The Treasury’s Checkbook: Healthy or Not Healthy as We Peer Into the Debt Default Abyss?

Looking at a couple of statements from your day-to-day checking account, I tell new clients in our first working meeting, is like looking at the lab results your doctor orders when you have a physical. Staring out from those pieces of paper [pdf files] are a bunch of numbers that tell us all the good, the bad, the beautiful and the ugly that is your day-to-day financial life at the numeric level. And from that we can together gauge an important part of your overall financial health. So roll up your sleeve and pump up your vein — let me take a look-see at those statements of yours — and let us together start getting smartened up about your financial life at the numeric level, shall we?

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In our nation’s darkest domestic hour in years, we face debt default next week. Or so we are told.

Most experts look at the situation and see dire, global, long-lasting consequences of a debt default, though recently a few on the right have claimed that a debt default would be just no biggie.

Those on the right, though, have been 180-degrees wrong about predicting such things as whether Mitt Romney would become president. As Karl Rove taught us so well last time around on general election night, even when something has already happened — such as Obama getting re-elected by a comfortable margin and in a readily predictable way — some on the right have an ability to ignore reality and continue predicting that it is not happening, and won’t ever happen. And, hey, if you can’t post-dict, how on earth might you be good at the pre-dict?

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The dollar and the debt that the U.S. government issues is to the global financial system what water is to the global biological system. It is that which supplies. It is the yardstick against which everything else is measured. It is the mortar betwixt the bricks. It is the foundry in which are smelted many of the most primordial financial ooooomph ingots.

It needn’t be this way — it is not built into the fabric of the universe that the U.S. economy is the Big Dog — but due to various historical, geographical and political twists of fate and luck, and, yes, due to some individual and communal brilliance and exceptionalism of many different sorts as well, this is the way it is now and pretty much has been since everyone now alive was born.

And to paraphrase Gene Simmons, it’s great to be us. It’s great to be in the driver’s seat of most things financial.

So what would happen if this particular well runs dry? Might we lose something and never get it back?

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Let’s hope we never find out, and let’s hope that political hostage-taking — in which the entire globe’s financial wellbeing is the hostage — ends forever right here right now. It is not OK to threaten to enfeeble the economic globosphere unless Obamacare is defunded.

Let’s also hope that this latest episode of hideousy/idiocy breaks the fever — that in a Toto-pulls-back-the-curtain sort of way, Republican voters everywhere come to see that the people for whom they vote are not seeking office to be of service to those voters and are not there to do those voters’ biddings, but are instead there to do the bidding of big business and mega-billionaires, and angling for governmental effort of any kind to be foreverafter perceived as pure pestilence, just because.

Normally I try to stay apolitical in here — no doubt with varying results — but right now I am in no mood for staying silent.

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In another entry in our long-running series entitled Ain’t The Internet Grand, this morning I learned, courtesy of Stan Collender and Bruce Bartlett, that the U.S. Treasury’s day-to-day checkbook is online. Here’s the link:


The site serves up, in great detail, the various components of the Treasury’s deposits and withdrawals during any given day, starting with the day that is two days ago and going back in time a long, long ways (now, before you go complainin’ about the two-day lag, ask yourself how good you would be at posting your day-to-day checking account statement from yesterday, out there for all the world to see each day and totally accurate!); the site also serves up some cumulative numbers, such as fiscal-year-to-date numbers or month-total numbers.

So today the most current numbers are for Monday 10/7, and are as follows:


Total Deposits (excluding transfers) $ 13,766
Total Withdrawals (excluding transfers)              $ 8,136
Net Change in Operating Cash Balance  $ 5,630


Yup, those are millions of dollars, so that first number is $13.766 billion.

So what’d’ya see?

That looks like we were a cool $5.6 billion to the good on Monday. Nice, eh?

But not all is rosy, as the statement from Monday also shows fiscal year-to-date figures, which are the same as the figures for October because October 1st is when the federal government starts its fiscal year.

And here are those less sanguine numbers:


Total Deposits (excluding transfers) $ 167,778
Total Withdrawals (excluding transfers)              $ 221,623
Net Change in Operating Cash Balance  $ -53,845


Not so good for the first week of the fiscal year, eh? That looks like Money-Out being about a third higher than Money-In. Not good at all. But how representative of the bigger thing is this snippet of time?

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Lumpy revenues and much-less-so-but-still-somewhat lumpy spendings is what you’ll see when you look at the Treasury checkbook over time. Social security checks, for instance, go out like clockwork (at least so far). Federal employee wages do too. But tax receipts? Wage withholding helps a lot, but you better believe that a lot of dollars from individuals come in around April 15th.

So what’s a business with lumpy revenues to do? Why, that description fits most businesses, and the answer for them all is to open up a line of credit to assure that they can take a loan to, say, meet payroll while waiting for a big check to come in on from a big, wouldn’t’ch’ya know it late-paying customer.

Right now the Treasury’s line of credit is being threatened, as shown in short-term interest rates going up in a very odd and wholly unwanted way the past several days. If the stalemate continues, you better believe we will see more unwanted financial effects, e.g., the dollar could lose value versus other mainstream currencies, all lending rates coud (mostlikely will) go higher (perhaps much higher), and the percentage of our economy that is actually working could plummet, much like what happened on September the 15th, 2008, and the weeks following, when Lehman went into the tank, because the odds, don’t’ch’ya know, are quite high that the U.S. Treasury defaulting would be a much Much MUCH bigger deal than Lehman going into the tank, if for no other reason than the U.S. Treasury is much Much MUCH bigger than Lehman was.

All because the Repubs don’t want medically uninsured people to get medical insurance?

One possible ray of sunshine here is that, in elections to come, there’s a decent possibility that the Repubs will suffer electoral diminishings, and, as in my beloved and currently much-missed state of Californa (sic), the people will bequeeth unto the Dems a bicameral super majority plus the executive branch, at which point we will see that they are adults, not children, and capable of making change in a measured, legitimate way. Imagine what the Repubs would have done in Californa (sic) if they had free run of all branches of government? See, e.g., North Carolina, see Michigan.

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Now here’s a question for you: Did you notice anything missing from the checkbook numbers up above? No? Yes?

I left out something important. I did so in a way that’s in keeping with a mistake that a lot of folks make.

Do you see it? Think about it. If you want to understand the numeric financial health of the U.S. Treasury by reviewing a statement from its day-to-day checking account, did I tell you everything you need to know?

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No I did not. I told you all about Money-In and Money-Out, but I did not tell you about Money-Stored. I told you about the Treasury’s Income Statement but not about its Balance Sheet — about its flows but not its stocks. Without that other info, you have no idea of the scale of things. And scale is everything, isn’t it? Or at least a chunk of everything, right?

So you also need to know the balance of the Treasury’s day-to-day checking account.

That number is $34.541 billion. At the end of the day on Monday, the Treasury had $34.541 billion in cash on hand. Put that together with the number from up above — that, for the month of October so far, the Treasury has lost $53 billion — and the picture is complete.

Now let’s change the scale of things from billions to thousands and shift the financial health from that of the government to you, and let’s do that by you asking yourself this: if you lost $53k so far in the month of October, and if today you have $34k in the bank, would you feel secure? Would you feel financially healthy at the numeric level?

No, right?

Heaven help us all.


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