Posted on 08/02/2016 1:48:55 PM PDT by MichCapCon
The U.S. national debt has increased every year this century and is approaching $20 trillion, nearly four times what it was in 2000. It has also grown relative to the national economy. While it was an amount equal to 55 percent of the nation’s gross domestic product in 2000, it reached 101 percent of GDP in 2015.
While most Americans are unaware of the escalating debt, some economists warn that citizens will eventually feel the consequences.
According to U.S. Debt Clock, the U.S. national debt stands at $19.4 trillion as of July 26. It was $5.7 trillion in 2000 and increased to $18.2 trillion by 2015. The number represents the debt issued by the United States Department of the Treasury.
GDP measures the monetary value of all goods and service produced by a nation. The U.S. nominal (not adjusted for inflation) GDP for the year 2000 was $10.29 trillion. It rose to $17.95 trillion in 2015.
“No one is upset about it because the consequences haven’t been felt yet,” said Chris Douglas, the chair of the department of economics at the University of Michigan-Flint. “Eventually, taxes will have to be increased to pay off the debt (deficit spending just means future taxes) or spending will have to be substantially cut, especially popular spending such as Social Security or Medicare, since that is where the real spending is taking place.”
“There may not be a substantial current cost to the debt, but the future costs can be very severe,” said Douglas, who is on the Mackinac Center for Public Policy’s Board of Scholars.
Antony Davies, an associate professor of economics at Duquesne University, compared the national debt to a household’s credit card balance.
“While it would be nice not to have a big balance on your credit card, what really matters is whether you can afford the minimum monthly payments,” Davies said in an email. “Those minimum monthly payments - called debt service - are analogous to the interest on the national debt. The federal government currently pays about 2.5 percent interest on its debt. At that rate, the interest on $20 trillion is $500 billion annually. And this is where the real problems of the national debt arise.”
The Congressional Budget Office projects a $534 billion deficit for the 2016 fiscal year or a $100 billion increase from 2015.
Davies estimated that the federal government will spend $13.6 billion on interest just on 2016’s projected $534 billion of red ink. He said that reduces the amount of money the government will have available to spend on public services by $13.6 billion every year into the future until the debt is paid.
The greater the federal debt, the greater the pressure to keep interest rates low, Davies said.
“The federal debt is so large that just a one-percentage-point increase in interest rates would cost the federal government, in additional interest expense, as much as the annual costs of the Iraq and Afghanistan wars combined,” Davies said. “In short, the federal debt has painted the Federal Reserve into a corner. It can't allow interest rates to rise significantly for fear of financially crippling the federal government.”
If orders for durable goods drops for foreign made items then how does that kill the USA economy? Laid off factory workers in other countries can KMA. So your comment MAKES NO ECONOMIC SENSE.
Better if we just go ahead and go over the cliff? Screw that. SMOOT HAWLEY did not do anything to cause or worsen the Great Depression. That is myth and a lie. If S-H act had not been passed the history of the 1930's would have been exactly the same.
Not if we apply the brakes, called tariffs.
“I hope someone rubs his manchild nose hard in the pavement when we All Fall Down...”
Good luck Wi Dat.......
... and here is $1 Trillion in $100 bills.
We are far past the point where the West can pay its debt.
The only reason we haven’t seen a crushing currency crisis in one country or another is that all of them are trying to race each other to the bottom.
We are a few years, at best, away from the worst financial reboot in human history.
I no longer care about the national Debt, but I care very deeply for how little gold I own. I need much more.
Yes, but that is not the only purpose of NIRP.
Lol to the power of infinity.
The last time idiots like him were spewingbnew paradigms it was about housing. “There is no bubble. Housing never goes down. It is different this time.”
We all know how that ended.
It is never different this time. The soaring debt will end very badly for everybody but the rich, presuming they have gold, real estate, staple businesses, and such. One day the speculatorps are going to be jumping out of windows.
There is a way out. The USA should save itself and the rest of the world be dammed. Tariffs of 20% would stop the bleeding of trade deficits, budget deficits and offshoring. Any factory owner contemplating offshoring would shelve that idea indefinitely. Repatriation of industry should be made a priority. It would be painful at first but in the long run much better. No need to reboot.
My point is that economics often doesn't make sense. Sometimes what happens is very different from what we expected to happen. We have been engaging in a discussion about the economic factors which triggered the Civil War.
So far, the evidence is leading me in the direction of the war being started to protect North Eastern monied interests. Their monopolistic/protectionist policies didn't have the intended consequences they expected.
When they saw they were going to lose huge sums of money due to Southern independence, they pressured Lincoln to start a war to prevent those huge losses.
Better if we just go ahead and go over the cliff? Screw that. SMOOT HAWLEY did not do anything to cause or worsen the Great Depression. That is myth and a lie. If S-H act had not been passed the history of the 1930's would have been exactly the same.
I do not know if it is a myth and/or a lie. I am amenable to arguments that it is, but I think economic policy needs to be set with a great deal more caution than we have seen in the past.
Before making such changes, we need to be D@mned sure they will result in consequences we like.
Cantorize the Mooselimb bass turd!!!
We have unfunded liabilities in excess of five times our entire national debt. "Tariff's" will be as effective as bailing the ocean with a tea cup.
We are either going to have to kill off a lot of population to whom retirement benefits are owed, or we are going to have to inflate the money supply to steal the value of the money owed.
We are in a horrible financial mess, and I think it is not going to be resolved by any simple means.
We are in a horrible financial mess, and I think it is not going to be resolved by any simple means.
What caused the cash flow to stop with the USSR?
our economy is based on innovative productivity.”
My point is that economics often doesn’t make sense. Sometimes what happens is very different from what we expected to happen.
I am really going to prove my ignorance because I don’t know what they are exactly but derivatives are an even bigger issue if I under stand that correctly. Like $750 trillion???
That’s because for almost everybody in office and in financial corporations and a lot of other elites are ALL in “get while the gettin’s good” mode. They only want to utilize what time is left to amass and load out their loot to someplace secure. They give not one rats turd what happens to the Republic or its citizenry.
And the ongoing and ever increasing third-world poverty immigration to Western countries is gasoline on the fire...well done, Western governments! May you all rot in hell (following public execution - after a fair and speedy trial).
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