Nation's Borrowing Exceeds GDP

by: Les Carpenter
Rational Nation USA
Birthplace of Independent Conservatism
Liberty -vs- Tyranny


Someday, this nation, all its people, and the politicians they elect to represent them will be forced to face reality. The objective truth is we simply will not be able to sustain continued growth in government programs financed through excessive borrowing.

AFT: US debt shot up $238 billion to reach 100 percent of gross domestic project after the government's debt ceiling was lifted, Treasury figures showed Wednesday.

Treasury borrowing jumped Tuesday, the data showed, immediately after President Barack Obama signed into law an increase in the debt ceiling as the country's spending commitments reached a breaking point and it threatened to default on its debt.

The new borrowing took total public debt to $14.58 trillion, over end-2010 GDP of $14.53 trillion, and putting it in a league with highly indebted countries like Italy and Belgium.

Public debt subject to the official debt limit -- a slightly tighter definition -- was $14.53 trillion as of the end of Tuesday, rising from the previous official cap of $14.29 trillion a day earlier.

Treasury had used extraordinary measures to hold under the $14.29 trillion cap since reaching it on May 16, while politicians battled over it and over addressing the country's bloating deficit.

The official limit was hiked $400 billion on Tuesday and will be increased in stages over the next 18 months.

The last time US debt topped the size of its annual economy was in 1947 just after World War II. By 1981 it had fallen to 32.5 percent.

Ratings agencies have warned the country to reduce its debt-to-GDP ratio quickly or facing losing its coveted AAA debt rating.

Moody's said Tuesday that the government needed to stabilize the ratio at 73 percent by 2015 "to ensure that the long-run fiscal trajectory remains compatible with a AAA rating."

Sure, the debt deal is supposed to insure deficit and debt reduction occurs over the next tn years. Anybody want to place bets now as to whether or not this really happens? It is sure to be interesting, especially if Obama is reseated in the Executive Chair at the big desk.

For an explanation of the picture captioned at the top of page visit here. It is the third picture as you scroll down on the page.

Via: Memeorandum

Comments

  1. I was just looking at the charts for this yesterday, Les. '45, '46, and '47 were the only other years in which the debt to GDP ratio exceeded 100%. This is indeed very troubling. But you know what's even more troubling - the fact that so many other individuals out there who AREN'T troubled by it. I especially find it amusing as to how they analogize this to a family's debt, the fact that many people also have a debt larger than their income. Of course, what they refrain from telling you is that this is usually the situation of a young person and that a young person in fact generally pays this debt down to a level where the income is the larger of the 2. The fact that this country seemingly isn't doing that, again, is troubling.

    ReplyDelete
  2. Unless we begin to acknowledge this, both the general population as well as the politicians and lawmakers, the nation is on a sure road to economic disaster.

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