Treasury Issues $1 Trillion in New Debt to Pay Off Old Debt, Despite Record Revenue
Even though the government is bringing in record revenue, its spending is still outpacing its intake. CNS News did an analysis of Treasury Statements, and revealed that the Department of Treasury is currently operating like a Ponzi scheme:
“The Daily Treasury Statement that was released Wednesday afternoon as Americans were preparing to celebrate Thanksgiving revealed that the U.S. Treasury has been forced to issue $1,040,965,000,000 in new debt since fiscal 2015 started just eight weeks ago in order to raise the money to pay off Treasury securities that were maturing and to cover new deficit spending by the government.
During those eight weeks, Treasury took in $341,591,000,000 in revenues. That was a record for the period between Oct. 1 and Nov. 25. But that record $341,591,000,000 in revenues was not enough to finance ongoing government spending let alone pay off old debt that matured.”
During the 8 weeks since the start of the fiscal year, the Treasury brought in revenue of $341,591,000,000. However, old debt was maturing. In order to cover the old debt plus finance the government, it was forced to issue new debt. There was $942,103,000,000 in old debt. To cover its obligations, the government had to “roll over the old debt into new debt and issue enough additional new debt to cover the new deficit spending”.
CNS News explains how the debt occurred so quickly. “The vast amount of debt that the Treasury must roll over in such a short time frame is driven by the fact the Treasury has put most of the debt into short-term “bills” and mid-term “notes”—on which it can pay lower interest rates—rather than into long-term bonds, which demand significantly higher interest rates….If the Treasury were forced to convert the $1.4 trillion in short-term bills (on which it now pays an average interest rate of 0.056 percent) into 30-year bonds at the average rate it is now paying on such bonds (4.919 percent) the interest on that $1.4 trillion in debt would increase 88-fold.”
If the private company operated in this manner, you can be sure the Securities and Exchange Commission would be after them for fraud. But when its the government, all bets are off.