The US Debt Piles Up

What a spectacle the world has become…full of farce and morbid hilarity.

The US government just breached the $16 trillion debt threshold. The folks at Zero Hedge tell us it took the government just 286 days to add an additional $1 trillion to the US debt pile. That’s $3.5 billion a day. Extrapolating, they tell us US debt will hit:

  • $17 trillion on June 10, 2013;
  • $18 trillion on March 23, 2014;
  • $19 trillion on January 3, 2015; and
  • $20 trillion on October 16, 2015

But before total US debt can smash through $17 trillion, it must first bump up against Congress’ self-imposed ceiling of $16.394 trillion. On the current trajectory, that will occur sometime in December.

It is the nature of dysfunctional economies and financial systems to require more and more debt to sustain their structural flaws. There is no going back for the US government. It will spend into oblivion. Otherwise, its economy will collapse.

Because US government spending is the only thing keeping the economy afloat. Over the past year the Feds pumped more than $1 trillion into the economy. That is, they spent over $1 trillion more than they collected in taxes.

And what did they get for it? An economy crawling along at barely a 2% growth rate! That’s not enough growth to do anything about the US unemployment problem. Which means the Federal Reserve can continue to justify its existence, and more quantitative easing because, it has a mandate to ‘fight’ unemployment.

Just how printing money leads to better sustainable employment outcomes is a mystery to us, and we suspect it is to the Fed as well. But these imbeciles are so saturated with their own self-importance that they no doubt think printing money must, somehow, be beneficial.


Greg Canavan
for Markets and Money

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Greg Canavan
Greg Canavan is a contributing Editor of Markets and Money and is the foremost authority for retail investors on value investing in Australia. He is a former head of Australasian Research for an Australian asset-management group and has been a regular guest on CNBC, Sky Business’s The Perrett Report and Lateline Business. Greg is also the editor of Crisis & Opportunity, an investment publication designed to help investors profit from companies and stocks that are undervalued on the market. To follow Greg's financial world view more closely you can subscribe to Markets and Money for free here. If you’re already a Markets and Money subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Markets and Money emails. For more on Greg go here.

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It’s not an arm or a leg, it’s only money(bits of paper with someones picture on it). And guess who owns a lot of it – China, so they need to keep America healthy, sort of thing. After all who else is going to ship money to China.

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