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View Full Version : U.S. national debt rises at $3.8 billion per day



Ron Czapala
02-17-2012, 12:21 AM
This is pretty scary----

http://finance.yahoo.com/news/12-scary-debt-facts-for-2012.html (http://finance.yahoo.com/news/12-scary-debt-facts-for-2012.html)

As President Obama unveiled the 2013 fiscal year budget, the nation's financial situation came back into sharp focus. Experts say partisan gridlock in Washington means the budget will probably go nowhere.

Considering this is an election year, however, expect politicians to harp on facts, figures and terms that most Americans weren't taught in high school. To help out, it's time to dredge up lots of scary facts to make you pay attention.

Before we get going, a quick primer on the number TRILLION:
$1 trillion = $1,000 billion or $1,000,000,000,000 (that's 12 zeros)
How hard is it to spend a trillion dollars? If you spent one dollar every second, you would have spent a million dollars in 12 days. At that same rate, it would take you 32 years to spend a billion dollars. But it would take you more than 31,000 years (http://defeatthedebt.com/) to spend a trillion dollars.
And now, some scary facts about the debt and the deficit -- some basics:
Deficit = money government takes in -- money government spends
2012 US deficit = $1.33 trillion
2013 Proposed budget deficit = $901 billion
National debt = Total amount borrowed over time to fund the annual deficit
Current national debt = $15.3 trillion (or $49,030 (http://justfacts.com/nationaldebt.asp) per every man, woman and child in the US or $135,773 per taxpayer)

OK, let's get started!

1. The U.S. national debt on Jan. 1, 1791, was just $75 million dollars. Today, the U.S. national debt rises by that amount about once an hour (http://www.brillig.com/debt_clock/faq.html).

2. Our nation began its existence in debt after borrowing money to finance the Revolutionary War. President Andrew Jackson nearly eliminated the debt, calling it a "national curse." Jackson railed against borrowing, spending and even banks, for that matter, and he tried to eliminate all federal debt. By Jan. 1, 1835, under Jackson, the debt was just $33,733.

3. When World War II ended, the debt equaled 122 percent of GDP (GDP is a measure of the entire economy). In the 1950s and 1960s, the economy grew at an average rate of 4.3 percent a year and the debt gradually declined to 38 percent of GDP in 1970. This year, the Office of Budget and Management expects that the debt will equal nearly 100 percent of GDP.

4. Since 1938, the national debt has increased at an average annual rate of 8.5 percent. The only exceptions to the constant annual increase over the last 62 years were during the administrations of Clinton and Johnson. (Note that this is the rate of growth; the national debt still existed under both presidents.) During the Clinton presidency, debt growth was almost zero. Johnson averaged 3 percent growth of debt for the six years he served (1963-69).

5. When Ronald Reagan took office, the U.S. national debt was just under $1 trillion. When he left office, it was $2.6 trillion. During the eight Regan years, the US moved from being the world's largest international creditor to the largest debtor nation.

6. The U.S. national debt has more than doubled since the year 2000.

Under President Bush: At the end of calendar year 2000, the debt stood at $5.629 trillion. Eight years later, the federal debt stood at $9.986 trillion.
Under President Obama: The debt started at $9.986 trillion and escalated to $15.3 trillion, a 53 percent increase over three years.

7. FY 2013 budget projects a deficit of $901 billion in 2013, representing 5.5 percent of GDP, down from a deficit of $1.33 trillion in FY 2012, which was the fourth consecutive year of more than $1 trillion dollar deficits.

8. The U.S. national debt rises at an average of approximately $3.8 billion per day.

9. The US government now borrows approximately $5 billion every business day.

10. A trillion $10 bills, if they were taped end to end, would wrap around the globe more than 380 times. That amount of money would still not be enough to pay off the U.S. national debt.

11. The debt ceiling (http://www.treasurydirect.gov/govt/charts/charts_debt.htm) is the maximum amount of debt that Congress allows for the government. The current debt ceiling is $16.394 trillion effective Jan. 30, 2012.

12. The U.S. government has to borrow 43 cents (http://mercatus.org/publication/how-much-federal-spending-borrowed-every-dollar) of every dollar that it currently spends, four times the rate in 1980.

You can track the national debt on a daily basis here (http://www.treasurydirect.gov/NP/BPDLogin?application=np).

Dr_Acula
02-17-2012, 01:52 AM
Scary stuff. $135k per taxpayer, and say two taxpayers per household, the national debt is getting up to par with what many people owe on a mortgage.

I wonder who all this money is owed to? When I was a kid it was Germany and Japan but I suspect it might be China now.

What do governments do when they owe lots of money? The temptation would be there to print more money. That devalues the currency which makes it easier to repay the debt in the future. If you borrow a million dollars and in ten years time that is enough to buy an icecream then it is easier to repay.

I suspect this is what is happening. From an Australian perspective, when I was a kid in the 1980s I remember the dollar got floated and our dollar bought US$0.47 Now we get about US$1.08. And by way of comparison, the Australian to New Zealand ratio has been virtually unchanged during that time.

So the US$ seems to be devaluing. In the long run that is a self correcting mechanism, as it makes US industry more competitive for exporting and imports become more expensive (in Australia we have the opposite problem - plasma TVs are at giveaway prices, but our wheat farmers are hurting).

I think I read somewhere that the US is printing lots of money. The effects of this I think get delayed more than, say, Zimbabwe, because the $US is also a global reserve currency. But eventually it means that the US$ will fall relative to other currencies, exports will pick up, business picks up and then there is less need to borrow.

It is interesting to compare this self correcting mechanism with situations where it cannot happen, like in Greece where the currency is locked into the Euro so it cannot be allowed to fall. In the long run, it reaches a crises and a default, and so while a borrowing and printing money is bad, it probably is not as bad as what Greece is going through.

Why are governments so bad at managing a budget compared with the average Joe?

Bean
02-17-2012, 01:59 AM
Nothing will change until people realize we can never pay back our debt.
Then things will get really bad, then hopefully we will learn our lesson.
I see hard times in the short term,but good times in the long run.
Bean

Martin_H
02-17-2012, 02:04 AM
I wonder who all this money is owed to? When I was a kid it was Germany and Japan but I suspect it might be China now.
...
Why are governments so bad at managing a budget compared with the average Joe?

Due to some funky accounting the US owes about half of that amount to itself for the social security trust fund. I think about half of the remainder is to the Chinese. The answer to the second question is complex, but the tragedy of the commons is a good summary.

Phil Pilgrim (PhiPi)
02-17-2012, 02:23 AM
That China holds a huge chunk of our debt is a popular fiction that's simply not grounded in fact. They own less that 24% of our foreign-owed debt, barely nosing out Japan, who will probably overtake them this year. Here's a table that shows our creditor nations over the last year:


http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

Our foreign-owned debt accounts for about 47% of the total, leaving China with less than 11% overall.

-Phil

Ttailspin
02-17-2012, 03:01 AM
Feeding every "Mouse that roars" (http://tvtropes.org/pmwiki/pmwiki.php/Literature/TheMouseThatRoared?from=Main.TheMouseThatRoared) probably doesn't help much with paying the debts...


"There isn't a more profitable
undertaking for any country than to
declare war on the United States
and to be defeated."


-Tommy

User Name
02-17-2012, 03:01 AM
I think I read somewhere that the US is printing lots of money.
You are exactly right. It is a very clever strategy, too: Buy votes by pilfering every single savings account in the country. No one will notice.

I've converted virtually every dollar of savings to tangible assets.

Martin_H
02-17-2012, 03:08 AM
OK I stand corrected on over guesstimating China's foreign ownerrship percentages. But I am correct that half is owed to the US and I am fairly sure that is the trust fund.

ctwardell
02-17-2012, 03:21 AM
Nothing to see here, everyone move along..have another cool-aide...

C.W.

erco
02-17-2012, 04:22 AM
Nothing to see here, everyone move along..have another cool-aide...

C.W.

XLNT! Kool-aid here, and PJ says the dark side has cookies. We all good!

ElectricAye
02-17-2012, 05:55 AM
...
Why are governments so bad at managing a budget compared with the average Joe?

Granted, governments are bad at managing money. But so are average Joes. How many average people have little or no debt? own their home free and clear? pay cash when they buy a car? owe nothing on their credit cards? Average Joes have debt. The only difference, I suppose, is that the Bankers will take back the homes, cars, jet skis, etc. if the Joes stop making payments. With nations it's a little different. For one thing money seems to have some kind of emergent property that magically appears as it circulates into the larger economy. There are multiplier effects, etc. that cause "kitchen table analogs" to totally break down, and these interdependencies make everything very messy and hard to predict. Even today, so many years after The Great Depression, people still argue over what should be done to stimulate the economy. I suppose if it were all so obvious what to do, we would not be debating it day in and day out. One thing is for sure: history has a nasty way of repeating itself.

This Time Is Different: Eight Centuries of Financial Folly.
http://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691142165

Loopy Byteloose
02-17-2012, 06:59 AM
Why are the governments so bad at managing debt when compared to the average person?

It is other people's money. You borrow it, skim some for your own pocket, and let the taxpayer worry about the repayment. If someone else would pay off my credit card and preserve the rating, I'd be on a roll as well.

Tor
02-17-2012, 10:11 AM
I once heard the question 'Can the U.S. go bankrupt?' answered with 'No, because all of the debt is cleverly in US dollars, so if someone wants their money back the US can simply print more dollars. Which means they won't dare to, which again means the U.S. can never go bankrupt.'

On the other hand it sounds to me like the U.S. could easily end up in a situation like the one described in Neil Stephenson's 'Snow Crash' where USA doesn't exist as such anymore, only a bunch of smaller privately-owned enclaves.

-Tor

Bean
02-17-2012, 05:31 PM
I once heard the question 'Can the U.S. go bankrupt?' answered with 'No, because all of the debt is cleverly in US dollars, so if someone wants their money back the US can simply print more dollars. Which means they won't dare to, which again means the U.S. can never go bankrupt.'
-Tor

This correct. But like I said earlier, once the buyers of our debt figure that out. No one will want to purchase our debt unless the interest rate is sky high. The interest on the debt will balloon.
Most everyone agrees that federal spending cannot continue like this forever. And like they say "Things that cannot continue forever, won't continue forever".
It only remains to be seen if politicians will have the guts to finally stop the spending, or if they will continue to "kick the can down the road" one too many times.

Bean

bill190
02-17-2012, 05:34 PM
Well they seem to be holding $6 trillion of FAKE U.S. debt in Switzerland!
(Who buys paper bonds anymore? Maybe in Europe?)

Or were they going to cash these all in at once?

Italian police seize $6 trillion of fake US bonds in Switzerland...
http://www.telegraph.co.uk/finance/financial-crime/9089268/Italian-police-seize-6-trillion-of-fake-US-bonds-in-Switzerland.html

bill190
02-17-2012, 05:38 PM
More on the fake bonds...
http://www.zerohedge.com/news/why-were-trillions-fake-bonds-held-chicago-fed-crates

Pharseid380
02-17-2012, 06:56 PM
One of the tricks we use to hide the fact that we're buying our own debt is for us to buy Japan's debt and Japan to buy ours.