Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Treasury Department Ups January-March Borrowing Estimate Another $8 Billion

  by    0   0

The government shutdown apparently didn’t save Uncle Sam any money. The US Treasury Department said it will borrow about $8 billion more than originally estimated in the first quarter of 2019 as deficits continue to spiral upward.

According to new Treasury Department projections, the US government will issue $365 billion through credit markets in the January-March quarter. This stacks on top of the $426 billion borrowed through credit markets in the October-December quarter.

A senior Treasury Department official told Reuters the 35-day partial government shutdown “didn’t really have any impact” on borrowing figures.

US government debt has been climbing upward at a staggering rate. Between Christmas 2017 and Christmas 2018, the US government added a staggering $1,370,760,684,441.54 to the national debt, according to Treasury Department figures.

Through the first three months of fiscal 2019 (October-December), Uncle Sam ran up a $316.4 billion deficit. December’s budget shortfall came in at $11 billion. That was $12 billion less than the previous year. But Dec. 1 fell on a Saturday, pushing some December payments back into November. Adjusting for those shifts in the timing of payments, the deficit would have been $36 billion last month – $13 billion more than December 2017.

This came on the heels of a record November deficit of $205 billion.

Meanwhile, the demand for US Treasuries is dropping precipitously as the US Treasury floods the market with paper.

Long-term US debt sales have risen to a level not seen since the height of the financial crisis. In November alone, the US Treasury sold over $200 billion in public debt. The department sold bonds at an average rate of $123 billion a month in the six months between June and November. This pace of borrowing is expected to continue into 2019.

As the Treasury Department sells more and more debt, the three biggest holders of US Treasuries – China, Japan and the Federal Reserve – are dumping bonds, not buying. Chinese holdings of US Treasuries dropped for the fifth straight month in October (the most recent data), sinking to the lowest level since May 2017.

The glut of paper along with shrinking demand may well lead to higher interest rates no matter what the Federal Reserve does. It’s a simple matter of supply and demand. As demand falls and supplies rise, the price of bonds drops. Bond yields (interest rates) move in the opposite direction.  ZeroHedge put it in pretty stark terms.

Considering that the US continues to sport the lowest FX-hedge adjusted yields of the entire developed world, it is only a matter of time before the creeping foreign boycott of US paper (and funding the US deficit) becomes a major issue, and will likely require much higher yields.”

And yet neither party seems the least bit concerned about getting federal spending under control.

As Peter Schiff talked about in a recent podcast, it appears the Fed might be winding down its quantitative tightening program. That would ease the supply of paper on the market.

Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

The Outlook for Gold in 2020 Remains Bullish

Gold had a strong year in 2019 and a World Gold Council report says the outlook for 2020 remains bullish. We expect that many of the global dynamics seeded over the past few years will remain generally supportive for gold in 2020.” Gold charted its best year since 2010 last year. The price increased by […]

READ MORE →

Spending Us Into Oblivion: Federal Budget Deficit Tops $1 Trillion in 2019 Calendar Year

The US federal government ran a budget deficit of over $1 trillion in the 2019 calendar year. It was the first budget deficit over $1 trillion in any calendar year since 2012 — in the midst of the Great Recession. The budget shortfall from January through December totaled $1.02 trillion, according to the latest report issued […]

READ MORE →

Holdings in Gold-Backed ETFs Grew 14% in 2019, Hit All-Time Highs

Net inflows of gold into gold-backed ETFs came in at 400.3 tons in 2019, according to data released by the World Gold Council. ETF gold holdings grew by 14% last year and finished at 2881.2 tons. Overall, global gold-backed assets under management grew by 37% in US dollars due to positive demand and an 18% […]

READ MORE →

Central Banks Continue “Remarkable” Gold-Buying Spree

Central banks continued their remarkable gold-buying spree in November and remain on pace to eclipse 2018’s near-record purchases. According to the latest numbers from the World Gold Council, central banks added 27.9 tons on a net-basis to official gold reserves in November. That brings the yearly total for 2018 with one month left to calculate […]

READ MORE →

A Shocking Numbers of Americans Live Paycheck to Paycheck

We’re told that this is the greatest economy in history. Stock markets are surging. Unemployment is low. And yet despite the good times, a shocking number of Americans live paycheck to paycheck. Several surveys cited by MarketWatch reveal the precarious financial situation many Americans find themselves in. This is less than ideal in an economy […]

READ MORE →

Comments are closed.

Call Now