Countdown To Crisis
Countdown To Crisis by David Stockman
[Ed. Note: To see exactly what this former Reagan insider has to say about Trump and the fiscal threats from politics and the debt ceiling, David Stockman is sending out a copy of his book Trumped! A Nation on the Brink of Ruin… And How to Bring It Back to any American willing to listen – before it is too late. To learn how to get your free copy CLICK HERE.]
During the run-up to the election, the deep state bureaucrats at the Treasury built up what I described Friday as Hillary’s debt ceiling “war chest,” sending the cash balance to $425 billion shortly before election day.
By contrast, shortly after the election the Treasury stopped selling new debt, and began to actually pay down maturing bills and notes. The Treasury has burned over $338 billion of cash since then. That depleted Hillary’s war chest since she wouldn’t be around to benefit from it.
Or rather, it pumped a veritable tsunami of cash into the canyons of Wall Street.
In a word, the Treasury took its boot off the neck of the bond dealers, thereby enabling the 15% frolic higher in the stock market that has become known as the Trump Reflation Trade.
And that gets me to the countdown to crisis beginning March 15…
Last week I told Neil Cavuto of Fox News that the Treasury was burning cash like drunken sailors, but even that turns out to be an understatement. (Besides my interview on Fox News, I’ve also issued an urgent warning about the March 15 crisis. Please see the details right here.)
The Treasury’s operating balance was just $66 billion on Friday. It’s even lower today. Now there are only two days left before the Obama-Boehner debt ceiling holiday expires and the ceiling freezes in at about $20 trillion on March 15.
And it was all that aforementioned “stimulus” which fueled the Trump-O-Mania rally — even as the talking heads peddled the Trump Stimulus meme and the second coming of Ronald Reagan.
Needless to say, those myths begin to die March 15 and the screaming aberration of the past four months — that is, a broke Uncle Sam paying down his debt — goes into reverse.
In a word, the canyons of Wall Street will get hit with a double whammy of cash withdrawal as the Fed finally launches on a long-overdue tightening campaign while the U.S. Treasury gets back into the market doing what it does best — sucking up cash hand-over-fist.