Since 10/1/07, the US has achieved 44 cents worth of growth for every dollar worth of debt. As the title implies, we’re “growing” our way to insolvency. From Chris Hamilton at economica.com:
As of October 1st of 2007 (the start of the 2008 Federal Government fiscal year), federal debt stood at $9 trillion and 70 billion. In the subsequent ten years and five months, the US federal debt has grown $11 trillion and 805 billion and now stands at $20 trillion and 875 billion (chart below). Over the same period, US GDP grew $5 trillion and 169 billion. Simply put, for every $1 of new federal debt undertaken, the US achieved $0.44 cents of economic activity or “growth”.
However, as the chart below shows, the huge increase in federal debt (red line) was accompanied by a minimal increase in interest payable on all that debt (blue line). The boxes detail the total debt incurred during each period against the annual increase in interest payments on that additional debt. The Federal Reserve is primarily to thank for the cheapening of debt and encouragement to undertake all that debt, but many fear the same Fed is set to hike those interest payments with its ongoing rate hikes.
In five months of fiscal year 2018 (through Feb 28), the Treasury has already issued $630 billion in new debt. The Treasury is on pace to issue $1.2+ trillion in new debt (2017 was a mere $672 billion increase). But let’s be conservative and assume the Treasury reins it in and “only” issues another $370 billion over the next seven months…for a nice round $1 trillion in new debt. Big numbers are hard to comprehend, so I’ll show just the added responsibility from the debt undertaken in 2018, per every full time employee in the US (there are 127 million FT US employees):
+$31 per work day
+$7.9 thousand annually
This would be in addition to the $163 thousand every full time employee is already responsible for. But, sadly, this vastly understates the issue. According to the Treasury’s 2017 Financial Report of the US Government, the “total present value of future expenditures in excess of future revenues” is $49 trillion in addition to the federal debt!!! Simply said, Social Security and Medicare require $49 trillion here and now to allow that money to grow at a compounded annual rate in conjunction with estimated future tax revenues to meet the present and future payouts that have been promised.
To continue reading: The Faster America “Grows”, The Faster America Goes Bust