Did you know this?
- Not one penny of US debt has been repaid for 51 years: the last time US government funded debt actually decreased on a year-over-year basis was 1960
- 97% of today's funded debt has been accumulated since August 1971 - the end of the Bretton Woods era by Nixon, and the terminal delinking of all fiat currencies from any and all hard assets, ushered in the era of modern-day hyper-debt insolvency
- Obama projects 2.5% Fed Funds rate in budget calculations through 2020. Average Fed Funds rate since 1980: 5.7%; Since 2008: 0.00%, If average 5.7% rate was used, projected US deficit would increase by another $4.9 trillion by 2020
- Obama projects 4.2% growth rate over next 3 years. If a normal growth rate of 2.5% is used, deficits would increase by another $4 trillion by 2020
- The US government borrows 40-50 cents for every dollar it spends. A balanced budget would mean cutting government spending in half.
- Implementing a balanced budget would not reduce current debt outstanding. It would merely stop it from growing.
- Over the past three fiscal years US debt grew by over $1.5 trillion per year: this is more than three times the record annual debt increase in any previous year in US history
- Last night deficit reduction targets were cut from $4 trillion to $2 trillion over the next decade, in exchange for a $2.4 trillion debt ceiling hike, which will last the Treasury until the next presidential election. Said otherwise, the Treasury needs to fund a $2.4 trillion hold over the next 15 months. Over a decade this come to $20 trillion: ten times more than the proposed deficit reduction.
I did not. I realise that there are many exclusions and debates but at the end of the day, the debt is going up remorselessly so what the bloody hell is going on? How long can you live by borrowing from the Chinese? Esphoks. For the Americans who are scared of this debt ceiling, read this and weep. What exactly are you guys doing to yourself? I am dumbfounded at your behaviour. Bloody hell guys.
Tim Harford from the FT wrote this brilliant piece on the debt ceiling situation. Its about a kid asking their mum and dad (democrats and republicans) on why are they fighting over the debt ceiling. There is Mr. Foss-Smythe involved as well who is the “banker” (i guess this is the general public and China and you and I and anybody who is buying federal debt). Let me know if you want to read it, its hilarious.