Foreigners Are Dumping U.S. Debt at a Record Pace and Our $20 Trillion National Debt Is Poised to Become a Major Crisis

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money

While most of the country has been focused on the inauguration of Donald Trump, a very real crisis has been brewing behind the scenes. Foreigners are dumping U.S. debt at a faster rate than we have ever seen before, and U.S. Treasury yields have been rising. This is potentially a massive problem, because our entire debt-fueled standard of living is dependent on foreigners lending us gigantic mountains of money at ultra-low interest rates. If the average rate of interest on U.S. government debt just got back to 5 percent, which would still be below the long-term average, we would be paying out about a trillion dollars a year just in interest on the national debt. If foreigners keep dumping our debt and if Treasury yields keep climbing, a major financial implosion of historic proportions is absolutely guaranteed within the next four years.

One of the most significant aspects of the “Obama legacy” is the appalling mountain of debt that he has left behind. As I write this article, the U.S. national debt is sitting at 19.944 trillion dollars. During Obama’s eight years, a staggering 9.3 trillion dollars was added to the national debt. When you break that number down, it comes to more than a hundred million dollars every single hour of every single day while Obama was living in the White House. In just two terms, Obama added almost as much to the national debt as all of the other presidents before him combined.

What Obama and the members of Congress that cooperated with him have done to future generations of Americans is beyond criminal.

Unfortunately, hardly anyone is talking about this right now, but the consequences are about to start catching up with us in a major way.

The only possible way that our game of “borrow, spend and stick future generations with the bill” can continue is if the rest of the world participates. In other words, we need them to continue to buy our debt.

Unfortunately for us, a major shift is now taking place. According to Zero Hedge, the most recent numbers that we have show foreigners dumping more than 400 million dollars of U.S. debt over the past 12 months…

The wholesale liquidation of US Treasuries continued in November, when according to the just released TIC data, foreign central banks sold another $936 million in US paper in November 2016, which due to an offset of $892 million in buying one year ago, means that for the 12 month period ended November, foreign central banks have now sold a new all time high of $405 million in the past 12 months, up from a record $403 million in LTM sales as of one month ago.

This isn’t a catastrophic emergency just yet, but if we continue down this road we will eventually get there. The only way that the U.S. government can continue on with business as usual is if it can continue to borrow billions upon billions of dollars at ultra-low interest rates. Now that Treasury yields are rising, some people are beginning to get quite nervous

As we pointed out one month ago, what has become increasingly obvious is that both foreign central banks, sovereign wealth funds, reserve managers, and virtually every other official institution in possession of US paper, is liquidating their holdings at a disturbing pace, something which in light of the recent surge in yields to over 2 year highs, appears to have been a prudent move.

In some cases, like China, this is to offset devaluation pressure; in others such as Saudi Arabia and other petroleum exporting nations, it is to provide the funds needed to offset the drop in the petrodollar, and to backstop the country’s soaring budget deficit. In all cases, it may suggest concerns about a spike in future debt issuance by the US, especially now under the pro-fiscal stimulus Trump administration.

Someday historians are going to look back in horror at what took place during the Obama years.

The amount that was added to the national debt during his years comes to “approximately $75,129 for every person in the United States who had a full-time job in December”. There is no possible justification for this. But because there haven’t been any catastrophic consequences so far, most people assume that this theft from future generations of Americans must be okay.

In a previous article, I explained that government debt greatly stimulates the economy. If we had not borrowed and spent 9.3 trillion dollars over the past eight years, we would be in the worst economic depression in U.S. history right now.

But most people don’t understand this. They don’t get the fact that we are living way, way above our means. And they also don’t get the fact that the only way that Donald Trump can keep the party going is to borrow and spend just like Obama was doing.

And even with all of Obama’s recklessness, he was still the only president in all of U.S. history not to have a single year when U.S. GDP grew by at least three percent. The following comes from the Hill

Despite the trillions of dollars in government spending pumped into the economy every year under Obama, America has never once enjoyed an annual GDP growth rate at 3 percent or higher, making Obama the least successful president—at least when it comes to economics—in modern history.

A historically sluggish GDP isn’t the only concern worth mentioning. Under Obama’s tenure, average annual food stamp enrollment has risen by more than 15 million (compared to 2008). The home ownership rate is the lowest it has been since 1995, the earliest year provided in the U.S. Census Bureau’s most recent report. The Bureau of Labor Statistics reports more than 590,000 Americans say they are not in the labor force because they are discouraged, a figure that’s 26 percent higher than even the worst annual average under George W. Bush. Additionally, the employment-population ratio has been continuously below the 60-percent threshold under Obama; the last time it was this low was 1985.

Now that Donald Trump is president, he is going to have some very hard choices in front of him.

If Donald Trump and the Republicans stop borrowing and spending so much money, the economy will immediately start suffering.

But if they do continue down the same path that Obama put us on, it is a recipe for national suicide.

So either we take our medicine now, or we risk completely destroying the bright future that our children and grandchildren were supposed to enjoy.

Wake up America, because time is running out.

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Contributed by Michael Snyder of The Economic Collapse.

Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream , The Truth and Economic Collapse Blog.

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  • dav1bg

    Reinstate Glass-Stiegel, set up Hamiltonian financial structure as our original forefathers had envisioned, federal credit control, federal government printing the money, government funded only by taxes collected (no borrowing). As a starter. This is not complicated, just “old fashioned” economics, piss on Reagonomics.

    • g.johnon

      dav, all good enough, as a start, except for the tax thingy. if we had constitutionally stuck to the government creation of money (remember here that the government was there to represent we the people) and spend it into existence according to the sustainable needs of the economy instead of creating money from thin air and loaning it into existence with interest attached, and no money ever being created to cover the interest. taxes would not be needed at all. and there would be no such thing as inflation. liberty means freedom, tax means burden and slavery.
      you cannot have both.

  • Bob Armstrong

    Because of the Fairy Tale nature of the US financial system since the creation of the Federal Reserve 100 years ago, said Fed Reserve will just buy up this debt with a few keystrokes on a computer. Creating more debt you say. Yep, you are 100 per cent correct. Debt must continually grow or the party(?) will end.That is how the present Merry-Go-Round works. And the folks who own the FED also own, literally and figuratively, the planet and everything on it, including you & me. No one in government will stop it because the people in the government and the government itself are owned . There is a tiny minority of humans for whom debt is an asset, not a liability. You & I are not among the lucky few. Forgiving the debt would be a very simple way to reset the financial system. The few will not let that happen. You & I have to make it happen. Of course, the owned Professors of Economics will tell you forgiving the debt is the worst thing which could ever happen (In Economics, forgiving debt is called Default. Wash my mouth out with soap for using that most dirty word. Default, of course, is the worst kind of unforgivable human irresponsibility).

    • American2ndCivilWar

      The people behind the curtain call themselves the “Chosen Ones”!

  • SP_88

    The Fed has caused this debt to spiral out of control and enslave us all. They did this on purpose to make themselves rich and us poor. It’s pretty much a pyramid scheme. The debt is unpayable. It keeps the money flowing from our pockets and into their pockets.
    We need to end the Fed. We need to put the printing of money back in control of elected officials, and by extension, us.
    All these rich old men who run the Fed and other financial institutions need to be kept away from our money. Let these old men earn money the old fashioned way, by working for it.
    No more printing money out of thin air and lending it to us with interest. Because the interest rate is very low right now, the government is borrowing money at a staggering rate. And when the national debt is over twenty trillion dollars, and the interest rate goes up, we will be paying a huge amount of money just to cover the interest. This is the scam. And Obama has played right into it. By doubling the national debt, he has doubled the amount of money we will be paying back to the Fed.
    And whatever interest we have to pay will also be double.
    I say that we should default on the national debt and throw all these greedy old men in jail. We’ve been scammed by them long enough.

    • cmb

      stop paying taxes fools

  • Bas

    Money, short or to much, never ever destroyed a country. Money streams naturally up, not down. It is the reward for risk, daring, killing, and inventing. For that you need brains. War is the ultimate tool to get out of a corner. Peace, again, is time to rejoice the system.

  • It is not Paranoia

    I wonder what would happen to me if I made a 9 trillion dollar debt at my work.

  • Chuck

    Get rid of the Federal Reserve and bring back U S Notes and problem is solved.

  • Dow Jones

    Karma is about to bite the serial war mongering USSAN Golem on its fat, free-loader ass. Don’t blame Donald Trump for the home bound tsunami of toxic derivative filth, the coming massive devaluation of the petroscrip IOU I$I$ backed Saudi Mercan dollah and the collapse into anarchy in the USSA itself. It will be better to have Trump deal with this inevitable long overdue collapse than the pedophile satanist filth that brought most of this on.
    Karma is a bitch, bitchez!

    Au
    Ag
    Pb

  • Sam Oconnel

    The truth is there is ZERO debt. Fraud by the banksters can not create a liability for the people. The US “government” is bankrupt and using fraud against the people to discharge it.

    If the people wake up to the fraud, it is easy enough to stop.

    • fungi2c

      You can see the plan at work with the passage of the 14th amendment, which reads, in pertinent part, “The validity of the public debt…shall not be questioned” (section 4) As always they secure the agreement of the SHEEPLE before they begin to sheer….good luck proving fraud in their courts 🙂

  • fungi2c

    If everybody is selling…who is buying? Can’t have sellers without buyers.

    • Scott Tactical

      That is the elephant in the room. This is definitely not a financially savvy site. And the readership doesn’t care either. They want doom and blame.

      • fungi2c

        It would be nice to find a site that valued TRUTH and LOGIC over HYPE….but I guess that is asking to much these days….and it would be nice to find the SHEEPLE attempting to hold writers accountable for their BS stories….I guess I am an idealist….disappointment always follows expectations, these days

        • Scott Tactical

          Dude you just used TRUTH and LOGIC in all caps in the same sentence. No doubt you got us both on a list.
          Going to have to change my name… again… dangit.

          Actually I studied philosophy for a while and spent months working on a thesis on some originations of these conditions. It was disheartening honestly. I dropped the project.

        • messianicdruid

          Try this one too:

          http://www.alt-market.com

  • Brad Scofield

    End the FED, NOW !!
    Make America Great Again, yes indeed.

  • Scott Tactical

    What I don’t see here is who is buying.
    These things don’t just vanish. It’s not like skee ball coupons you cash in for stuffed animals. Someone believes in their long term prospects or is playing arbitrage. Plus these aren’t that huge.

    This site is not where I would come for financial news.

  • Pale Writer

    These are good problems or challenges. The US is either a Sovereign United States State Country,Nation,land and people right along with that Sovereign Holy God in it, over it and truly funding it who’s in it and what He cares about or it’s not.

  • Alleged Comment

    It is said the negro added debt more than all the previous legal presidents combined before him.

    Well, that kinda makes sense. A usurper will usually try to SCREW you.

  • deCosmos

    It will never get paid back in dollars that are worth much…

    http://www.usdebtclock.org/

  • Thes information in this articles gives Trump even more reason to dump the Federal Reserve banking system and order the US Treasury Department to start printing dollars debt free.
    No Federal Reserve Banks means no interest debt. No interest on the money that is printed.
    It’s time to the 1913 statute that created the Federal Reserve system.
    Ever wonder why the IRS and the FED was created in the same year?
    They were created the same year so the income taxes collected could pay the Rothschild’s the interest on the dollars the FEDs print.
    Of course, JFK was killed for ordering the US Treasury to start printing money.
    Just my opinion.
    Guy Fawkes
    Editor
    FawkesReport.com

    • extreme truther

      These people would start WWIII before they let this happen. I’m not a believer in the Trump fairy tale either. He has been rubbing elbows and partying with these people like the Clintons and Soros for decades up there in the big apple. He is one of them. I said this earlier on another thread, when the chemtrailing stops all over this country then we’ll talk. There was a lot today where I live. Or how about the foreign troops that are training all over the place being told to leave. The Denver area and really all of the front range are infested with them.

      • They will not hesitate to start WWIII if they feel they are losing control of the cental banking systems in countries around the world.
        It’s little known but one of the reasons the US has been so adamant about war in Syria and wanting a new government in Syria is because the US is controlled by globalist. Why does the globalist want a new government in Syria?
        Syria does not have a central banking system. They print they own money debt free.
        Something the Rothschild controlled globalists will not permit.
        I hope you’re wrong about Trump but one thing I see coming is Trump be ing unduly influenced by his Zionist son-in-law in regards to what Trump will do in regards to Israel.
        Chemtrails are part of the population reduction plan of the globalists. It’s been going of for 20-25 years.
        Guy

  • Who Cares

    Ever heard of default? Extreme, sure, but what are they going to do, repossess the Louisiana Purchase?
    The “people” who own the debt would feel little more than a momentary bump (they are now the richest people in the history of the world) and it would only serve to get America working and producing again, which would make it an even fatter goose than ever with even more golden eggs!
    I wouldn’t be surprised if those folks aren’t actually expecting it. Right now every working American is helping shovel millions of dollars an hour day and night into the pockets of people who actually produce nothing, and it’s getting worse by the day.

    • extreme truther

      The World Bank and IMF have been playing this game in ‘developing nations’ for a long time. They loan money that they know countries can never repay then they come in and seize national assets, including land, when the countries default. I don’t think it couldn’t happen here in a total collapse scenario. Americans are going to regret having lived high on the hog on borrowed money from China.

  • Rev. James B. Medd

    I took on the Rothschild monetary system in Canada, and fought to destroy the
    income tax system , and it’s private collection agency the CRA. The CRA is the
    private collection agency for the ROTHSCHILD CONTROLLED BANK OF
    CANADA. It took me approximately 3 years but i got it to THE SUPREME
    COURT OF CANADA. The illuminati court refused to hear the case, because i
    had all the proof to destroy the the income tax system, along with its private
    collection arm. I TRIED. It is the equivalent of a U.S. citizen taking the FEDERAL
    RESERVE all the way to the U.S. SUPREME COURT.

  • extreme truther

    We will soon be looking at a right on time delivery of the next planned boondoggle. Donald Trump has been cast in the role of Herbert Hoover in ‘Great Depression II The Final Apocalypse’ The last depression left the dems in control for nearly 20 years. What will they get away with this time? Remember how cozy Trump was with them back in the 90’s? Whatever happens Obama will get none of the blame in the MSM; he never does. This is just like the Clintons escaping all blame for the 2008 housing bubble crises. It was changes to banking regs under their watch and that they hardily approved of that were the primary cause. It took a decade for the dam to break and they were long gone by then.

  • g.johnon

    lets get this straight. this “debt” does not belong to we the people of the united states, nor to the defacto if marginalized, government of the usa. it belongs to the federal reserve banking system and the quasi government known as usa, inc.
    it is extremely important that we do not forget this in the days to come.
    and be it known that his debt is owed in larger part to we the people than to anyone who was stupid enough in the past to buy usa, inc. bonds from the conmen who have been vending them.