Wednesday, October 23, 2013

The Size of the Problem

Excellent graphics from FreedomWorks which shows the problem quite nicely:
And this is without the extra couple of trillion in expenses coming from Obamacare.  There are many reasons to oppose the law, but don't overlook the cost.  The CBO currently estimates it at $2.5 to $3 Trillion for the first decade, instead of the "under $1 Trillion" figure they paraded around.  We simply can't afford this.  We need to be running surpluses, not deficits.  Putting Obamacare in place is adding pressure to the coming collapse.  With a debt total pushing over $17 trillion, by the time of the 2017 inauguration, the debt will be well over $20 trillion. 

Pressure is mounting on the dollar these days.  You and I weren't the only people who noticed how the debt instantly popped over the $17 trillion debt line when the debt ceiling deal was made; our creditors noticed it too.  That's their money the Federal Reserve is devaluing.  The Saudis are actually breaking diplomatic relations with us, over our refusal to fight the Syrians for them, and that's causing pressure on that odd conglomerate: the Petrodollar.   The move to remove the "reserve currency" status from the dollar gathers steam.  To borrow a quote from that link (CNBC):
The Tea Party was formed to prevent runaway inflation and an economic depression resulting from a crumbling currency and devalued debt. It appears by the absolute and universal vilification of its members by both Republicans and Democrats that U.S. citizens are not yet ready to undergo the pain associated with the removal of our pernicious addictions.
Indeed.  Marc Faber, the famous analyst from the Gloom, Doom and Boom Report, probably had it right when he said,  "The question is not 'tapering', the question is at what point will they increase the asset purchases to say $150 billion, $200 billion, or a trillion dollars a month."  Except it won't get that far.  At some point, other nations will abandon us and leave us for dead - which will lead to many of us achieving that status.  Of course the hard question is just when.  I wish I could answer that. 

On October 14th, Megan Ahrens went to Mt. Rushmore for her first visit, in the morning fog.  Her picture - which she swears was not shopped - went viral, because it appears that Washington and Jefferson are crying. 
If they were alive today, that's probably exactly how Washington and Jefferson would feel.


  1. Thank you for the graph. In recent yrs, I've read a lot about the US debt & deficit, but the graph is a pic worth a 1000 words.
    The pic that came to my mind, from looking at your graph, is that of a anchor-bomb dropping from a huge ship; for many yrs the speed of descent was gradual, but in the last 10 yrs, it's dropping faster & faster. At some pt, the anchor will become so big & heavy, that it will stop the momentum of the huge ship/nat'l economy. When that happens, the ship will sink, probably will a big crash or a series of smaller crashes. ...all b/c of "our pernicious addictions."

    1. Thanks for the kind words. What you're describing is another way of explaining the parabolic acceleration of something in free fall. Usually, the debt curve is upside down from this, trending up, and we talk about it going exponential. It's not as smooth as a math function, but the build-up of debt never reverses. Just look at plots of the debt ceiling.

      I wrote about that here on this blog years ago (and many times), but a good plot of the debt ceiling rising inexorably is in Congratulations, We're Officially Broke

  2. boy, that would really be something if it was like real debt, and we actually had to pay it back...

  3. The actual debt is closer to $200 trillion which would skew the graph to the point that it would look like a vertical line 11 times longer than what is depicted here.

    1. $200 trillion would be $1.8 million for every household in the US...