Good Luck Getting Social Security

Debt has mounted since Clinton [Morning Reckoning] May 25, 2023 [WEBSITE]( | [UNSUBSCRIBE]( Good Luck Getting Social Security - Why do central banks make our lives worse? - Who’s Vivek Ramaswamy? - Why did the Clinton budget surpluses not decrease the national debt? [Act Fast – Controversial Video Will Be Pulled Offline Thursday Night]( Due to the confidential nature of [this new video]( we will be pulling it offline on Thursday night. And because [what you’ll discover in this video]( could give you the chance to change your life forever, I suggest you set aside a moment and watch it right away. You only have until Thursday night to take action, or you could get left behind forever. [Click here now for access.]( [LEARN MORE]( Asti, Northern Italy May 25, 2023 [Sean Ring] SEAN RING Good morning Reader, Greetings from a soggy Asti! As I wrote, we got loads of rain, and the ground is just starting to get used to the water again. Last summer, we went almost 90 days without rain. This year, thankfully, we’re getting pummeled with sky water. Good friend and Daily Reckoning Grand Poobah Brian Maher asked if I wanted access to the DR’s mailbag. I politely declined, thinking there were enough hands there to manage it. But I simply didn’t realize how many people had written in. And I apologize for that. To make up for it, I will do a Morning Reckoning Mailbag piece today, like I’ve done for the Rude this week. I’m not sure I’ll get everyone’s excellent comments, questions and issues in this edition of the Morning Reckoning, but we’ll give it a go. Speaking of answering your questions… Before we get to the mailbag, I want to invite you to our Whiskey Bar event happening [today, May 25 at 4pm ET](. This sitdown included Jim Rickards… Vice President of Publishing Doug Hill… market strategist Dan Amoss… income specialist Zach Scheidt… mining expert Byron King… and myself — all with drinks in hand (of course). We’re going to get into the nitty gritty of what’s happening in the markets, what stocks we’re looking at right now and our discussion on gold, the dollar, the economy and how to build wealth will probably answer many of your most pressing questions. Best of all… it’s completely free, no sign-up required. [Click here to get access](. As I said, the event doesn’t start until 4pm ET, so save that link and set an alarm so you’re ready when we begin. Hell, grab yourself a drink and settle in with us! It’s going to be a good conversation you don’t want to miss. Now, onto your questions… Central Banks Tell us in 3 to 5 bullets why people are WORSE off as a result of Central Banks. Nice and simple, so we can feed the masses and start pushing back against the madness. Jerry M. Thanks for writing in, Jerry. What a great idea! Here are my bullet points: - Lack of Accountability: Unelected officials have the “independence” to raise and lower interest rates without fear of public reprisal. I’m all for bringing back tar, feathers, and, if need be, the guillotine. But I’m not sure who’s with me on that… - Economic Manipulation: Central bank interventions distort the markets, starting with interest rates. Like anything else, interest rates can find their clearing level without the help of twelve old folks. Their rate settings wreck the pricing mechanism of the economy. This makes it harder for entrepreneurs and business owners to accurately forecast future supply and demand. - Fiat Currency: Central banks have the authority to issue and control a country's fiat currency, not backed by a physical commodity like gold. With an “elastic currency,” central banks can - and do - print far more of the stuff than needed, creating bubbles in asset markets (see 2009-2020) and price inflation in consumer product markets (2020 to present). - Bailouts and Moral Hazard: During financial crises, central banks provide emergency liquidity and bailouts to troubled financial institutions to prevent systemic collapse. These bailouts result in losses, shifting the burden of financial mistakes onto taxpayers. This creates a moral hazard by encouraging banks and financial institutions to engage in risky behavior. In a free market, these banks and FIs would go bankrupt. [[CHART] Could Inflation Hit 20%+ In 2023?]( [Click here to learn more]( Take a close look at this scary chart pictured here… What you see is the money supply in America… And as you can see, the number of dollars in circulation has exploded in the last few years. In fact, more than 80% of all dollars to ever exist have been printed since just 2020 alone! Which is why some say inflation could soon explode even higher than it is now, to 20% or more. And if you’re at or near retirement age you must take action now to protect yourself… otherwise you risk losing everything. [Simply click here now to see how to survive America’s deadly inflation crisis](. [LEARN MORE]( Vivek Ramaswamy Good day, Sean, from the sunny and warm Piedmont of the Carolinas. Thanks for your daily Rude and today’s ‘Morning Reckoning’. One question - in your list of presidential candidates, you didn’t list Vivek Ramaswamy. I just started hearing about him, first from George Gammon, and it appears he has the “Creature” in his crosshairs. I realize he is currently a distant 3rd for the Republican nomination and I don’t trust ANY politician, but it is refreshing to hear one speak about the real issues as a regular citizen. I’m interested in your opinion. Thanks, Ed C. And a good day to you, as well, Ed! I’m a big fan of Ramaswamy. He’s an entrepreneur worth over $600 million and utterly loathes the Fed. And that’s why he doesn’t have a snowball’s chance in hell of securing the nomination. He just makes too much sense to become President. You know, like Ron Paul. But I did write about him in the [Rude on May 3rd](. And funnily enough, this ties in perfectly with Jerry’s query above. Ramaswamy wrote this in [The Wall Street Journal]( “The global market will hang on every word of every FOMC press conference to see what a dozen central planners have to say. That won’t be because these planners have any special insight. Everyone will listen to see what the Fed may destabilize next.” Right in the coconuts! If you have a free minute, click on those links to read my Rude assessment of him and his op-ed in The Journal. The Clinton Years’ Budget Surpluses Sean, If there were truly surpluses, why did the outstanding federal debt increase each of those years? I heard that the accountants changed the way social security was being treated on federal books. They reasoned that because there was no real trust fund, social security receipts and payments should be included on the general books instead of being separate. With receipts being greater than expenses at that time, it was a favorable change. But I have never verified this claim. Jeff C Jeff, this is brilliant. You know, I’ve always just looked at the year-to-year deficits. I just assumed the debt fell. You are correct. The debt increased! [table] Now how in Sam Hill did that happen? Jeff, you are correct in that it concerns Social Security. And my goodness, the problem has ballooned to one that will never get solved. If you look on my favorite financial doom website, [usdebtclock.org]( you’ll see the unfunded liabilities of the US are $187.8 trillion. Yes, $187,800,000,000,000 or so. That’s 187 with twelve zeros behind it. Of that $187.8 trillion, $22.6 trillion is the amount the USG is supposed to pay out to Social Security. Good luck with that. But this number wasn’t nearly as gigantic back in Clinton's days. Here’s what may have happened to the surpluses: - Interagency Borrowing: The federal government operates through various agencies, and during periods of budget surplus, some agencies may have excess funds while others may not. To meet these needs, the government engages in interagency borrowing, where surplus funds from one agency are used to cover deficits in another. This practice can temporarily reduce the reported budget surplus and contribute to an increase in the national debt. - Intragovernmental Holdings: (Editor’s note: this is the likeliest reason.) Most of the national debt is held as "intragovernmental holdings." These are essentially IOUs issued by the government to certain trust funds, such as the Social Security and Medicare trust funds. When these trust funds generate surpluses, they invest the excess funds in Treasury securities, effectively lending money to the government. So, even though the overall government budget may be in surplus, the national debt increases as the government owes money to these trust funds. - External Debt: The national debt also includes debt held by foreign entities and investors. While the budget surplus may reduce the need to issue new debt to the public, the government still needs to repay existing debt obligations. If debt repayment exceeds the budget's surplus, it can increase the national debt. The fact that Social Security is essentially an off-balance sheet item — a la Enron — is a crime in and of itself. The Debt Ceiling Hi Sean, Does the treasury really lack the money to pay the bills, so the only option is to raise the debt limit? Or…. They do have the money to pay their obligations, but they would rather spend that money on green new deal stuff, Ukraine, welfare galore (with no work requirements), 87K IRS agents, etc... There is an ex-congressman and author (Power Divided is Power Checked) from Minnesota by the name of Jason Lewis who says that there is plenty of money in the Treasury to make every single payment that needs to be made. How right/wrong is he? Could you possibly shine some light on this and maybe explain in layman’s terms what is actually going on, as you so eloquently do through your no-nonsense, direct, and clear style we’ve all gotten used to? Thank you! Rafael V. Hi Rafael. Thank you for the kind words. No pressure, then… Let’s define it first. The debt ceiling is the statutory limit the United States Congress sets on the national debt the Treasury Department can issue to fund government operations. Essentially, it’s the maximum amount of money the USG can borrow to meet its financial obligations. I look at it as a completely made-up number. And not because I don’t think Congress should control its spending. It’s because the USG is so far gone these arguments are pointless. The USG will never, ever be able to pay back its obligations. So instead of trying to stop digging, it should dig harder and get the inevitable over with sooner. And though I can’t stand the Democrats, thinking Republicans don’t spend is complete horsefeathers. We need a debt jubilee or a massive debt forgiveness program. But the Chinese are fresh out of forgiveness. As Jim Rickards wrote in the [DR]( There are always warning signs of a crisis, which are mostly ignored. The warning signs today include a dollar shortage, high-quality collateral shortages to support derivatives (made worse by the debt ceiling, which prevents net new issuance of Treasury bills), inverted Treasury yield curves, negative swap spreads, auctioned Treasury bills yielding less than the Fed overnight reverse repo facility and the flight of cash from banks to Treasury bills and money market funds. That means the Treasury can’t issue new bills without redeeming old ones first. And that just clogs up the whole system. If a deal isn’t struck, you may get these consequences: - Government Shutdown: Ok, this would be great. I’d pay them all to take an extended vacation. - Payment Delays: Here comes at least the threat of Social Security payment delays and angry old folk voting out incumbents. - Economic Uncertainty: this would hasten de-dollarization and further erode America’s leadership role. - Credit Rating Downgrade: This would suck, but it would just be a consequence of the uncertainty wrought above. In the face of these consequences, the government may use these measures to continue to fund itself: - Prioritizing Payments: Essential obligations must be met first. This typically includes debt payments, Social Security benefits, military salaries, and other critical expenditures. By prioritizing these payments, the government avoids defaulting on its debt obligations and maintains essential functions. - Using Available Cash: The government holds a certain amount of cash in various accounts. The government would rely on these cash reserves to cover its ongoing expenses. - Implementing Extraordinary Measures: These measures can include suspending the issuance of certain types of securities, redeeming existing debt early, or tapping into federal employee pension funds. These actions are meant to free up cash and provide additional funding flexibility temporarily. - Seeking Additional Revenue: This could be stopping non-essential programs, implementing emergency taxes or fees, or exploring other extraordinary revenue-raising measures. So, yes, the government can still function to the extent the Treasury will make sacrifices. Honestly, though, they’ll cut a deal. Wrap Up I didn’t get through half of what I wanted to. But please keep writing in. Your intelligent comments, questions, and issues get my creative juices flowing. I’ll look at the mailbag more often, I promise. And I’ll try to get to the rest of the questions soon. If you have a question you want answered, be sure to email me [here](mailto:feedback@dailyreckoning.com). Have a wonderful rest of your week! All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com Twitter: [@seaniechaos]( [“Could Outpace Bitcoin In 2023” – The Motley Fool]( Bitcoin is on a tear. At its peak, a $2,500 investment at its March 2020 lows would’ve been worth as much as $31,150. And that explosive growth doesn’t appear to be stopping any time soon… Fortune Magazine reports Bitcoin is set to hit $100,000 this year. But as great as that is, one hidden crypto is poised to run even higher… One hedge fund expert says it could overtake Bitcoin as the most valuable crypto in 2023. [Click here now for the full story](. [LEARN MORE]( In Case You Missed It… Time to Take off the Bear Suit Greg Guenthner, Editor [Greg Guenthner] GREG GUENTHNER Good morning Reader, Just a few weeks ago, I was writing to you about the ugly, maddening market conditions frustrating most investors. While most stocks weren’t on the brink of serious breakdowns, there was a distinct lack of follow-through in most areas of the market. Rallies would appear, then fizzle before they could make any substantial headway. Only the mega-caps seemed to want to play nice with Apple Inc. (AAPL), Microsoft Inc. (MSFT) and just a few of their cohorts consistently marching higher. Naturally, this action can cause traders to think bearish thoughts. After all, if stocks keep bumping into resistance and failing, maybe there simply aren’t enough buyers to get them over the hump. Don’t get me wrong – prepping for downside action wasn’t the worst decision you could have made earlier this month. I was even making my own list of decent short opportunities, from sluggish small-caps to the teetering tech-growth names. It’s one thing to stay on top of the market. Leaning heavily short before witnessing any actual breakdowns is an entirely different story… Remember: If the market doesn’t scare you out, it will wear you out. As I’ve noted, there was nothing scary about the choppy market action. Most stocks weren’t breaking down — they were simply stuck in sideways ranges. That’s what happens in choppy, potentially basing conditions: stocks grind away, wearing down the resolve of everyone whose mind is stuck replaying last year’s bear market. Investors get frustrated and sell. They give up on ever making back the losses. And they swear they’ll never again get sucked into another bubble. Of course, this is precisely when stocks begin to bounce. The initial move is often violent, catching nearly everyone off guard. It can also push market leaders far into overbought territory. This is where we find ourselves today. Market leading mega-cap tech and semiconductor stocks helped spark last week’s furious breakout, helping push the Nasdaq Composite to a gain of more than 3% on the week to close at new year-to-date highs. While these gains from the tech space easily bested the S&P 500, the large-cap index was also able to post new year-to-date highs. Now, the chase is on. Sold-out bulls are fighting to get back into the market after last week’s squeezy action. Instead of selling in May and going away for the summer, stocks are catching bids left and right. And we’re already seeing another broad rally to start the new trading week. Unless this is the mother-of-all fakeouts, it’s time to take off the bear suit and plan your next move. Here’s where I’m looking to find my next momentum trades… [Send Me Your Mailing Address!]( [Click here to learn more]( The biggest gold bull market in history has just begun. That’s why New York Times best-selling author Jim Rickards has arranged to send his must-read book on gold to any U.S. citizen with a valid mailing address today. [Click here now to see how to claim your copy of The New Case For Gold](. [LEARN MORE]( - Speculative tech plays catch-up I’m already seeing some forgotten tech-growth names from the Covid Bubble catch higher following last week’s broad market breakout. I already mentioned a few favorable earnings reactions we were seeing throughout this beaten-down group. Keep in mind, many of these names have been building wide bases for a year or more. The only thing missing has been upside breakouts. That’s quickly changing. Just look at the action from Cathie Wood’s infamous ARK Innovation ETF (ARKK): [chart] ARKK looked dead in the water at the beginning of May when it briefly lost the $35 level — which also marked the March lows. We discussed its multiple attempts to clear $40 and its 200-day moving average in late April as the ETF slumped last month. But the $35 test held. ARKK has now started the new trading week with a bang, gaining nearly 5% on Monday to vault off its 200-day moving average following some constructive action last week. This could be the first step toward ARKK regaining some of the momentum that pushed it off its lows back in January. We should remain on the lookout for those individual tech-growth stocks that are completing big bases for explosive moves higher. - Thinking smaller Last week’s thrust higher placed many mega-cap tech names firmly in overbought territory. While this is a positive development in the long-term, we should keep an eye on some rotation into other stocks and sectors as these leaders inevitably consolidate. If we are in the midst of a strong bull move into the summer, the tech giants will probably need to churn sideways while other groups take the baton. We’ve already highlighted the explosive move in tech-growth to start the week. We should also monitor other beaten-down groups, such as regional banks (KRE) and small-caps (IWM) — both of which have greatly underperformed. KRE has already rallied double-digits off its May lows. If smoother market conditions lie ahead, we could continue to see a sharp recovery in these names in the weeks ahead. [“The Mainstream Media Is Lying To You!”]( The media would have you believe that the worst of the supply chain issues are over. But the opposite is true… Behind the scenes, things are getting much, much worse. Bob Biesterfeld, CEO of one of the biggest logistics firms in the world, warns “the pressures on global supply chains have not eased, and we don’t expect them to any time soon.” This is going to impact every American’s life in a potentially major way… And I’m urging everyone I can to prepare now. [To see the #1 move to make before this problem gets any worse, click here now.]( [LEARN MORE]( - Waiting for Crypto Stocks are firming up as Memorial Day approaches. But what about Bitcoin? We’ve discussed at length about how the crypto and speculative tech trades have been two sides of the same coin. But a divergence has been on full display since last week’s broad market rally. Stocks have stormed higher. But Bitcoin? It’s barely budged… [chart] To be fair, Bitcoin has been able to cling to those late March consolidation lows just under $27K. But there’s been no positive momentum in the crypto space since that failed push above $30K last month. The speculative tech stocks are already on the move. Is crypto next? Common sense says yes — as long as our correlations hold true. I’ll be watching crypto — along with the crypto-related stocks — for a sharp move higher to materialize in the near future. What do you think? What other potential rallies am I missing as the market firms up? Let me know by emailing me [here](mailto:feedback@dailyreckoning.com). Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Sean Ring] [Sean Ring, CAIA, FRM and CMT]( is a former banker and financial educator and is the editor of the Rude Awakening. Sean has trained interns and graduates from Goldman Sachs, Morgan Stanley, Citi, Bank of America, Standard Chartered Bank, DBS (Singapore), the Abu Dhabi Investment Authority (ADIA), Bank Indonesia (the central bank), HSBC, Barclays, RBS, and BlackRock. He knows the global economy is being corrupted by forces that most people can't understand and has used his unique and worldly experiences to help people navigate the markets. 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