US Debt visualized.

[Puros Y Vino]

Here.

[riazp]

wow...thats pretty cool. but yeah scart as hell

[Maron76]

Great link Frank! I like the comments at the bottom. Best comparison I have heard yet. "raising the debt ceiling is like raising blood alcohol level to reduce drunk driving".

[zuma]

Whoa! bloody scary I say... and I mean real freaking scary nightmare...

will the US default? will the US be seeking/needing of bailing out?

will the American people do it? or will China do it?

if a massive default happens, the GFC will look like a fun kids ride...

[thechenman]

If the debt cap isn't increased, the U.S. will still not technically be in default. More than likely there will be a debt downgrade on U.S. Treasuries from AAA to AA, but only on the short-term side. You can see it in the markets now, where it costs you more to hedge a 1-year Treasury than to hedge a 5-year Treasury. Bizarre. The problem isn't that the U.S. can't pay its debts, it certainly can. Just like publicly traded corporations the U.S. typically raises capital by issuing Treasuries. The problem is that Congress won't allow the debt ceiling (the amount of debt the U.S. can have outstanding) to be raised, which precludes the U.S. from being able to raise money in the markets to finance its debt. That said...the U.S. will continue to issue Treasuries as existing Treasuries expire and are rolled over. The U.S. Treasury will use these funds to service the country's existing debt, but the country will not be allowed to take on new debt. In no way should the situation in the U.S., be looked upon in a similar fashion to what is happening with the PIIGS (Portugal, Italy, Ireland, Greece and Spain). It's a totally different ballgame. These European countries are unable to raise sufficient capital at reasonable interest rates...that is not a problem that the U.S. faces, or would face.

Whoa! bloody scary I say... and I mean real freaking scary nightmare...

will the US default? will the US be seeking/needing of bailing out?

will the American people do it? or will China do it?

if a massive default happens, the GFC will look like a fun kids ride...

[zuma]

Thanks for your comments mate... good to hear that the US can still borrow to pay its debts

[nick17]

This is why the US dollar ia going to be worthless and the US will not be a super power for much longer

[Peter11216]

There is a no-referring-to-US-politics rule that, if you ask me, is being violated here, and prevents me from making a full response. However, the best non-political response is to point out that the diagrams showing how "large" the debt is are pretty much meaningless, without comparing the debt to the size of the US economy.

Comparing a stack of bills to one or another particular object probably just obfuscates things.

Here is what happens to the deficit (which adds to, or if a surplus subtracts from the debt) under current law according to the Congressional Budget Office. It doesn't look too scary.

Best,

Pete

[el.barbudo]

I agree with Pete that we are on the edge of a political discussion here that is against forum rules. Also agree that while a pile of notes is a startling visual, it does not take into account the reality of the entire situation.

Shocking? Yes. Thought provoking? Not really, imagine how much taller the stack would have been if it was just $1s, or even pennies! Thoughtful and useful for the current political problem? No.

As only the government liabilities are mentioned, ("the Medicare, Medicare Prescription Drug Program,

Social Security, Military and civil servant pensions.") but no mention is made of government subsidies to corporations or revenues lost due to loopholes, etc. it strikes me as merely a biased scare tactic and not any reasoned fully informed piece of useful information. Pete's graph is much more useful.

Can we stop now?

-Will

[Puros Y Vino]

Gents. It's a graphic illustrating the debt. No right vs left shenanigans implied. Personally, I've learned a bit more about the whole situation as a result of subsequent posts. Don't worry, this isn't some "cigar talk" forum where things get out of hand. As for the "US Politics" rule on the forum, there might be an offcolour post or two but not enough to be concerned about. Besides, this issue just isn't isolated to the US. It's global in it's implications. FWIW, the world markets are heavily tied to the US dollar and the situation makes a lot of folks nervous. Sure there are better places to discuss this issue in detail. But this is a "novelty" post illustrating what those massive amounts of money look like in the real world.

Cheers.

[habanos1972]

[anacostiakat]

I say default!!!!!!!!!!!

Let the Chinese bail us out cause the US is TOO BIG TO FAIL!

[El Presidente]

"I like this one from The Economist"

Do the comparison between USA and Japan.

Problems a plenty globally.

http://www.economist.com/content/global_debt_clock

[Habanos2000]

I just love these uplifting posts! And it's good to see in the Economist link that plenty of countries in Africa seem to have very little debt. Maybe we should consider moving over there and all will be rosey?

[mykeuva]

There is a no-referring-to-US-politics rule that, if you ask me, is being violated here, and prevents me from making a full response. However, the best non-political response is to point out that the diagrams showing how "large" the debt is are pretty much meaningless, without comparing the debt to the size of the US economy.

Comparing a stack of bills to one or another particular object probably just obfuscates things.

Here is what happens to the deficit (which adds to, or if a surplus subtracts from the debt) under current law according to the Congressional Budget Office. It doesn't look too scary.

Best,

Pete

The chart is pure fantasy.

In the entire history of the United States, tax revenue has averaged about 18% of GDP, no matter what the top marginal tax rates were. The highest % of revenue to GDP was a brief period (about 1 to 2 years), where it just touched over 20%. Any plan that projects government spending at 20% of GDP or more will be running deficits. Any plan that projects 20% or more in tax revenue to GDP, will be running deficits. Any plan that suggests both government spending and tax revenue of over 20% of GDP (like this chart) should be ignored (at the very least).

This isn't a Democrat/Republican thing (Well, actually it is, as both Bush and Obama together have added about half of the 14+ trillion dollar debt in just 10 years). Both parties want to spend for their pet projects.

The problem is one of spending, not of revenue. The most the US ever received in tax revenue was around 2.6 trillion in 2007 (today's dollars). The US, in 2010, had about 2.15 trillion in tax receipts. That's a difference of about 450 billion. The US has been, and projects to be, running 1+ trillion dollar deficits. So even if the US takes in the most it ever has, at current spending levels, you're looking at 500-700 billion dollars worth of yearly deficits. Government spending in just 10 years has almost doubled. Again, the problem is one of spending, not revenue.

[cigcars]

I agree with Pete that we are on the edge of a political discussion here that is against forum rules. Also agree that while a pile of notes is a startling visual, it does not take into account the reality of the entire situation.

Shocking? Yes. Thought provoking? Not really, imagine how much taller the stack would have been if it was just $1s, or even pennies! Thoughtful and useful for the current political problem? No.

As only the government liabilities are mentioned, ("the Medicare, Medicare Prescription Drug Program,

Social Security, Military and civil servant pensions.") but no mention is made of government subsidies to corporations or revenues lost due to loopholes, etc. it strikes me as merely a biased scare tactic and not any reasoned fully informed piece of useful information. Pete's graph is much more useful.

Can we stop now?

-Will

x1

[finecigar]

i think everyone in the U.S should see this and be aware.. Such a great visual, not great in terms of the content but more so the familiar sense. That truck, the human, the average year pay, the football field, etc..... Thanks for this post I am going to bookmark that! It's very sad, but me being the right brained kind of guy that I am - this is needed to make a statement beyond the words thrown at us everyday on the news of what is Really happening with debt. I honestly bet by those predicted dates, the debt will be even worse than they estimate. I bet it will be as high and mass scale as the Burj Khalifa in Dubai.... Kind of similar ideas behind them. Way too large and excesive, unnecessary, beyond comparison, and in debt Lol

[PigFish]

The problem is endemic and the result of many things and mostly a crisis now due to base line budgeting.

In our world if you were to plan to increase your son's allowance to $15/week from $10/week he would be getting a raise. If you told him he was only going to get $12/week because of his mom's health issues, he would probably still be happy because he got an increase and his mom is okay!

In the US Fed Gov. if you tell them that they will only get $12/week instead of $15/week the CBO will call that a BUDGET CUT.

This is not my usual anti-goverment folly it is a fact. Every dollar spent in the budget automatically gets added to the future budgets. The stimulus for example added approximately 1 T in dollars to the budget. It was not one time! That means the CBO adds the 1 T every year thereafter as a matter of baseline budgeting. On top of that the budget increases about 7.5%/year as a matter of automatic increases. If you simply fund the 2012 budget at 2011 dollars, the CBO will rate that as a 9.5 trillion dollar cut over 10 years!!! Now in whose world does a static budget equal a cut? Only in DC!

The spending is out of control and W DC might as well be H SA as far as I am concerned!!! -Piggy