$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 Fed.gov 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.
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.ReplyDelete
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."
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.Delete
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
boy, that would really be something if it was like real debt, and we actually had to pay it back...ReplyDelete
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.ReplyDelete
$200 trillion would be $1.8 million for every household in the US...Delete
There are three parts to this problem. 1. We have 20 trillion in debt and we can not and will not ever pay it down or pay it off. Simple as that. 2. When "normal" interest rates return, say 6%, we cannot pay the interest on this debt and whatever future debt we incur in the meantime. We will have to default, perhaps run the economy into the ground first trying to keep up with the interest payments but ultimately we will default. 3. Our bloated federal government cannot survive without borrowing hundreds of billions every year. We are hooked on free money just as a drug addict is hooked on drugs. We have no will or ability to fix this problem. Period!ReplyDelete
We "could" fix this overnight. Two simple steps and one tough step and this problem would be fixed and never return:
1. A constitutional amendment that the federal government must live within their income/revenues.
2. Pay off the debt in one feel swoop by basically printing 20 trillion dollar bills and paying it off. Do it without notice over a long weekend and be done with it. (Must have step 1 first though.)
3. The tough one; Stop income redistribution. End all forms of welfare and subsidies forever. If you are down on your luck; get a job, ask your family or church for help, beg on the street corner or give up the drugs but no more "free stuff" from the government. This is tough because the entire Democrat party would have to remake themselves because today they exist because they trade free stuff for votes.
Having said all this; the simple truth is that we will NOT solve this problem. We will eventually go bankrupt/default and we will make the tax payers and good people of this country suffer and go through a decade long great depression while we struggle to both make payments to the debt and continue to give the lazy and unproductive voters "free stuff". We won't fix it because we elect politicians and not statesmen.
Just a note that this is a four year old post and comments are moderated to posts over two weeks old, so that Blogger will email me and I'll know they've been made.Delete