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2017-12-26 07:00 by Karl Denninger
in Federal Government , 293 references Ignore this thread
Truly Bizarre Treasury Data
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I'm not sure what's going on here, but this much I do know -- nobody is talking about this in the media, and they should be.

The latest MTS (Monthly Treasury Statement) has some interesting data that I cannot explain when it comes to Medicare and Medicaid.

Specifically, it appears that Medicare and Medicaid spending is down materially in the first couple of months of the fiscal year (by about 5%).  This is a chimera, however, and the internals are really troubling.

First, the funds given to the states for Medicaid are up by 4.55%.  That's bad, especially considering that we were under a "freeze" for the first month or so.  Worse, by a lot, are the SCHIP (children's health fund) payments, which I've flagged repeatedly as hideously bad -- they're up an outrageous 13.9% over comparable year period.

Medicare hospitalization is up 6.78% -- down a bit over the 9% run rate of recent years, but not by much.

So how did they get a decrease of 5% overall?

Two ways: They are underfunding the trust fund (although the received taxes are up) by 31% on a comparable year basis and are also not paying drug makers (by an astounding 51%.)  It's essentially impossible that half the senior citizen meds have suddenly stopped being prescribed, so this is quite-clearly a stiff-arm treatment coming from Treasury.

I suspect this is part of Treasury's gaming of the debt ceiling, but nonetheless it bears watching into the new year -- especially when our "lovely" asteroid-munchworthy Congress inevitably lifts the limit at which point an utterly huge shift in those numbers should "magically" appear.

That is, unless the MTS has become as accurate as the DOD's accounting....

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Djloche
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Drugs being down a ton makes sense, especially if RICO is moving forward

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Tickerguy
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And where is evidence that someone's being prosecuted for that?

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Max_planck
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Southern Arizona
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As a new Medicare recipient, I registered for a My Medicare account on Medicare.gov, and picked a Medicare Advantage plan. When I look at the My Medicare claims section, it says go look at the Medicare Advantage carrier's (CareMore) site for claim info (including drug claims). CareMore doesn't have online claims, they just send a statement. So a data problem?
Happytrails
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So the Forbes article asks if the government has spent $21 Trillion without telling us. If dollars were seconds, one trillion seconds ago would be almost 30,000 B.C.

I can't begin to wrap my head around such sums of money.



Reason: ..
Tickerguy
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The Forbes article is more than a bit sensationalistic.

See, money flows show up somewhere. In this case since Treasury receipts are known (taxes) to spend more than it has it must issue bonds (and thereby compel The Fed the issue "money") because the checks it writes have to clear.

I've noted several times that there's a LARGE gap between the so-called "deficit" and the actual debt figures. That's the gap that's involved here, and it's easily quantified.

It's several hundred billion a year and I don't believe the DOD is all of it -- although it's certainly a large PART of it -- but even so that doesn't add to $21 trillion.

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Copernicus-usdd
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Houston TX
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I haven't looked at the MTS in a while...It's not that it was terrible, but I never could tie anything out...and that bugged the crap out of me...so I look at the Daily Treasury Statement and use a cash based approach (no Govt. accounting shenannigans)

About 3 years ago I did this write up:
http://usdailydeficit.com/calculating-th....

One of the interesting issues I discovered is that the MTS seemed to be undercounting the deficit by $800B+ over a ten year period.
Of course...in the big picture...that's chump change...we could be looking at $1T/year deficits again in just a year or two depending on how this tax cut shakes out.

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Keenan
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Western PA
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Rumsfeld remarked on Pentagon accounting issues on 9/10/2001:
https://www.youtube.com/watch?v=xU4GdHLU....

"Adjustments" and footnotes in accounting reports ought to be regarded as at least a cautionary flag.

Physicist Richard Feynman once remarked:

"There are 10^11 stars in the galaxy. That used to be a huge number. But it's only a hundred billion. It's less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers."

Tickerguy
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Quote:
One of the interesting issues I discovered is that the MTS seemed to be undercounting the deficit by $800B+ over a ten year period.

It's FAR more than $800 Billion.

The only actual measure of the deficit is the amount of borrowing that goes on. Total debt y/o/y change is the deficit -- period. Yes, I know all about cash management but it's not like the Treasury has $200 billion around on one Sept 30 and then is in the HOLE $300 billion the next year -- and even if they were, over the period of many years it all evens out.

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Nevertoolate
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San Antonio de Bexar de runover with illegals, Texas
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Heres something that possibly part of the reason. When .gov started cracking down on Rx drugs they started giving prescriptions for only 30 days at a time. They required you to return, in person, pee in a cup (so they could make sure the drugs you were being prescribed were not being sold.) You then have to go to the phamacy in person with your ID to get it filled for another month. I heard a lot of complaining in the waiting room. Not to mention giving up your rights with the pee test. A)It takes several hours out of your life to go to the Dr, sit in the waiting room for a while because they are alway late, see them for a few minutes, wait for the lab to give you a cup to pee in. Then rush to the rx store because if you dont refill it they assume either something is going or you really dont need the rx. In most cases you are talking about nearly a day a month plus transportation costs.
Then God help you if your pee tests is wrong or doesnt show both the right drug and level of it in your urine. Perhaps seniors are unintentionally doing a drug holiday and realizing that all the over prescribing of drugs is plain BS.

They had me on all kinds of drugs before my heart valve replacement 18 months ago. 6 weeks after they said I could resume taking all these drugs again. My answer was I havent felt this good in 10 years and it was obvious these drugs didnt do ****. It was a birth defect atrial heart valve that in spite of a pacemaker an then a replacement battery nobody had bothered to check. I said Ive done my own research and I do the baby aspirin once a day and let them know if I start feeling worse.

Dr said when they took my heart out for the valve change that I had the heart of a 30 yo. They called a week ago and said at my annual checkup that my good cholesterol was low and bad was high and I needed to take some drug. My answer was,less than a year ago you said I had the heart of a 30 yo. Im 64 so obviously Ive been doing something right. In 30 more years Ill be 94 and if your assessment was right Ill have the heart of a 64 yo. No thanks.

Simple rule. Question everything these people say. They miss the obvious and want to enrich themselves. Starve the beast. Perhaps, I am not alone. My rx bill was $750/month gross. Now my aspirin is about $10/ year. Fem.

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Tickerguy
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Maybe, but that drop is so ridiculous in size that I'm not buying it on an aggregate basis.

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Mickey
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Chic
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Folks: check out the GAO annual "audit" report of the USGov.

280 pages but the most important are the last 29 pages which is the internal control letter. that 29 pages, which has been sent to the President and leaders of Congress since at least 1998, rips shreds in US internal controls saying most of the accounting books are un-auditable and money is leaking out regularly. Systems are old.

The data is unreliable and GAO said the data is not good enough to analyze where the leakage really is.
Mickey
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On the deficit vs debt growth issue--the last 2 years of Obama adm the stated budget deficits were just under 600 bil, while debt growth was ~1.2 trillion-
over the time frame from 1983 (Reagan) to now, the difference is $8 trillion.

I wrote e mailed my 2 wonderful senators and I wrote them again after 3 months--finally after 8 months one had an intern get back to me. The question was why do we have such a large difference consistently with debt growing faster than the stated deficit.

The answer from the intern was it was investments. end of discussion.

The unaudited financial statements do show a version of government GAAP reporting where it picks up unfunded liabilities. For a while it was reporting 6 billion in "Loss" per year.
And for a while it reported 88 TRILLION in unfunded but I could not find that 88 Trillion type of number in the recent statements.

I started my career in Chicago 48 years ago with a large accounting and auditing firm, so I like to nit pik.

But the GAO has already stated that the books are unauditable. That means a full blown mess, but just what do we expect out of a government that's unaccountable.

Whitehat
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@ Nevertoolate, i am glad that everything worked out for you, may you have many more good years without their interference.

is this something new with the testing of patients to see if they are taking their opioids?? recently cared for two dying cancer patients and this would have made it a nightmare. they have to have some logical way of dealing with this. actually it exists. saw a write-up recently and once posted here that the solution is to dose it out in liquid form as it is impossible to abuse and not worth stealing or selling. Here is the article:

https://www.nytimes.com/2017/12/04/healt....

Opiophobia Has Left Africa in Agony, NY Times 12/4/17

Quote:
The bottles are a simple and ingenious way to prevent addiction. Getting high would require drinking gallons of the bitter, slightly nauseating solution. Distilling enough morphine to inject would require boiling away gallons.

You can drink a whole bottle and all youd get is some nausea and constipation, and be sleepy, said Rinty Kintu, the Uganda coordinator at Treat the Pain.

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Tickerguy
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Quote:
is this something new with the testing of patients to see if they are taking their opioids?? recently cared for two dying cancer patients and this would have made it a nightmare. they have to have some logical way of dealing with this. actually it exists. saw a write-up recently and once posted here that the solution is to dose it out in liquid form as it is impossible to abuse and not worth stealing or selling. Here is the article:

Ahahahaha.... sure it is.

Trust me on this -- that claim up there is a lie. Liquids are used on hospice and I will tell you from direct personal knowledge that they ARE stolen and ARE consumed by people who "like" such things. I can't speak to whether you actually get high (since I don't use such drugs) but since they appear to be attractive enough to steal, well, you be the judge.

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Whitehat
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too good to be true, got it.

yes, that is where we were using them. they are very effective in this form under these conditions. it must however have the potential to cut into the business of dealing the more concentrated pills.

got an idea to end this **** once and for all. it is a disease right; let's make it terminal. right now in my city they have a program where they use Narcan to revive the OD's. many first responders that i know bring back the same people over and over. there is a movement to get Narcan into the hands of parents and addicts, etc. so that they do not die. Ban the Narcan and make it a one way trip. problem solves itself as the users die off. at least Narcan does not work for the newest crazy Fentanyl.

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There are two ways to be rich: One is by acquiring much, and the other is by desiring little.
snow, seasons, distance and dirt roads: SSDD
"Be not deceived; God is not mocked; for whatsoever a man soweth, that shall he also reap" (Gal. 6:7)
Copernicus-usdd
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Houston TX
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"It's FAR more than $800 Billion."

The difference in our numbers almost certainly has to do with intergovernmental debt.... I exclude it in the $800B number...if you don't the delta is closer to $3T as you say...far bigger.

Other than that...methodology is the same...subtract debt outstanding at the beginning of Year 1 from the debt outstanding at the end of year 10...then adjust for the change in the cash balance. Then...compare to whatever number the MTS reported over the same 120 months. The bottom line is..they don't tie, and it's not even close.

I think it's about time for a default...anyone foolish enough to lend Uncle Sam $15-$21T...at ~2% deserves to lose it all.

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Tickerguy
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Yep; the stuff works when used as intended (e.g. under the tongue) and for someone who's severely compromised (on hospice) it's DEFINITELY a great thing.

But anyone who actually believes that the stuff is abuse-proof or even materially abuse-resistant has rocks in their ****ing head. It most-definitely is NOT.

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Analog
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Quote:
since Treasury receipts are known (taxes) to spend more than it has it must issue bonds (and thereby compel The Fed the issue "money") because the checks it writes have to clear.


Thanks. I'm beginning to grasp what that means -
---issuing new money dilutes prexisting money
so staying in cash anticipating another deflationary crash has so far been the wrong choice.


I can't pick stocks. Only investment i've ever done any good with is land around a growing town. Still less than $1K an acre here in the Ozarks, taxes negligible.

Can't bring myself to get in the market at record highs. Been saying that since 2012.

Downsized and living well within my means,,,

a.

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Rollformer
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There is a possibility that we may be seeing a substantial reductions in drug spending. 50% is probably A drug I am on is priced at around $63 at retail list. GoodRx can get it for you for $10 or so. CVS, Rite-Aid, and Walgreen's are the worst offenders. GoodRx could be offering drugs below the co-pay price, which will push people to pay cash rather than use insurance.

Another thing that come to mind, is that the government typically uses APTWGTAPTIJ accounting (Accounting Principles That Would Get the Average Person Thrown in Jail), is that they may be using cash basis accounting, and are not recording the expense as incurred, but when paid. This is an interesting idea. Perhaps they are swinging their dicks around saying, "Lower prices, or better terms." It looks like CVS had $12.2 billion in receivables, against 177.5 billion in sales, or about 25 days. Their cash is relatively light, as are their backup credit lines. They have a commercial paper program, which may be unlimited.

I know that most Medicare Part D is handled by insurance companies, but it is conceivable to me that withholding payment for a while could be a very good negotiating tool. So the executives aren't having things put in their butts in prison, but are having things come out of them in the board room.

Probably far fetched, but it's Christmas time, and that is a time for hope.

Rollformer
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I will also point out in defense of my prior point, that Donald Trump is our president, and he has a well-known history of lackadaisical payment of suppliers...
Cfskellvt
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Something tells me the Federal Government doesn't use Blockchain;)
Djloche
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https://www.docdroid.net/JwVoT8Q/city-of....

City of Detroit v Purdue, RICO

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