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TRUMP-KING OF DEBT

The Federal Reserve balance sheet grew to 7.18 Trillion dollars as of the 22^nd.  This has the signs of the Fed increasing their portfolio in the near term.  The Feds holdings of U.S. Treasuries and mortgage backed securities added 25 Billion last week to total 6.56 Trillion dollars. 

There are concerns that the economy is slowing prompt in the Fed to consider additional purchases of assets and targeting and potentially changing asset purchases. 

In the early months of the virus the Fed stood up $3 Trillion in an unprecedented purchase of asset holdings in order to flood the market with liquidity, at the same time the Fed funded 13 facilities to backstop markets ranging from corporations to municipal bonds. The primary function was to prop up the stock markets to subdue fears and avoid panic.

Fed Chief Jerome Powell stated: “Public markets are out there and they’re working and the pricing is pretty good.”  During the September policy setting meeting The Federal Open Market Committee began pinning asset purchases to more than keeping financial markets calm.  In it’s public statement the Fed committed to using quantitate easing to “maintain an accommodative stance of monetary policy.”  This sets the stage for additional larger targeted purchases in the future.

Currently the Fed purchases are at a clip of $80 billion-per-month for Treasuries and $40 Billion-per-month  for mortgage backed securities.  This could also mean that the Fed is considering purchase of longer term debt.

Big banks are cautionary about a Covid-19 recovery.  The four big banks, JPMorgan Chase, Citigroup, B of A, and Wells Fargo.  All are hoping the impact on the US economy is behind them.  All four reported year-over-year declines in net interest income from business and consumer loans, the bread and butter for the banks. 

At the depth of the covid crisis the banks added $33 billion in loan loss reserves and now the total is added is only $5 billion.  The banks commented : “the reserve release was largely on portfolio run-off and changes exposure in wholesale (loans), so not a reflection of a change in our outlook” said Jennifer Piepszak an analysist at JPMorgan Chase.

The current national debt is 27.1 trillion dollars 10/27/2020.  . That’s $82,100 per person or 217,612 per tax payer.  With current GDP at 19.8 trillion dollars.  That’s 136% of GDP.  Republicans were all up in arms that the National Debt should be so large. Today with an annual deficit of 4.3 Trillion dollars thru October.  Ted Cruz (R-TX) in an interview was all upset at the current large debt and will attempt to cut spending in the next term if Biden is elected.  Ok Ted where were you when the Trump budget and tax cut had a built in 1 Trillion dollar deficit forever.  The tea party republicans came into power railing on the size of the debt and wanted balanced budgets.  Instead of being tax and spend democrats as they would like you to believe they are borrow and spend republicans. 

Under Barack Obama, the debt swelled to $19.9 trillion and its percentage of GDP topped 100 percent.  Obama debt went from 11.1 trillion dollars to 19.9 trillion in 8 years whereas Trump National Debt went from 19.9 to 27.1 in 4 years.  Barack Obama had a 56% increase in debt in 8 years vs Trump with a 73% increase in only 4 years.  Trump’s debt through the end of the year will be approx. 5.4Trillion dollars.  Yes Trump is the king of debt, however he also went bankrupt at least 6 times and has had numerous other entities go broke,  Trump Airlines, Trump steaks.  His self-dealing in a charity caused he and his family to be banned from any charitable board in the future.  Failed school costing 25 million to settle.  Yes he is the King of Debt.