Addicted to Debt– America is a Debt Junkie

Debt JunkieFrom the Grandfather Economic Report authored by Michael Hodges:

America has become more a debt ‘junkie’ – – than ever before with total debt of $57 Trillion – – and the highest debt ratio in history.

That’s $185,668 per man, woman and child – – or $740,260 per family of 4.

While 2008 total debt increased $3 Trillion, 8 times faster than GDP, total Debt in 2009 & 2010 stopped growing – like hitting a brick wall !!

While private sector debt dropped via defaults & foreclosures, federal government debt expanded $3.3 ($1.6 trillion 2009 + $1.7 trillion 2010)
[state & local govt. debt expanded $226 billion]

External debt owed foreign interests increased $1.2 Trillion in 2008, and $720 billion in 2010.

81% ($46 trillion) of all debt was created since 1990, a period primarily driven by debt instead of by productive activity.

And, the above does not include un-funded pensions and medical promises.

2 great questions:
Can the production of debt forever replace the production of goods and savings?
Can Americans forever borrow their way to prosperity?
Easy Answer > NO WAY !!

BIG PICTURE – $57 TRILLION of DEBT in America, and rising rapidly

the economy is 2-3 times more debt-dependent – – with $36 Trillion DEBT EXCESS compared to prior debt ratios.

Here’s one graphic of many shown in the main Total Debt Report.

national debt vs national income

National Debt vs National Income

Here is a chart showing trends of total debt in America (the red line) reaching $57 trillion in 2010 vs. growth of the economy as measured by national income (blue line). (adjusted for inflation).

Which line goes up faster, the red debt line or the blue net national income line? Answer: the debt line.

And, that debt line has exploded up faster and faster than national income! Right?

(maybe, like this chart, your own personal or business debt is also going up faster than your own income – – possible?)

As mentioned, debt is here defined as all U.S. debt (sum debt of federal and state & local governments, international, and private debt, incl. households, business and financial sector debts, and federal debt to trust funds).

This chart shows, for the period 1957 to mid 1970s, total debt (red line on chart) was increasing close to the growth rate of national income (blue line on chart), despite war debt for WW II, Korea and Vietnam.

But, in the last several decades total debt has zoomed up, up and away – – growing much faster than national income. As of beginning 2011 total debt was $57 Trillion ($40.8 trillion private household/business/financial sector debt PLUS $16.2 trillion federal, state and local government debt).