Extreme Treasury Corruption

What happened to school cafeteria classics like Sloppy Joes and Tater Tots?  That’s what school kids across the nation want to know.

From what we gather, Michelle Obama doesn’t think they’re healthy enough.  Plus she believes too many children are overweight…and that they need to slim down.  So she took it upon herself, as First Lady, to choose what they eat for lunch and how much.

Regrettably, according to students in rural Kentucky, the food served under Michelle Obama’s National School Lunch Program “tastes like vomit.”  But that’s not all.  In addition to tasting like vomit, the food’s “crappy and there isn’t nearly enough of it.”

Somehow the federal government has come to govern what school children eat and portion sizes in many American school districts.  There’s even a calorie cap that school cafeteria’s must adhere to: 850 for high school lunches, 700 for middle schools and just 650 for elementary schools.

But while school districts across the nation must stay within Michelle Obama’s calorie cap, President Barry Obama’s number one money man – Treasury Secretary Jack Lew – has come up with a nifty way to dance around the nation’s debt cap.  No kidding…

Jack Lew’s Debt Cap Fandango

The first step Lew has undertaken is to lock the U.S. government’s debt at $16,699,396,000,000 for the last three months.  This is just a hair below the nation’s current borrowing cap.  Somehow, over this time, the Treasury has continued to run monthly deficits without adding to the debt.

CNSNews.com provides the details…

“The Treasury Department’s Financial Management Service (FMS), which publishes both the federal government’s official Daily Treasury Statement and its official Monthly Treasury Statement, is reporting that in July the federal government ran a deficit of $98 billion but that the federal government’s debt remained exactly $16,699,396,000,000 for the entire month.

“The FMS said that the deficit went up $98 billion ($97,594,000,000) in the Monthly Treasury Statement for July, which it released on Monday [August 12].

“At the same time, the FMS said the debt stayed at exactly $16,699,396,000,000 in its Daily Treasury Statements, which are published every business day.  The Daily Treasury Statements show the daily value of the federal government debt that is subject to a legal limit set by Congress.

“At the static $16,699,396,000,000 level that the Treasury reported for every day of July, the debt was just $25 million below the legal limit of $16,699,421,000,000 that was set in a law passed by Congress and signed by President Barack Obama.

“If Treasury’s daily statements were to declare that the government had borrowed an additional net $98 billion to cover the $98 billion deficit the Treasury declared in its monthly statement for July, the Treasury would be conceding that the government had already surpassed the legal limit on the debt – and has been violating the law by continuing to borrowing additional money.

“Instead, even as the Treasury was running up the $98-billion deficit it reported in the July Monthly Treasury Statement, every one of the 22 Daily Treasury Statements published for July said the Treasury had closed out the previous business day with exactly $16,699,396,000,000 in debt.”

“The Daily Treasury Statement for August 12, released Tuesday afternoon [August 13], says the debt remained stuck at exactly $16,699,396,000,000 during the first 12 days of this month, too.

Extreme Treasury Corruption

“On May 17, the first day the Treasury reported that the debt had hit exactly $16,699,396,000,000 – and was thus just $25 million below the legal limit – Treasury Secretary Lew sent a letter to House Speaker John Boehner saying he was beginning to implement what he called “the standard set of extraordinary measures” to prevent the Treasury from exceeding the legal limit on the federal debt.

“Since Lew sent that letter – announcing that he would use “extraordinary measures” – the debt has remained stuck at exactly $16,699,396,000,000 for 87 straight days.

“That includes all 31 days in July when Lew’s Treasury says it was running a $98 billion deficit.”

Since this CNSNews.com story was reported on August 14, the published national debt has yet to increase.  The Daily Treasury Statement for August 28 still reports the debt at $16,699,396,000,000.  That means, despite continued deficit spending, the reported debt hasn’t increased for 104 days.

Deficit spending, by definition, requires borrowing money to cover a funding gap.  But how can the Treasury borrow money without adding to the debt?

They can’t.

“Extraordinary measures,” cannot make this possible.  Jack Lew cannot multiply loaves of bread and fish.  Every dollar borrowed must show up as debt.

No doubt, Lew’s not following generally accepted accounting principles.  If a CFO were to manage a corporation’s finances like this, they would be guilty of accounting fraud and falsifying financial statements.  But Lew does it in plain sight and no one cares…stock and bond markets don’t care, Congress doesn’t give a rip, and, with the exception of fringe websites, the media could care less.

We’re not sure what to make of the extreme Treasury corruption.  At this point it shouldn’t surprise us.  But it still infuriates us, nonetheless.


MN Gordon
for Economic Prism

Return from Extreme Treasury Corruption to Economic Prism

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One Response to Extreme Treasury Corruption

  1. nonleminus says:

    Just to whom are the Treasury securities stored at the Federal Reserve owed? Certainly it is not the banks from which the Fed bought them with new money it created out of thin air for the purchase (effected by crediting their reserves with the value of the securities). The banks no longer hold the securities. It can’t be the Fed because the Fed is just a government agency like the Treasury. It may be an independent agency in the government, but government nevertheless. The Fed has effectively redeemed the government’s debt to the banks by buying the securities. So, why are they counted as debt? We are not on the gold backed system, have not been since 1971. So, there is no gold that has to be returned to the government after it buys them with newly created money.
    The debt ceiling law should be challenged in the courts as not pertaining to reality.
    The mature securities at the Fed will be swapped for new securities with Treasury. No money changes hands between Treasury and Fed. The Treasury gets its securities back. I’m not sure what it does with those mature securities from the Fed. Maybe it should extinguish them after the swap. Or simply record their value first then destroy their physical representation. But nobody is owed outside of government for them. So, why are they debt?

    The law of 1917 creating the debt ceiling by requiring Treasury to borrow money to cover deficits instead of simply creating its own money and spending it, really does not succeed in its purpose. When the Fed buys those securities involved in borrowing, it effectively redeems the debt owed the banks by giving them their money while they return the securities to the government at the Fed. The government does not owe itself in this respect. It would be like a bank clerk claiming to be paid for the securities it bought from bank customers using bank money.

    And when the Fed swaps the mature securities for new, the new securities do not have anyone they are owed to. They are just potential debt. The Fed will sell them to drain bank reserves during inflations.

    As for Treasury bonds and securities sold to non-governmental entities like China, British banks, Arab oil companies, etc. those are just investments of surplus dollars these entities have, looking for a secure interest earning investment. They are like purchases of bank CD’s. The money taken in is not used to fund deficit spending. It is just recorded, perhaps destroyed otherwise if in physical form, then returned by the Fed to the owners when the securities or bonds mature and are claimed for full value. The Fed credits the interest out of thin air. So, the national debt is an anachronism that no longer corresponds to reality. It is a debt that is no longer a debt. Our politicians need to get up to date on the fact that we have a fiat money system. Having “debt” limits in a system where the debt is paid off routinely all the time by the Fed creating the money to pay for it is no longer in touch with reality.

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