Disturbing Federal Debt Trend
Dshort has a disturbing chart showing the gross federal debt, as well as 6-year estimates.
The financial crisis that began in 2008 changed everything. Government policies to deal with the crisis have significantly altered the OMB estimates, as the two Obama budgets (2010 and 2011) dramatically illustrate. The 2010 budget (presented February 26, 2009, 11 days before the market low) included a forecast for the fiscal-year-end debt that proved to be 8.3% higher than the 2009 final number, a fact that illustrates the magnitude of uncertainty introduced by the financial crisis. The 2011 six-year forecast has scaled back the numbers for 2010 and 2011, but it closely tracks the later trend of the previous budget.These federal debt forecasts confirm we what already know — 2008 was a major economic turning point, a metaphoric fork in the road. However, the chart helps us quantify the magnitude of the new direction. The current 2015 forecast of a 19.68 Trillion debt is about 46% higher than the equivalent point (about 13.5 Trillion) on the road not taken.
If you didn't already know, we are on an unsustainable course. This will hurt the poor and middle class the most, as it already is.
March 2nd, 2010 - 16:33
The Fed and treasury both know they can keep running up the debt as long as they want (for now at least) for several reasons:
1) The overhwelming majority of the American sheeple still have no clue what is going on with our economy and they actualy believe there was a recovery. In Austrian economics, there is no such thing as a “jobless recovery.” The American sheeple also believe the American media is always telling them the truth.
2) The treasury has an unstated intenion of purposefully devaluing the dollar. Paying Social Security benefits, gvmnt pension worker benefits, debts service payments, etc in cheaper dollars is great unless your creditors (foreign countries like Japan and China) and bond vigilantes say enough is enough and force interest rates higher.
3) The dollar’s status as world’s reserve currency. When you own the world’s reserve currency and you are still considered the world’s best military, you can run the printing presses for a long time and no one is going to do anything about it.
4) The government deficit spending and creating inflation is the easiest and best way for a government to tax its people. Even Keynes said so. Inflaiton is often called the “invisible tax.” Wealth is not being destroyed. It is merely being transferred from most private US citizens to our gvmnt in the form of loss of purchasing power from private citizens. Please take a look at my new company. We have a Facebook fanpage up. We’re Wall St for Main St and we’d welcome you into our dicussions!
Thanks,
Jason