Treas Sec. Oscar Diggs

"I'm just a man, a humbug." - Oscar Diggs a.k.a. The Wizard of Oz

Although, well-known as the tag line for a miserly curmudgeon spooked into being nice, "humbug" was a late 1700's term for a hoax.

The latest in a long and seemingly never-ending stream of things you're supposed to freak out about is the additional interest to be tacked on to $17 T in US government debt if/when interest rates rise. That total line item cost has dropped during the protracted low rate zirp is undisputed. That rolling into higher rates is a pending crisis is hardly assured.

The debates have provided a platform for several monetary fear mongers to promulgate a return to metal. A brain is not on their wish list. The terrible consequence of tying all that debt to their shiny idolatry escapes the narrative. We live in a fiat world. Technology is stretching the "faith-based" monetary system thinner. Non-government issued "currencies" are the medium of exchange for billions of global transactions every day. Backed by the "full faith and  bandwidth of the network" is replacing "the Government."

Central Bank debt buying has placed the humbug of government accounting on display. 3 Trillion of the aforementioned 17 T in obligations (or 17.5 ish %) sits on the Fed's balance sheet. Purchased with a keystroke, the interest, created by a like issue, is transferred by keystroke back to the Treasury dept. Oscar Diggs would be proud. No curtain or elaborate smoke machine is needed, this all takes place in the great wide open. Men with brains, courage and hearts do all they can to convince you that such an arrangement MUST be "bad." That is a value judgement.

We have seen low government debt and high rates, large amounts and higher rates, and various other combinations. Even the widely held view of a "stronger dollar" because "the Fed is raising rates" does not hold up in practice. The exchange rate is a reflection of the humbug we operate in, sometimes bold and other times meek. This Thanksgiving I'll make a special novena to the awesome bounty ingested by the simple transfer of humbug.


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