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https://srsroccoreport.com/more-black-swans-arrive-as-u-s-debt-balloons-800-billion-in-two-months/

More Black Swans Arrive As U.S. Debt Balloons $800 Billion In Two Months

The rate at which black swans are showing up in the world should scare the hell out of people. But, unfortunately, everyone seems to be lost in the highly complex technology of I-phones, computers, social media, and the telly to notice that something is definitely wrong. The current situation reminds me of a famous scene in the Monty Python movie, The Holy Grail, where a guy is banging a bell and saying, “Bring out your dead.” Let me explain.

The scene in the movie takes place in England or Europe during the Black Plague, and due to the staggering amount of deaths, carts were used to pick up the bodies throughout the city. Yes, this is indeed a macabre subject matter, but Monty Python takes a serious situation and turns it into a comedy. However, the point I am trying to make is this… death is a very tragic and emotional part of life that impacts family members, friends, and coworkers. But, in this Monty Python scene, there is so much death, that it almost becomes numb to everyone.

And, that is precisely what I see now in the public. There are so many warning signs, or black swans, that no one seems to notice. Everyone has become… QUITE NUMB to it all. So, when the U.S. Government adds $814 billion of new debt in a little more than two months, the public yawns as this is no big deal:

Since the beginning of August, the total U.S. federal debt has increased from $22,023 billion to $22,837 billion. Thus, the U.S. public debt has increased by nearly 4% in just two months! Here is the debt table from TreasuryDirect.gov website since August 1st:

For the first half of the year, the U.S. debt balance remained right around the $22 trillion level. However, after the Whitehouse and Congress struck a deal on July 22nd, the debt ceiling was raised, and as we can see in the table above, the U.S. debt jumped $291 billion in one day (August 2nd). The U.S. government was making up for borrowed funds since the beginning of the year.

If we look at the next chart that shows an increase in U.S. debt over the past two weeks, it jumped another $227 billion:

The big spike up in U.S. debt by $96 billion on Sept 30th was due to the end of the fiscal year. Regardless, the 2019 U.S. budget deficit rose to $984 billion, the highest in seven years.

The federal budget deficit is big by historical standards, and federal debt is expected to rise significantly in the years ahead, to the largest size relative to the economy since World War II. Economic growth is also expected to slow slightly in the years ahead.

Federal Reserve Chairman Jerome Powell and other mainstream economists have said the government’s fiscal course is not sustainable.

That quote was from the article linked above. The relevant sentence in that quote states that top economists and the Fed Chairman do not believe the government’s fiscal course is sustainable. This seems to be the overall theme of my article. Nothing seems to be sustainable, but we keep moving forward as if we are heading into a new futuristic Jeston’s world:

As I mentioned in my previous article, More Than 50% Of The Mighty Permian’s 2018 Oil Production Has Vaporized, the sustainability of the U.S. Shale Industry is in serious jeopardy. While some of the notable “Shale” energy analysts don’t see anything to worry about here, but if we look at what I call the “Annual Compounded Decline Curve” in the Permian, this should also scare the hell out of people:

Some shale oil experts say that there is no BIG DEAL taking place in the Permian in 2018, because every year the wells decline 50+%. However, what seems to be overlooked is the massively STEEP Annual Compounded Decline Rate that is now reaching 70-75%. I don’t know about you, but if you come across a hill that declines 75%, that should be relabeled as a “CLIFF,” not as a “HILL.”

The annual decline rates in the Permian during 2013-2016 (Red, Light Green, Green & Tan colors) resemble a hill, but those in 2017 and especially in 2018 (Orange & Blue colors), now look more like a cliff. So, yes… the overall situation in the United States’ largest shale field is heading towards a collapse in production. Unfortunately, the Permian isn’t alone. The other shale fields, the Bakken and Eagle Ford, also are suffering very high annual compounded decline rates.

While the U.S. Shale Boom can go on a bit longer, the Bust will always follow. As I mentioned in previous articles, the rate at which the U.S. oil production has increased in the past decade morphs what took 40 years in the past:

Even though I am repeating myself here, it’s important to highlight for older and new readers. It took the U.S. oil industry to increase production from 2.5 million barrels per day (mbd) in 1930, forty years to reach 10 mbd in 1970. However, the Shale Industry did it in a decade by increasing oil production from 5 mbd in 2008 to nearly 12.5 mbd in 2019.

What goes up in ONE WAY, will likely come BACK DOWN in the same fashion. And it all is based on the oil price. If we do head into a severe recession within the next 1-2 years, oil prices will likely fall back to $40 and below. This would be the death knell to the shale industry as $137 billion of debt becomes due between 2021-2023.

So, why do I continue to focus on the Oil Market?? Without oil, the entire economy grinds to a halt. And, for those who believe we can transition some oil usage to coal or natural gas, how do you think we extract and transport the coal? Massive trucks, barges, and large trains that are powered by diesel transport most of the coal. Furthermore, without liquid petroleum, the 40,000 natural gas shale wells that were drilled, completed, and produced in the United States since 2009 would not have been possible. Do you remember this photo of the typical shale completion pad setup?

It takes a staggering amount of trucks to drill, complete, and service just one shale gas well. So, the silly notion that we can transition to natural gas, coal, or worse yet… Solar and Wind, is simply not possible in the time-frame we need.

This means… the Black Swans continue to arrive on the scene, but nobody seems to notice, or nobody seems to care.

I can list dozens of troubling headlines, but why bother any more? While the U.S. and global economy won’t unravel overnight, to believe we are going to get another GET OUT OF JAIL FREE CARD during the next financial crisis, just like the one we were dealt in 2009 by the Federal Reserve, I hate to say… it isn’t coming. The U.S. shale oil boom that brought on 7.5 million barrels of additional oil onto the U.S. and global market CANNOT be repeated.

So, don’t count on the Business Cycle to turn back up and continue after the next BIG MELTDOWN. The world will be heading into a new paradigm. One of protecting wealth, rather than building it.

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Comment to this article,

In fairness Steve, the madness must go on. Those in the know (the banking elites, senior government officials, corporate titans et al.) are fully aware of the fact that when the money printing runs its course all hell breaks loose. This isn’t going to be a run of the mill cyclical event that works its way out or even a repeat of the Great Depression. This time it’s for all the marbles. Society as we know it ends and what comes after is not even in the vernacular. There was a time when I detested TPTB and to some extent I still do because of the criminally insane system they created and perpetuated. Now, I just feel tremendous sadness and remorse for what lurks in the wings. You and a handful of other very smart analysts understand that what awaits us is an energy crisis of incalculable proportion. The public, aided and abetted by a media that caters to juveniles, has no concept of how our current society sustains itself. They think that the economy functions as a result of how much debt it can incur. Can we manage the payment? No idea that our monetary system is a construct of fuel spewing from the end of a gasoline hose at the nearest gas station. Once that stops or becomes unaffordable, we’re done and there is NO Plan B. We are now living in the Twilight Zone, crazy shit happening everyday and the world simply keeps on as if it’s a new level of normalcy. Lucky for you Steve (tongue in cheek) you will have much more insanity to report on. The problem of course is you are preaching to the choir. Your articles though are a welcome relief to those of us who need to know that we are not out of our minds. So keep up the great work but recognize that at this point there is NO alternative but to continue the financial and geopolitical madness. There is NO going back, there is no sustainable nirvana to work towards. There is NO balancing of anything. That ship sailed 50 years ago. The idea of endless growth and money for nothing and chicks for free, was to alluring. We ran it to the hilt and now we approach the banquet of consequences. It will be like no other time in history if for only it’s proportion. So, let’s continue to be honest with ourselves and note the absurdness and desperation of the control masters but realize that they are fully aware of what happens when we run out the clock....

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Two comments to the article listed below,

https://www.peakprosperity.com/did-everything-just-change/

They will steal everything we have, one QE at a time … one discount rate reduction at a time. One war at a time. One bailout at a time. One iceberg/icesheet at a time. One species at a time. How long can this last? It can last until you are out of savings (and you may be too old by then to complain, or dead.) Until all but the super wealthy are completely bankrupt. The well is deep, my friend and there is still plenty of water in it. “They” will not stop at implementing extraordinary measures to keep the party going. When the impact of these measures dry-up, there were be more. They will never cease to surprise us. Go listen to George Carlin’s “Big Club Rant” and strap in for the whip-saw rocket ride....

....we’re living in the “long now” as described in Epsilon theory. Everything, and I mean everything, is being sucked into the present for consumption… our children, profits, culture… and our currencies. This is just one of the many symptoms of how civilisations die… they consume everything of value from the future.

The present central bank cult will end like a light switch going On/Off. There’s a stable equilibrium in one position which can remain stable only until enough pressure is applied for the switch to rock over…. this new stable equilibrium becomes our ruinous inflation / hyperinflation.

All civilisations decline in money quality at their end. Note that I don’t say empire, even though the same applies. Empires change during the up cycle (ie Greek to Roman to Byzantine; Dark Age! Arab to Spanish to French to British to USA – there’s a few tuppence halfpenny ones I’ve missed out like the Dutch and Portuguese). But in my opinion we’re not at an empire change (ie USA to China) but at an end of civilisation epoch.

All symptoms point to a Dark Age ahead. We’re all living in a civilisation of terminal decline. I shake my head in disbelief at many posters on this site who appear to believe that we can gently live simpler lives while holding hands in love and harmony. Let me tell you what goes out in a time of collapse: equality; respect for the weak; democracy; honesty; rule of law; anti-racism; order. This is what comes in: hatred; fear; violence; racial slaughter; tribalism; starvation and deprivation; chaos.

So I agree with you that this time is truly different, but not because we’re on an eternal boom (aka economic nirvana). It’s different this time because as a civilisation we’re going bankrupt; we’re consuming everything including our oil, our culture, our minerals and via the central bank-political class… our currency!....