U.S. Treasury Is Down To One Day Of Cash
Friday, 31 May 2013
Economist John Williams says the Federal bank account at the US Treasury Department is down to just one-day’s estimated outlay, a dire situation that can only be papered over for a short time. Williams cites the May 28 Daily Treasury Statement showing the US Treasury has an operating cash balance of ~$16 billion which is roughly one day’s average cash outlay of about $17 billion.
Williams paints reality over the fantasies created by the federal government in his latest commentary (#527). At his website Williams shadows government-issued economic statistics, erasing the false illusions created to make it sound like the economy is in recovery mode.
Williams shows the annual rate of inflation (buying power of the dollar) is ~9.3% rather than 2.4%, unemployment is more like 22% rather than 8% and the Gross Domestic Product, the measure of the production of goods and services, is actually in decline.
By papering over the real numbers, government has bought some time, but it won’t last long according to Williams.
The US government can’t control foreign holders of US IOUs (US Treasury Bonds) who have a growing perception they will never be paid back on the trillions of dollars of debt owed them. Foreign holders of US Treasury bills can sell them off at a loss to others.
The amount those T-bonds are discounted is the amount the US dollar will be valued at in the world marketplace. At that point, the US faces a default on its obligations to pay back lenders.
Williams says he had expected the US dollar to come “heavy selling pressure in April and May, but manipulated market perceptions of a pending reversal of the Federal Reserve Bank’s “quantitative easing” program temporarily averted a looming US fiscal disaster.
Williams calls federal government efforts “false dollar props that are illusions.” When these perceptions shift sharply, which he says is soon, is when panic is possible and “full dollar debasement is inevitable” (means 100% devaluation of the US dollar)!
Williams says the scandals unfolding in the White House only create an environment where further lack of trust will hasten the collapse of the US government as we know it.