need to borrow another $1 trillion in the span of twelve months or add another credit facility of equal amount to the repo markets in the span of 90 days?
Fake Calm, Real Debt
The answer is simple: We are broke and thus rely on borrowing (i.e. issuing bonds) to stay afloat.
Don’t believe me? Well here are the numbers for October 2019 which the financial media largely ignored. The U.S. took in $3.4 trillion in receipts but then found itself staring down the barrel of $4.4 trillion in outlays (expenses).
Net result? An additional $1 trillion in annual deficits, thus adding to our already nosebleed national debt to the tune of $23 trillion as of November.
As importantly, if we are taking on debt like this in month 124 of the “good times,” just imagine what kind of borrowing and debt we will be taking on in the bad times, which the Fed has not yet outlawed?
Folks, the facts speak for themselves rather than for the financial media content editors at CNN, CNBC or FOX. We live on debt and our markets, supported by the Fed, live on printed money to buy otherwise unwanted debt.
That’s a recipe for long-term disaster.
What to Expect—No Choices but More “Stimulus”
Given that the US now lives off debt and prints its own dollars to buy its own debt (what the fancy lads call “debt monetization,” but the rest of us call “faking it”), it goes without saying that the Fed, the financial media and Uncle Sam are desperate to keep the cost of that debt low—which means they have no choice but to keep rates low.
No choice at all.
And the only way to keep rates low is to push bond demand (and prices) up. Since natural demand no longer exists, they have to create artificial demand—i.e. the Fed printing money to buy unwanted Treasuries.
This, of course, is a pure scam, but it’s officially lauded by the financial media under fancy terms like “easing,” “accommodation” or “monetary support.”
This means that you can expect more money printing to come–a lot more. Why? Again, because we literally have no choice at all.
The numbers just confirmed that the U.S. is a debt-driven monster supported by printed money to sustain the only tool we have left to keep the lights on: a rate-suppressed borrowing binge (aka debt bubble) supported by printed, fiat dollars and lauded by the financial media as a “recovery”or “solution.”
How Long Can Faking-It and Financial Media Spin Work?
The trillion-dollar question, as always, remains the same: How long can we print, borrow and spend before the “Uh-Moment” phase follows the “Fantasy” phase?
The short answer for now is equally blunt: We don’t know.
The Fed is now in a perfect lose-lose-lose scenario. They can’t “stimulate” forever, but they also can’t keep the market up without stimulus, as last December’s market disaster confirmed.
Meanwhile, Wall Street uses cheap debt to buy its own stocks rather than invest in CAPEX, so Main Street will get hammered even more when the next market crash hits. Nothing new there…Of course the Financial media has mostly ignored such realities.
The entire Fed experiment and market bonanza has been an equally open economic failure as we finish the fourth consecutive year of global economic contraction—a streak which began long before the trade war even started.
Many respected names in the hedge fund space are warning of a recession in 2020, others are predicting the pain will be postponed (via stimulus) till after the 2020 elections and thus likely hit in 2021.
But again, no one really knows–certainly not the financial media.
No one, that is, but the markets themselves, and they will tell those who know how to listen what to do and when to do it.
Only Mr. Market Knows
That’s why we track market trends, rates, spreads, yield curves and data rather than a financial media of 20-something journalists who studied marketing and click-bait rather than markets and bull-traps.
All we can do now is translate the markets’ daily, weekly and monthly reactions and warnings and then report back to YOU.
The dollar liquidity risks we spoke of here and the recent yield curve steepening discussed here are two extremely important signals otherwise totally ignored by the financial media dimwits. But YOU are already deeply in-the-know as to the risks they imply and we face.
For now, however, the volatile melt-up is on, and thus so is the nervous party on Wall Street. Our Storm Tracker cash recommendations remain a key component of managing such risks despite the seductive highs of late, and we urge you to click above and follow the same.
Comments
18 responses to “What the Media’s Not Telling You About Debt”
- Gus Mitchellsays:
December 4, 2019
What’s the correlation between rapidly rising debt and the US dollar ? You would think as you print more money the value of your currency should decline ?
- Leon Bsays:
December 4, 2019
I think your article is ready for Zero hedge
- Steven Mullersays:
December 4, 2019
I don’t understand the ignorance by this Democrat leadership not acknowledging Trump’s infamous talking points of, DRAINING THE SWAMP, AND THE GREAT ECONOMIC MIRACLE, at who’s the expense. This dangerous dept by the ignorance of out of control spending by this billionaire Republican corporate wealth give away will eventually within several more years blow up in our faces and like every disastrous economic explosion the poor, the seniors, the veterans, and entitlement programs will be attacked by these greedy, unethical, and corrupt Republicans. Putin and our enemies are in their glory, and they will do everything in there power to try and rig the elections for Trump once again, he is there answer to the United States downfall. THERE IS ONLY ONE SOLUTION TO SAVING THIS DEMOCRACY, TRUMP AND HIS GREEDY CORRUPT ADMINISTRATION MUST BE ERADICATED. VOTE-VOTE
- Larry Garlandsays:
December 5, 2019
So what is a safe option to such bad news?
- Tom Rios says:
December 5, 2019
It’s a sorry world we live in, nothing to brag about. The United States had been proven to be the top notch in well standard top economy reformat for many of prior years. But our leaddhip has become greedness for power and money.
We don’t have the trustworthiness of prior years ago honest to God trustworthy LEADERSHIP. Now we have entered into a different ballgame. And to reverse the damage occurred will take many years to come.. The new coming in presidents will have to work overtime in order to get a portion of what has been lost to a fair functional mode.
- Rod Hancocksays:
December 5, 2019
Not a problem, China will buy the country out for pennies on the dollar.
- Andrew Vranichsays:
December 5, 2019
You didn’t mention gold silver etc as potential insurance IS IT? ANDY
- Mongosays:
December 5, 2019
We’re f@u@c@ked, but business as usual.
- christopher gibsonsays:
December 5, 2019
as soon as the crash occurs and the implications become apparent to the general public ; seize the opportunity to abolish the ‘Fed ‘ and return the Country to what your Founders wished it to be . FREE OF EXTERNAL BANKERS OR BANKING SYSTEM , and reliant only on your own Govt appointed Banking system
- Edouard d’Orangesays:
December 5, 2019
You got me so worried that I can’t take my eyes off my little portfolio, wondering if each dip like the one on Tuesday (03 Dec) is the start of the big leg down.
- Joyce ( Li ) Bentonsays:
December 5, 2019
Although I am not a trader at all, but interested to learn about market field. However, if a financially broken family can be severe problems for own families. Then, a financially hollowed country can be massive disasters for any entire countries. Measuring pocket to spend, working hard to build country by good policies for America’s greatness of strong economy by America’s own established Constitution laws together to make America great are all Americans’ duties by patriotism & loyalty toward America’s greatness together. Let’s achieve America’s greatness together.
- Z.says:
December 5, 2019
In Oct 2019 you said 46% cash.
Then in late Nov 2019 you said 36% cash.
Do you think that 10% extra in the market is really going to pay off in the next 6 months ?
Apparently like me, your thinking is that Trump is going to pull the rabbit of the the hat before election ???!!!
- Thomas Leopold says:
December 5, 2019
My concern is if John Q public hears and can actually comprehend anything besides Hollywood crap–a depression could ensue sooner if action by the public-goes haywire–in no buying and withdrawing from banks–etc..maybe playing dumb and asleep might be the best course–until the new dollar and SS issues could? be resolved…If we can keep the worlds economic leadership on our shores–in tow even with funny $$–perhaps a miracle will fall out of the sky or whatever .is..being asleep better than being aroused? –dunno
- Duke Fuhrmannsays:
December 5, 2019
I just want to know what to do right now when I don’t have anything left in the bank and I need guidance on exactly step by step of what’s next for myself..
- Giuseppe Spatarosays:
December 5, 2019
Thank You for your great work.Can You publish a chart of the MARGIN amount in the Market?
- Ez scott says:
December 6, 2019
Matt here is something I noticed today.
As the stock market made a new all-time high, my silver stock failed to dip.
This is unusual and I suspect that this could be a turning point. If this phenomenon continues after the next all-time high, I believe the next monthly round of QE could be going to gold and silver.
What say you?
- Jay Kleesays:
December 6, 2019
I’m 64, old enough to remember when three percent quarterly GDP growth was considered mediocre. Now anything over two percent puts Wall Street into full-on party mode.
It’s easy enough to go to the St. Louis Fed website and construct a chart showing the inverse correlation over the last fifty years between rising national debt and declining GDP. Thanks to the corrupt, controlled mainstream media most “investors” have no clue about this.
- Jim Welgesays:
December 13, 2019
Matt
While this does not correlate with this article, in one of your articles just recently, you suggested that Fed Monetary Policy is now innefective, and that if we go into recession mode, the major tool available is fiscal policy, ie tax cuts. And I believe you also indicated that the increase in deficits because of these cuts would cause interest rates to rise because the additional debt issued to finance the resulting increased deficits would flood the financial markets with debt, causing bond prices to drop and effective interest rates to rise. Regardless of what the Fed does to try to keep rates low, rates would rise!!!!
I tend to believe your position. Our recent shock with Fed Funds rising to
9% one monday, is a scary precurser!!!
