Total US Debt Soars To 101.5% Of GDP

Discussion in 'Economy' started by Trajan, May 1, 2012.

  1. Trajan
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    Trajan conscientia mille testes

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    danger will robinson. 70% in 2009.....we will hit the debt ceiling ( inc. all of the BS bills that were passed then and since last august) in Sept.



    There is nothing quite like a $70 billion debt auction settlement at the last day of a month to bring total US debt to a record $15.692 trillion, which happens to be just $600 billion shy of the $16.394 trillion debt ceiling. (and no, contrary to simple economic textbook lesson, this does not mean that the private sector just got another $70 billion in debt capacity courtesy of taxpayers, as explained here). And now that we know what Q1 GDP was at the end of Q1, or namely $15.462 trillion, it is simply math to divine that today alone total US/debt to GDP rose by 50 bps to a mindboggling 101.5%.

    Total US Debt Soars To 101.5% Of GDP | ZeroHedge
     
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  2. itfitzme
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    itfitzme VIP Member

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    Well, I suppose it would be less if the GDP was higher. There is a thought.

    It is an interesting thing. Yep, it's a really big number. So what does it mean except it is really big?

    So what is the difference between the Debt Held By The Public and Intergovernmental Holdings?

    The Debt Held By The Public is $10,916,070,898,102.68.

    Intergovernmental Holdings is $4,776,297,169,202.55.

    What does it mean that the Debt Held by the Public is really only $11T, not $15.6T?

    And what is the real effect of the debt?

    Here is an interesting article. The real effects of debt

    Unfortunately, it doesn't say why growth limits at some level. There is no clear causality. Any clue? What, if any, is the causal relationship between GDP growth and government debt?

    The MMT guys point out that government debt is matched, penny to penny, with private savings. In fact, if the government runs a surplus then it takes away from private savings. And this only makes sense. A government surplus is money being taken out of the economy. Government bonds are savings.

    So, yeah, it's a really big number, so what? What does it mean, except it is a really big number on a bookkeeping account? It is, at some account at the Federal Reserve, a bunch of interest bearing savings accounts that add up to a really big number.

    I had some of that debt, in the form of bonds, that I cased in just the other day. At the Fed, for debt held by, say, the Chinese government, when they "cash" them in, the Fed marks down their "savings" account and marks up their "checking" account.

    Okay, so? Now what? Except for the account where the numbers are recorded, what happens?

    Here are a few more really big numbers. 7.7 million businesses. 160+ million workers. 320+ million in population. All really big numbers.

    But really, they are not "mind boggling", unless you have a mind that is easily boggled. is your mind easily boggled by numbers?
     
    Last edited: May 1, 2012
  3. uscitizen
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    uscitizen Senior Member

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    It does not matter as long as the market does good?
     
  4. itfitzme
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    itfitzme VIP Member

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    Clever question.

    Here are the things that vex me.

    1) We cannot occupy a future dwelling. We cannot borrow from future consumption. Everything that is consumed in the future will be produced in the future.

    See, when you look at the production and consumption, it doesn't matter. And it is the production and consumption that is the real thing.

    2) It is clear that an increasing money supply, relative to population growth, standard of living, and CPI, allows output to increase. A decreasing supply causes output to decrease. And the really wicked part is that output is lower on the way down then on the way up, for the exact same level of money supply. There is something just funny about the money.

    These two fundamental facts are indisputable.

    The debt is simply an accounting of money, nothing else. It has no direct connection to the economy except in that we rely on it to account for the real production and consumption.

    The problem is a purely monetary one. As long as the accounting practice allows the money supply to increase at a rate that equals the maximum rate of growth, then it's not an issue. It it increases to fast, then we get inflation. If it increases to slow, then we get deflation and falling production. (We can't get more growth then maximum, so the symmetry is lost.)

    So what is the problem with the national debt that can interfere with the money supply being "stable" compared to the population, standard of living, and CPI growth rates? If it should, is it the debt or is it the accounting?

    I say it's the accounting. There is something "broken" in our system of money. The accounting principles that apply to the household and businesses does not carry up to the entire economy. The very fact that the debt exists, and that it should then result in an issue, is testimonial to this. If the system was balanced, it wouldn't accumulate.

    It's like driving a car that pulls to the right. You know it is off because you have to steer to to the left. The very fact that you have to steer to the left to go straight is testimony to the fact that the car pulls to the right.

    Oh, and since the beginning of recorded history, well known in the Bible, debt accumulates. "Forgive our debtors....." I hear there is a seven year reference and that is where our seven year bankruptcy period comes from.

    I am just supposing here, but isn't it interesting that, on the way up output is higher then on the way down, for the same amount of money. Think about it, isn't that just odd. It has hysteresis. Doesn't it just scream of some fundamental imbalance.

    Do you suppose that on the way down, the debt is relieved, on the way up, the debt accumulates, and at zero growth, the debt just sits flat? I don't know, it's just a thought.

    Do you suppose that, while we cannot consume future food, that the hysteresis can result in us being unable to account for future food so production falls. What is the macro economic affect to the money supply if the gov't cannot accumulate more debt or pays it off? Will this result in a relative decrease in the money supply such that production becomes less then it would otherwise be at the same level of money supply during growth?
     
  5. Widdekind
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    Widdekind Member

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    Debt pledges (some of) that future production "tomorrow", to the lender, in exchange for credits, "today", de facto "free money today" (without labor) for "Taxes tomorrow" (future indentured servitude)



    Federal Reserve notes are "paper gold". Economies can only grow, when the supply of "gold" currency increases (to cover the inevitable negative cash-flows, of some economic entities).



    the expansion of the Money supply, through the creation of credit, simulates the "mining & minting of more gold coins". Increasing amounts of Fed "paper gold" cash, and bank credit, in circulation, grows the Money supply, thereby covering the losses of some (offsetting negative cash-flow with borrowed credit), who would otherwise "go broke" and "dry up" their parts of the stream of spending. Naively, if the Money supply was fixed, then every "economic cycle" would result in some "over-spending" their last coins, going bankrupt, and then "starving". Credit permits people to borrow their way through hard-times, hopefully to pay back the loans in good-times. i suspect that credit acts like a "social safety net", much more economically than Government programs -- which are, in fact, funded amidst deep deficit spending -- you might as well dispense with the Social programs & Taxes, and borrowing directly from banks yourself, to pay for your parents' retirement. Your kids would then pay for you -- i.e. the private sector already has the flexible capacity to more-than-mimic Big Government "care for our elderly".

    Banks already are "social safety nets", and "ideal Demand-side stimuli" for economies, compared to which Government programs are crude & costly (as i understand things). Being blunt, though, i think the difference, is people prefer Government solutions, when they think Government Force can get other people's money to pay for them. People don't seem to realize, though, that everybody else has the exact same idea, so that we all wind up in a "Mexican standoff of Tax obligations".
     
  6. waltky
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    waltky Wise ol' monkey Supporting Member

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    Uncle Ferd says dey liable to foreclose onna White House to pay for earthquake an' tsunami damage...
    :eusa_shifty:
    Japan on Track to Overtake China as Top Foreign Owner of U.S. Debt
    May 4, 2012 - After a 9.0 earthquake struck off the coast of Japan last March and sent a tsunami crashing into the Fukushima Daiichi nuclear power plant, causing a Japanese national emergency, some worried the Japanese would stop buying U.S. government debt—or even sell off some of what they already owned—thus precipitating a spike in the interest rates on that debt.
     
  7. edthecynic
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    edthecynic Censored for Cynicism

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    'I don't worry about the deficit. It's big enough to take care of itself.'
    Ronald Reagan

    "Reagan proved deficits don't matter."
    Dick Cheney
     
  8. waltky
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    waltky Wise ol' monkey Supporting Member

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    Japan has been even more nonchalant than the US in efforts to rein in spending...
    :eusa_shifty:
    Japan's fiscal death is a warning to the West
    22 May 2012 - Fitch Ratings has downgraded Japan two notches to A+, citing a surge in public debt since the Lehman crisis and the lack of any plan to restore fiscal probity.
     
  9. ShackledNation
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    ShackledNation Libertarian

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    First time since WWII that this has happened. Quite sad.
     
  10. Nova78
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    Nova78 Silver Member

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    OBAMA ------:cuckoo:

    $obamacarelines.jpg

    $Obama-Year-One.jpg
     

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