holy cow - when did US debt exceed US GDP?

Yeah... That happened under Obama. Worst President EVER!

You mean we owe in total more than we produce in one year. You're comparing a "fixed" value in the debt (of course it's not literally fixed) to a rate in the GDP. What if you looked at a monthly GDP instead of yearly, we'd owe an order of magnitude more than GDP. This comparison is arbitrary and means nothing.

The only real meaningful comparison would be the interest rate on the debt to the GDP, where of course you're totally screwed when the interest piles up faster than you can possibly pay it off, even if you were to allocate 100% of your resources towards servicing the debt.

Don't worry, Obama has it all in control. We're in worse shape than Greece was and nothing happened to them when they couldn't pay their debt did it?

Sure, but time-accumulated values (I/S) are compared to point-in-time/snapshot values (B/S) all the time (ex: ROA, ROE, DSC). And an annual accumulation (like annual GDP) is frequently used, commonly understood, and widely cited for comparison among nations. Arbitrary perhaps but we need a common reference point.Back to the issue: who's going to pay this back? Will it happen through increased taxes or inflation? What happens when a debt fueled economy pivots to repayment? Will the Boomers shoulder any of the repayment or will they kick the can down the road until they are gone or incapable of paying...?

Shmuck wrote:

You mean we owe in total more than we produce in one year. You're comparing a "fixed" value in the debt (of course it's not literally fixed) to a rate in the GDP. What if you looked at a monthly GDP instead of yearly, we'd owe an order of magnitude more than GDP. This comparison is arbitrary and means nothing.

We're already paying it back. Try to keep up.

Senses wrote:

We're already paying it back. Try to keep up.

Not in a meaningful way that reduces the debt-to-production ratio below 100% as every month we take on more debt at Treasury sales. Sure, 100% is an arbitrary number but where else are we going to draw the line?

I know the debt is denominated in dollars and thus we can always "print" more but that has unintended consequences. And at some point our creditors might start to ask/require that our debt be denominated in another currency or basket.

But that's neither here nor there; we took out vast sums of debt and all we have to show for it is a cluster in the Middle East, growing dependency on social programs, and a crumbling infrastructure.

Your leaders have failed you.

Quite true, the risk of currency failure rises dramatically when national debt > GDP. This time won't be any different!

The only comfort I have is thinking about the old joke about only having to outrun your hiking buddies (and not the attacking bear). You only have to out-save (and invest) the average and you'll be ok when everyone else is suffering.

krispy kremlin wrote:

And at some point our creditors might start to ask/require that our debt be denominated in another currency or basket.

They can ask, but they can't require. Short answer: not gonna happen.

3 things

1. why on a running message board?

2. vast majority of debt rung up under Reagan, Bush, not Clinton, Obama

3. So if my home mortgage is 100K but my annual salary is 90K, that's a disaster? why?

Financial expert wrote:

krispy kremlin wrote:

And at some point our creditors might start to ask/require that our debt be denominated in another currency or basket.

They can ask, but they can't require. Short answer: not gonna happen.

It's not past creditors that matter; it's future creditors. Creditors can require whatever they want as a condition of loaning money.

krispy kremlin wrote:

I must have fallen asleep at the switch, I thought this ratio was hovering around 70-75%... but it is now over 100% - this is danger zone.

http://www.usdebtclock.org/

Even before now, I've brought this concept up to my friends but they are too busy playing video games, babbling on about social justice, or bitching about why they're social workers.

We.now.owe.more.than.we.produce.

#whoisgoingtopaythisbackquestionmark

InflationOrTaxes.html

Read this please:

"Quite true, the risk of currency failure rises dramatically when national debt > GDP."

This is one of the things that bothers me the most, and affects my relative risk assessments.

jungleroy59 wrote:

3 things

1. why on a running message board?

2. vast majority of debt rung up under Reagan, Bush, not Clinton, Obama

3. So if my home mortgage is 100K but my annual salary is 90K, that's a disaster? why?

ah, more proof that we're utterly screwed. Can't have a population as confidently ignorant as this idiot and expect it to end well...

Before 2012 the peak was 122% in 1943.

Q4 2000 - 54.6%

Q1 2006 - 61.3%

Q1 2010 - 87%

Q1 2013 - 101.6%

Q2 2013 - 99.2%

Q1 2014 - 103.3%

Isn't US debt still considered grade A debt to countries that are buying it? So what difference does it make how much US issues as long as it's considered good?

If you click the time machine, sometime between 2008 and 2012.

Need to get GDP up.

The debt will never be lower than it is now.

America is going to crash. The FED is just about tapped out and once the US Dollar is no longer the world's reserve currency, look out below....

A new world order is coming. You have been warned.

Don't ever compare us to Greece. The dollar is the reserve currency of the world. We are the largest economy. Our budget deficit is entirely sustainable at among the smallest percentages of GDP in a long time. If we are in trouble, then why isn't there either a high interest rate or a high inflation rate? The economy's doing quite well in fact. It was Bush (and his recession) who put the deficit to the highest figure in the last year of his presidency.