Fed to transfer $140 billion in remittances to Treasury

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bond_trad3r

The Fed is buying $85 billion in bonds and MBS every month. The interest paid on these bonds are transferred to the U.S. Treasury in the form of 'remittance' at the end of the federal fiscal year.

Even though we're massively in debt, the government is paying less and less in interest due to declining interest rates. Below lists the amount of interest paid on debt, from the U.S. Treasury website.

http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

2012 $359,796,008,919.49
2011 $454,393,280,417.03
2010 $413,954,825,362.17
2009 $383,071,060,815.42
2008 $451,154,049,950.63
2007 $429,977,998,108.20
2006 $405,872,109,315.83
2005 $352,350,252,507.90
2004 $321,566,323,971.29
2003 $318,148,529,151.51
2002 $332,536,958,599.42
2001 $359,507,635,242.41
2000 $361,997,734,302.36
1999 $353,511,471,722.87
1998 $363,823,722,920.26
1997 $355,795,834,214.66

Factoring in the $85 billion the fed transferred to Treasury, net interest payments was about $275 billion. That takes us back to 1990 levels. The economy was much smaller back then and $275 billion in interest payments was a huge burden on the budget.

For 2013, we're on track to spend about the same as 2012 on interest. There is more debt outstanding but the average interest rate on that debt has been on a steady decline for years now.

The Fed will send about $140 billion in remittance to the Treasury in 2013. Our net interest payments will then be $220 billion, back to 1988 levels.

I would not be surprised if tax revenues start soaring in the near future thanks to Helicopter Ben's QE3. If the Bernank doesn't pair back the $40 billion a month in bond purchases soon, Fed may begin buying over 100 percent of annual debt issuances. I believe that is already the case some months...

What does it all mean? I don't know. But I assume it will all end very badly. Then again, the HuffPo article doesn't seem to think so. For a real hoot, check out the 12 myths about the Fed.

http://www.huffingtonpost.com/2013/03/15/federal-reserve-record-profit_n_2884366.html
 
So they are just returning the interest the government pays after the primary dealers skim it? Someday they will make a production as good as The Saprano's about this.
 
Quote from bond_trad3r:
----The Fed....
----interest paid.....
----we're massively in debt....
----government is paying less and less in interest due to declining interest rates.
----if tax revenues start soaring....
----Fed may begin buying over 100 percent of annual debt issuances.
----What does it all mean?
More...
Just imagine what will happen when interest rates go negative and stay there. :eek: :D :p :( :mad: :) :cool:
 
Seems like it would just be easier if the government created it own bank and issued itself money interest free.


I suppose if they did that before the Federal Reserve was created, we would have little to no debt right now. I mean, we paid $8.5 trillion in interest payments since 1988. Thats a little more than half the debt right there.
 
Quote from Martinghoul:

Oh no, not again...
More...

You think I'm a doomsayer. You better believe this is nothing but a circle jerk that will NOT have a happy ending.

I'm itching to go short equities and ride this bitch down.
 
Quote from bond_trad3r:
You think I'm a doomsayer. You better believe this is nothing but a circle jerk that will NOT have a happy ending.

I'm itching to go short equities and ride this bitch down.
More...
I wasn't referring to your post. Your view is just as valid and viable as any other.
 
For the first time in three years, the U.S. Treasury will announce plans to begin reducing debt sales in a victory for stimulus over austerity, the majority of Wall Street’s biggest bond dealers say.
Government sales will be cut by $40 billion to $100 billion over the next year when the Treasury announces its quarterly funding needs July 31, a survey of the 21 primary dealers that are obligated to bid at U.S. bond auctions shows. About two-thirds of those responding, including Goldman Sachs Group Inc. and JPMorgan Chase & Co., see reductions this year, possibly as soon as next month. The U.S. issued $2.153 trillion in 2012.

Smaller sales may contain yields as Federal Reserve Chairman Ben S. Bernanke prepares to reduce the $85 billion a month of bond buying that has supported the economy. The budget deficit has fallen to about half what it was in 2009 and a Bloomberg survey shows gross domestic product may grow next year at the fastest pace since 2006. By contrast, the euro area’s economy is shrinking as governments pursue austerity measures in the face of debt turmoil...

http://www.bloomberg.com/news/2013-...-vindicates-anti-austerity-since-2008-1-.html
 
Lol at the comment on the first page about interest rates being negative. That would be awesome to see – banks paying you to take their money.
 
I’ve also never understood the concept of the US Federal Reserve. It seems like a pointless middle man that costs the US taxpayer money in interest?
 
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