Some Common Cents for October 30th 2015

battlelinesTo read the headlines this week, you would think the US Treasury stood at the precipice of defaulting on its debt. Nothing could be further from the truth. The US won’t default on its debt until it absolutely can’t finance it any longer, and that is some years away. After all, for the fiscal year to date ending in August 2015, the Treasury has raked in $2.883 trillion and paid out $381.346 billion to service its debt.

In other words, the Treasury’s income is far greater than its debt service, which means it can continue to pay what it owes to creditors for some time to come. Of course, that might mean it will eventually have to cut some spending, buy why would it do so when it can borrow seemingly as much as it wants in in the current low (in absolute terms) interest rate environment? …Read On…

The opinions expressed within this report are those of John Norris as of the initial publication of this blog. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders, and employees.