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17.10.08
16.10.08
Grandfather Economic Report series
$ 53 Trillion - - and soaring
- household, business, financial and government sectors -
by Michael Hodges - email
updated May 2008
- a chapter of the Grandfather Economic Reports -
debt dollars
America has become more a debt 'junkie' - - than ever before
with total debt of $53 Trillion - - and the highest debt ratio in history.
That's $175,154 per man, woman and child - - or $700,616 per family of 4,
$33,781 more debt per family than last year.
Last year total debt increased $4.3 Trillion, 5.5 times more than GDP.
External debt owed foreign interests increased $2.2 Trillion;
Household, business and financial sector debt soared 7-11%.
80% ($42 trillion) of total 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 !!
I am concerned about the debt being passed to our younger generation. Who isn't? (The Grandfather Economic Reports is a series of picture reports of economic challenges to the future of families and their children, compared to prior generations. You are now at the chapter on America's Total Debt trends. Welcome. We hope your visit will find useful information to help you and your loved ones.)
The Federal Government Debt Report covers just the federal government debt of $9.2 Trillion, or $29,926 per child in 2007. This chapter covers all U.S. debt, called Total America Debt (the sum of all recognized debt of federal, state & local governments, international, private households, business and domestic financial sectors, including federal debt to trust funds). Total Debt in America is now $53 Trillion, or $175,154 per man, woman and child.
This is the summary page of America's Total Debt Report, to get you started. Since 'a picture is worth a thousand words', below are two of the many data trend pictures shown in the Full Debt Report linked at the bottom of this page.
Trend national debt vs national incomeBIG PICTURE - $53 TRILLION of DEBT in America, and rising rapidly
the economy is 2-3 times more debt-dependent - -
with $32 Trillion DEBT EXCESS compared to prior debt ratios
Here's one graphic of many shown in the main Total Debt Report, linked below.
This is A SCARY CHART - showing trends of total debt in America (the red line, reaching $53 trillion in 2007 vs. growth of the economy as measured by national income (blue line). (adjusted for inflation). That debt increased $4.3 Trillion (9%) in the past year.
Which line goes up faster, the red debt line or the blue net national income line? Answer: the debt line.
And, that debt line is going 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. It has now reached $52.9 Trillion ($41.5 trillion private household/business/financial sector debt PLUS $11.4 trillion federal, state and local government debt).
Here are some highlights:
* Last year's total debt of $53 Trillion was 11 times higher than the $5 Trillion debt in 1957 (both measured in inflation-adjusted 2007 dollars).
* Last year's total debt increased $4.3 trillion (up 8.9%). Federal government debt (incl. added debt owed trust funds) increased $549 billion (6.3%), household debt increased $877 billion (up 6.8%), business debt increased $1.1 trillion (11.7%), state & local government debt increased $184 billion (up 9.2%), domestic financial sector debt increased $1.6 trillion (11.1%). Each sector reached a new, all-time record high.
* As shown below for 2006, 26% ($1 Trillion) of the total debt increase of $3.9 Trillion was owed to foreign interests, up 11%.
* Last year's total debt per person was $175,154 (up $13,065 over prior year's $162,125); this compares to $29,722 in 1957 (measured in inflation-adjusted 2007 dollars). Last year's debt per family of four increased by $33,781, to $700,616.
trend of debt ratioWhile the above chart shows debt growth in inflation-adjusted dollars, here's another chart from the main report of this chapter - - showing debt as a percentage of net national income - - which I term the 'debt ratio'.
This chart shows <> a chapter of this series called the 'Family Income Report' shows the time period of the first half of this chart, when debt ratios were stable, was also one of the best periods ever of real median family income growth - most with one wage-earner per family.
Stated differently, in 1957 there was $1.86 in debt for each dollar of net national income, but in 2007 there was $4.70 of debt for each dollar of national income - up 153%. It also means this extra $2.84 of debt per dollar of national income produced zilch extra national income. In 2007 alone it took $6.28 of new debt to produce one dollar of national income. What kind of 'so called productivity' is that? Answer > Negative Productivity.
* Since 1990, 85% of today's domestic financial sector debt was created, as it increased by a factor of 6 times (2.5 times faster than the economy); household debt increased 60% faster.
* 2007 was a new, all-time record high in debt ratios of the household, business, and domestic financial sectors - also record debt ratios owed to trust funds.
* In FY 2006 the federal government's bite out of trust funds of $328 billion set another record, bringing total trust fund debt to $3.6 trillion, including $1.8 trillion siphoned from the social security trust fund.
* In 2004, the average credit-card debt of US households was $9,300, up from $2,966 in 1990, according to research firm CardWeb.com - - that's 214% more debt.
* Even students are learning how to go into debt up to their necks. The federal General Accounting Office, according to AP's Martha Irvin, says college students are graduating with an average of $19,400 in student loans - a 58% increase after adjustment for inflation since 1993. Additionally, average student credit card debt soared, according to student loan agency Nellie Mae. Meanwhile, universities promote credit cards issued by agencies who kick-back to them.
* Since 1990 it is clear the economy was 'driven' almost entirely by the biggest injection of new debt in history, which produced a much diminished lower return in national income per dollar. Just as one hooked on drugs needs ever increasing amounts of drugs to 'survive', it appears America needs ever increasing amounts of new debt to eke out diminishing amounts of growth - - even with 2 wage earners per family.
* America's total private and government debt is at least 100% higher compared to debt ratios of the recent past.
INTERNATIONAL OWNERSHIP OF U.S. DEBT - - SOARING - - now $12.5 Trillion
"Foreign interests have more control over the US economy than Americans, leaving the country in a state that is financially imprudent. More and more of our debt is held by foreign countries – some of which are our allies and some are not. The huge holdings of American government debt by countries such as China and Saudi Arabia could leave a powerful financial weapon in the hands of countries that may be hostile to US corporate and diplomatic interests.” David Walker, the US comptroller general. 23 July 2007. http://business.timesonline.co.uk/tol/business/markets/united_states/article2120735.ece
external-debt.gif (3703 bytes)The total America $53 Trillion debt shown at the top of this page can be broken down into two parts > $12.5 Trillion owed to foreign interests and $40.5 Trillion ($2.4 trillion federal government and $38.1 trillion other sectors) owed domestically.
Left is a data graphic of External U.S. Debt, meaning sum total of all debt owed to foreign entities.
From $6.4 trillion of external debt in 2003 to $12.5 trillion in 2007 - near 100% increase in just 4 years of more than $6 trillion.
The $12.5 trillion in 2007 was $2.2 trillion ($21%) higher than that the previous year, showing a quickening - and representing about half the increase in America's total debt in 2007.
According to the Federal Government Debt Report federal debt was $9.2 Trillion at the end of 2007, including $2.4 Trillion owed by the U.S. federal government to foreign interests - which represents 46% of all Treasury bonds & notes, compared to but 15% in the late 1980s.
As of 2004, according to Gillespie Research/ Federal Reserve, U.S. financial assets owned abroad included 13% of all stocks and 27% of corporate bonds, and foreign investors & central banks also owned 13% of U.S. government agency debt up from 5% in 1995. However, the above graphic shows a rapid quickening of external debt since 2004, meaning the foreign ownership share of stocks, bonds, agencies, etc. is today higher than ever. Consider this > Fannie Mae and Freddie Mac are the largest suppliers of mortgage funds in America, borrowing extensively on the open market - it has been reported two-thirds of their $1.5 trillion outstanding debt is held by foreign investors, up from one-third in 2002 - - (dangerous with a long-term falling dollar exchange rate).
Additionally, foreign interests own real estate and factories - - and some would be surprised to learn that the well-known and respected California-based Pimco, the world's largest bond fund, that many believe is an American firm is in fact a unit of Allianz AG, a German firm.
As reported in the International Trade Report, in the 12-month period to Feb. 2008 the U.S. had a total merchandise trade deficit of $827 billion, while Japan & Germany produced a cumulative trade surplus of $377 billion ($105+$272). That's a whopping $1.2 trillion worse relative trade performance for the U.S., in JUST ONE YEAR - against just 2 nations that also are hign-wage nations. And, Japan and Germany actually inport a higher percentage of their oil needs than does the U.S., and still relative U.S. trade deficits go on, and on, continually building soaring international liabilities - - to the benefit of foreign entities, because the American economic system 'refuses' (or does not know how) to produce enough of its needs.
External debt and trend of foreign holdings of federal government debt is covered more extensively in the Total America Debt Report (link bottom page)
We should not be mad at foreign interests. We are the ones borrowing from others so we can consume beyond our own production and savings, thereby creating unprecedented debts and trade deficits PLUS excessive government spending. While America's debt used to be nearly all owed domestically, increasingly huge portions are now controlled by foreign interests.
America is less and less independently in control of its economy
and, this is happening on OUR WATCH !!
- - not a nice bequest we are creating for our children and grandchildren.
While facing this accelerating debt Challenge:
* America, already the world's largest international debtor with $12.5 Trillion external debt owed foreign interests. $7.4 trillion in cumulative trade deficits in goods have occurred since 1985, as international trade deficits explode to new records and America depends more and more on the production and savings of others than on itself (see International Trade Report); and,
* with each citizen carrying on his/her back more state & local government employees than ever before, because their headcounts again increased faster than general population growth; and,
* personal savings plunged to record lows; and,
* real median family incomes (Family Income Report) ceased their solid increases after debt ratios took off.
* with household debt at the highest ratios in history,
* whereas in previous times one bread winner per family was sufficient to provide for the family, build savings and reduce get-started debt loads - - the family now allocates the 2nd bread winner plus more debt and zero savings and less time for the children - - to do the same.
* and - in previous times students graduated from college debt-free to themselves and their parents, because many worked their way via part-time jobs while minimizing consumptive spending. No Longer!!
* The above debt ratio chart also adds evidence about the period of what some call the "financialization" of the economy by debt, including increasing domination by the nation's financial sector of the total capitalization based weight of the S&P index - - a topic discussed as a part of naming debt causes - - in page 2 of the full debt report (from link below).
* More families than ever before, with every possible adult member in the work force, try to make-up the mounting pressure by turning to more debt and negative savings - - while more business debt is accumulated despite paying out fewer dividends to shareholders, as well as a much smaller manufacturing base.
- a few hard questions > With the lowest personal savings rate on record, with the federal government relying more and more on foreign entities to lend it funds to operate and prop up its currency, and with run-away trade deficits, where will this debt monster lead? Does America simply borrow savings of non-Americans until either they stop lending or until America has mortgaged or sold-off all its assets to others?
How can this direction be changed - - or am I the only one who does not believe individuals and a nation can, forever, borrow their way to guaranteed continual prosperity and security? Also, am I the only one who believes these trends represent major negatives regarding the future of our children and grandchildren - - in many, many ways?
The End Game of debt expansion ??
Esteemed Economist Ludwig von Mises stated the endgame brought on by reckless expansion of credit (debt): "There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."
Two Questions: 1. Does anyone wish to offer guarantees that Dr. von Mises is wrong?
2. Does anyone believe these debt trends can continue forever - without dire consequences?
Is this a way to run an economy for my children and grandchildren
- - debt, debt and more debt?
Idea > > There can be little doubt that the only way energy (for example) will be better conserved with reduced dependence on foreign interests is with significantly higher economic (prices) costs and lower consumption. The same goes for debt > > a free market (without central-planning via the Federal Reserve to manipulate interest rates) setting significantly higher economic costs (higher interest rates, elimination of tax subsidies on debt, higher bank reserve ratios, etc.) to debtors, until debt ratios fall back more in line with America's past. Perhaps payroll taxes for social security and Medicare should be eliminated with its revenue loss (plus the gap missing for the future) transferred to the equivalent tax on energy and on debt.
What's your idea to get these debt ratios down significantly toward ratios of the past,
including reduced dependence on foreigners?
Most can agree >
The U.S. is more debt-dependent than ever.
That is not a nice bequest to our young generation - - on our watch !!
"We hear sad complaints sometimes of merciless creditors;
whilst the acts of merciless debtors are passed over in silence." - William Frend, 1817
"I place economy among the first and most important virtues,
and debt as the greatest of dangers to be feared." - Thomas Jefferson"
"The decline of great powers is caused by simple economic over extension."
The Rise and Fall of the Great Powers, by Paul Kennedy
"There is no means of avoiding the final collapse
of a boom brought about by credit (debt) expansion.
The alternative is only whether the crisis should come sooner
as the result of a voluntary abandonment of further credit (debt) expansion,
or later as a final and total catastrophe of the currency system involved." - Ludwig von Mises
No generation has a right to contract debts
greater than can be paid off during the course of its own existence."
- George Washington to James Madison 1789
"Growing domestic and international debt
has created the conditions for global economic and financial crises.”
Bank for International Settlements June 2005
Debt Burden Hinders FutureAmerica, that used to derive strong family values and incomes with savings and paying 'as you go', has moved to a more consumptive society financed by ever increasing liens on future income - - with debt ratios reaching new records.
America has become less a family-based, frugal society of strong real savings and small government. It has become a more consumptive, more debt-dependent with nil private savings, and more a government spending-dependent society - - depending more on the production and savings of others (including foreigners), and on debt, than ever before - - quite different from that envisioned by its founding forefathers. In the long-term there are consequences to be paid for excess debt reliance, in addition to sucking more mothers into the work force and away from their children.
The purpose of the Grandfather Economic Reports is to increase public awareness
of difficult trends facing today's families and youth - compared to prior generations.
KNOWLEDGE IS POWER - IF YOU HAVE IT
You have just viewed a summary with 3 of the trend charts of "America's Total Debt Report", a chapter of the Grandfather Economic Report series.
From here you might consider 4 possibilities >
1. Go to the full chapter of "America's Total Debt Report" - which includes many data graphics to help tell the story of debt in America, including a breakdown of government debt, household debt, corporate debt, financial sector debt and external debt - - from the following link - - give it a chance to load those neat color graphics. This chapter is on 2 web pages, so be sure and click the link at the bottom of the first page that comes up to see the second page.
- a picture is worth a thousand words'
TO THE FULL REPORT on Total Debt in America, with 12 tell-all pictures
- Click This
Click This
or - 2. Go to the chapter called "Federal Government Debt Report", showing many data graphics about federal government debt-only. This chapter tells the story in one summary page, plus two web pages of the full report with many graphics.
or - 3. Go to a simple web page showing a Summary Table of debt by sector.
or - 4. Go to the home page of the Grandfather Economic Report series to view the list of chapters on other critical issues facing our nation in addition to debt, each story told by use of data trend graphics. (the reader may wish to book-mark that page).
TOP
Copyright © 1997-2008 Michael W. Hodges. The Grandfather Economic Report series is the intellectual property of its author; all rights reserved under Copyright Conventions. Permission to redistribute all or part of this series for non commercial purposes is granted by the author, provided the associated web page address is included and full credit given to the Grandfather Economic Report (including its home page web address http://mwhodges.home.att.net/) and the author, Michael Hodges. Notice appreciated via email.
- bottom of > http://mwhodges.home.att.net/nat-debt/debt-nat.htm .
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$ 53 Trillion - - and soaring
- household, business, financial and government sectors -
by Michael Hodges - email
updated May 2008
- a chapter of the Grandfather Economic Reports -
debt dollars
America has become more a debt 'junkie' - - than ever before
with total debt of $53 Trillion - - and the highest debt ratio in history.
That's $175,154 per man, woman and child - - or $700,616 per family of 4,
$33,781 more debt per family than last year.
Last year total debt increased $4.3 Trillion, 5.5 times more than GDP.
External debt owed foreign interests increased $2.2 Trillion;
Household, business and financial sector debt soared 7-11%.
80% ($42 trillion) of total 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 !!
I am concerned about the debt being passed to our younger generation. Who isn't? (The Grandfather Economic Reports is a series of picture reports of economic challenges to the future of families and their children, compared to prior generations. You are now at the chapter on America's Total Debt trends. Welcome. We hope your visit will find useful information to help you and your loved ones.)
The Federal Government Debt Report covers just the federal government debt of $9.2 Trillion, or $29,926 per child in 2007. This chapter covers all U.S. debt, called Total America Debt (the sum of all recognized debt of federal, state & local governments, international, private households, business and domestic financial sectors, including federal debt to trust funds). Total Debt in America is now $53 Trillion, or $175,154 per man, woman and child.
This is the summary page of America's Total Debt Report, to get you started. Since 'a picture is worth a thousand words', below are two of the many data trend pictures shown in the Full Debt Report linked at the bottom of this page.
Trend national debt vs national incomeBIG PICTURE - $53 TRILLION of DEBT in America, and rising rapidly
the economy is 2-3 times more debt-dependent - -
with $32 Trillion DEBT EXCESS compared to prior debt ratios
Here's one graphic of many shown in the main Total Debt Report, linked below.
This is A SCARY CHART - showing trends of total debt in America (the red line, reaching $53 trillion in 2007 vs. growth of the economy as measured by national income (blue line). (adjusted for inflation). That debt increased $4.3 Trillion (9%) in the past year.
Which line goes up faster, the red debt line or the blue net national income line? Answer: the debt line.
And, that debt line is going 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. It has now reached $52.9 Trillion ($41.5 trillion private household/business/financial sector debt PLUS $11.4 trillion federal, state and local government debt).
Here are some highlights:
* Last year's total debt of $53 Trillion was 11 times higher than the $5 Trillion debt in 1957 (both measured in inflation-adjusted 2007 dollars).
* Last year's total debt increased $4.3 trillion (up 8.9%). Federal government debt (incl. added debt owed trust funds) increased $549 billion (6.3%), household debt increased $877 billion (up 6.8%), business debt increased $1.1 trillion (11.7%), state & local government debt increased $184 billion (up 9.2%), domestic financial sector debt increased $1.6 trillion (11.1%). Each sector reached a new, all-time record high.
* As shown below for 2006, 26% ($1 Trillion) of the total debt increase of $3.9 Trillion was owed to foreign interests, up 11%.
* Last year's total debt per person was $175,154 (up $13,065 over prior year's $162,125); this compares to $29,722 in 1957 (measured in inflation-adjusted 2007 dollars). Last year's debt per family of four increased by $33,781, to $700,616.
trend of debt ratioWhile the above chart shows debt growth in inflation-adjusted dollars, here's another chart from the main report of this chapter - - showing debt as a percentage of net national income - - which I term the 'debt ratio'.
This chart shows <> a chapter of this series called the 'Family Income Report' shows the time period of the first half of this chart, when debt ratios were stable, was also one of the best periods ever of real median family income growth - most with one wage-earner per family.
Stated differently, in 1957 there was $1.86 in debt for each dollar of net national income, but in 2007 there was $4.70 of debt for each dollar of national income - up 153%. It also means this extra $2.84 of debt per dollar of national income produced zilch extra national income. In 2007 alone it took $6.28 of new debt to produce one dollar of national income. What kind of 'so called productivity' is that? Answer > Negative Productivity.
* Since 1990, 85% of today's domestic financial sector debt was created, as it increased by a factor of 6 times (2.5 times faster than the economy); household debt increased 60% faster.
* 2007 was a new, all-time record high in debt ratios of the household, business, and domestic financial sectors - also record debt ratios owed to trust funds.
* In FY 2006 the federal government's bite out of trust funds of $328 billion set another record, bringing total trust fund debt to $3.6 trillion, including $1.8 trillion siphoned from the social security trust fund.
* In 2004, the average credit-card debt of US households was $9,300, up from $2,966 in 1990, according to research firm CardWeb.com - - that's 214% more debt.
* Even students are learning how to go into debt up to their necks. The federal General Accounting Office, according to AP's Martha Irvin, says college students are graduating with an average of $19,400 in student loans - a 58% increase after adjustment for inflation since 1993. Additionally, average student credit card debt soared, according to student loan agency Nellie Mae. Meanwhile, universities promote credit cards issued by agencies who kick-back to them.
* Since 1990 it is clear the economy was 'driven' almost entirely by the biggest injection of new debt in history, which produced a much diminished lower return in national income per dollar. Just as one hooked on drugs needs ever increasing amounts of drugs to 'survive', it appears America needs ever increasing amounts of new debt to eke out diminishing amounts of growth - - even with 2 wage earners per family.
* America's total private and government debt is at least 100% higher compared to debt ratios of the recent past.
INTERNATIONAL OWNERSHIP OF U.S. DEBT - - SOARING - - now $12.5 Trillion
"Foreign interests have more control over the US economy than Americans, leaving the country in a state that is financially imprudent. More and more of our debt is held by foreign countries – some of which are our allies and some are not. The huge holdings of American government debt by countries such as China and Saudi Arabia could leave a powerful financial weapon in the hands of countries that may be hostile to US corporate and diplomatic interests.” David Walker, the US comptroller general. 23 July 2007. http://business.timesonline.co.uk/tol/business/markets/united_states/article2120735.ece
external-debt.gif (3703 bytes)The total America $53 Trillion debt shown at the top of this page can be broken down into two parts > $12.5 Trillion owed to foreign interests and $40.5 Trillion ($2.4 trillion federal government and $38.1 trillion other sectors) owed domestically.
Left is a data graphic of External U.S. Debt, meaning sum total of all debt owed to foreign entities.
From $6.4 trillion of external debt in 2003 to $12.5 trillion in 2007 - near 100% increase in just 4 years of more than $6 trillion.
The $12.5 trillion in 2007 was $2.2 trillion ($21%) higher than that the previous year, showing a quickening - and representing about half the increase in America's total debt in 2007.
According to the Federal Government Debt Report federal debt was $9.2 Trillion at the end of 2007, including $2.4 Trillion owed by the U.S. federal government to foreign interests - which represents 46% of all Treasury bonds & notes, compared to but 15% in the late 1980s.
As of 2004, according to Gillespie Research/ Federal Reserve, U.S. financial assets owned abroad included 13% of all stocks and 27% of corporate bonds, and foreign investors & central banks also owned 13% of U.S. government agency debt up from 5% in 1995. However, the above graphic shows a rapid quickening of external debt since 2004, meaning the foreign ownership share of stocks, bonds, agencies, etc. is today higher than ever. Consider this > Fannie Mae and Freddie Mac are the largest suppliers of mortgage funds in America, borrowing extensively on the open market - it has been reported two-thirds of their $1.5 trillion outstanding debt is held by foreign investors, up from one-third in 2002 - - (dangerous with a long-term falling dollar exchange rate).
Additionally, foreign interests own real estate and factories - - and some would be surprised to learn that the well-known and respected California-based Pimco, the world's largest bond fund, that many believe is an American firm is in fact a unit of Allianz AG, a German firm.
As reported in the International Trade Report, in the 12-month period to Feb. 2008 the U.S. had a total merchandise trade deficit of $827 billion, while Japan & Germany produced a cumulative trade surplus of $377 billion ($105+$272). That's a whopping $1.2 trillion worse relative trade performance for the U.S., in JUST ONE YEAR - against just 2 nations that also are hign-wage nations. And, Japan and Germany actually inport a higher percentage of their oil needs than does the U.S., and still relative U.S. trade deficits go on, and on, continually building soaring international liabilities - - to the benefit of foreign entities, because the American economic system 'refuses' (or does not know how) to produce enough of its needs.
External debt and trend of foreign holdings of federal government debt is covered more extensively in the Total America Debt Report (link bottom page)
We should not be mad at foreign interests. We are the ones borrowing from others so we can consume beyond our own production and savings, thereby creating unprecedented debts and trade deficits PLUS excessive government spending. While America's debt used to be nearly all owed domestically, increasingly huge portions are now controlled by foreign interests.
America is less and less independently in control of its economy
and, this is happening on OUR WATCH !!
- - not a nice bequest we are creating for our children and grandchildren.
While facing this accelerating debt Challenge:
* America, already the world's largest international debtor with $12.5 Trillion external debt owed foreign interests. $7.4 trillion in cumulative trade deficits in goods have occurred since 1985, as international trade deficits explode to new records and America depends more and more on the production and savings of others than on itself (see International Trade Report); and,
* with each citizen carrying on his/her back more state & local government employees than ever before, because their headcounts again increased faster than general population growth; and,
* personal savings plunged to record lows; and,
* real median family incomes (Family Income Report) ceased their solid increases after debt ratios took off.
* with household debt at the highest ratios in history,
* whereas in previous times one bread winner per family was sufficient to provide for the family, build savings and reduce get-started debt loads - - the family now allocates the 2nd bread winner plus more debt and zero savings and less time for the children - - to do the same.
* and - in previous times students graduated from college debt-free to themselves and their parents, because many worked their way via part-time jobs while minimizing consumptive spending. No Longer!!
* The above debt ratio chart also adds evidence about the period of what some call the "financialization" of the economy by debt, including increasing domination by the nation's financial sector of the total capitalization based weight of the S&P index - - a topic discussed as a part of naming debt causes - - in page 2 of the full debt report (from link below).
* More families than ever before, with every possible adult member in the work force, try to make-up the mounting pressure by turning to more debt and negative savings - - while more business debt is accumulated despite paying out fewer dividends to shareholders, as well as a much smaller manufacturing base.
- a few hard questions > With the lowest personal savings rate on record, with the federal government relying more and more on foreign entities to lend it funds to operate and prop up its currency, and with run-away trade deficits, where will this debt monster lead? Does America simply borrow savings of non-Americans until either they stop lending or until America has mortgaged or sold-off all its assets to others?
How can this direction be changed - - or am I the only one who does not believe individuals and a nation can, forever, borrow their way to guaranteed continual prosperity and security? Also, am I the only one who believes these trends represent major negatives regarding the future of our children and grandchildren - - in many, many ways?
The End Game of debt expansion ??
Esteemed Economist Ludwig von Mises stated the endgame brought on by reckless expansion of credit (debt): "There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."
Two Questions: 1. Does anyone wish to offer guarantees that Dr. von Mises is wrong?
2. Does anyone believe these debt trends can continue forever - without dire consequences?
Is this a way to run an economy for my children and grandchildren
- - debt, debt and more debt?
Idea > > There can be little doubt that the only way energy (for example) will be better conserved with reduced dependence on foreign interests is with significantly higher economic (prices) costs and lower consumption. The same goes for debt > > a free market (without central-planning via the Federal Reserve to manipulate interest rates) setting significantly higher economic costs (higher interest rates, elimination of tax subsidies on debt, higher bank reserve ratios, etc.) to debtors, until debt ratios fall back more in line with America's past. Perhaps payroll taxes for social security and Medicare should be eliminated with its revenue loss (plus the gap missing for the future) transferred to the equivalent tax on energy and on debt.
What's your idea to get these debt ratios down significantly toward ratios of the past,
including reduced dependence on foreigners?
Most can agree >
The U.S. is more debt-dependent than ever.
That is not a nice bequest to our young generation - - on our watch !!
"We hear sad complaints sometimes of merciless creditors;
whilst the acts of merciless debtors are passed over in silence." - William Frend, 1817
"I place economy among the first and most important virtues,
and debt as the greatest of dangers to be feared." - Thomas Jefferson"
"The decline of great powers is caused by simple economic over extension."
The Rise and Fall of the Great Powers, by Paul Kennedy
"There is no means of avoiding the final collapse
of a boom brought about by credit (debt) expansion.
The alternative is only whether the crisis should come sooner
as the result of a voluntary abandonment of further credit (debt) expansion,
or later as a final and total catastrophe of the currency system involved." - Ludwig von Mises
No generation has a right to contract debts
greater than can be paid off during the course of its own existence."
- George Washington to James Madison 1789
"Growing domestic and international debt
has created the conditions for global economic and financial crises.”
Bank for International Settlements June 2005
Debt Burden Hinders FutureAmerica, that used to derive strong family values and incomes with savings and paying 'as you go', has moved to a more consumptive society financed by ever increasing liens on future income - - with debt ratios reaching new records.
America has become less a family-based, frugal society of strong real savings and small government. It has become a more consumptive, more debt-dependent with nil private savings, and more a government spending-dependent society - - depending more on the production and savings of others (including foreigners), and on debt, than ever before - - quite different from that envisioned by its founding forefathers. In the long-term there are consequences to be paid for excess debt reliance, in addition to sucking more mothers into the work force and away from their children.
The purpose of the Grandfather Economic Reports is to increase public awareness
of difficult trends facing today's families and youth - compared to prior generations.
KNOWLEDGE IS POWER - IF YOU HAVE IT
You have just viewed a summary with 3 of the trend charts of "America's Total Debt Report", a chapter of the Grandfather Economic Report series.
From here you might consider 4 possibilities >
1. Go to the full chapter of "America's Total Debt Report" - which includes many data graphics to help tell the story of debt in America, including a breakdown of government debt, household debt, corporate debt, financial sector debt and external debt - - from the following link - - give it a chance to load those neat color graphics. This chapter is on 2 web pages, so be sure and click the link at the bottom of the first page that comes up to see the second page.
- a picture is worth a thousand words'
TO THE FULL REPORT on Total Debt in America, with 12 tell-all pictures
- Click This
Click This
or - 2. Go to the chapter called "Federal Government Debt Report", showing many data graphics about federal government debt-only. This chapter tells the story in one summary page, plus two web pages of the full report with many graphics.
or - 3. Go to a simple web page showing a Summary Table of debt by sector.
or - 4. Go to the home page of the Grandfather Economic Report series to view the list of chapters on other critical issues facing our nation in addition to debt, each story told by use of data trend graphics. (the reader may wish to book-mark that page).
TOP
Copyright © 1997-2008 Michael W. Hodges. The Grandfather Economic Report series is the intellectual property of its author; all rights reserved under Copyright Conventions. Permission to redistribute all or part of this series for non commercial purposes is granted by the author, provided the associated web page address is included and full credit given to the Grandfather Economic Report (including its home page web address http://mwhodges.home.att.net/) and the author, Michael Hodges. Notice appreciated via email.
- bottom of > http://mwhodges.home.att.net/nat-debt/debt-nat.htm .
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Peace and Security
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Pommern Village Choir of Tanzania at Amzing Things Arts Center
Pommern Village Choir of Tanzania at Amzing Things Arts Center
I am very excited about this!
Wednesday, November 05, 2008
7:30 PM
Pommern Village Choir of Tanzania
Pommern Village Choir of Tanzania
Explore the roots of rhythm with the Pommern Village Choir from Tanzania, Africa Imagine you're sitting in the warm, late afternoon, Tanzanian sun.
The Amazing Firehouse
$15 (Stu/Sen $14, Mem $12)
[Get Directions]
106 Year Old Nun will vote for Obama
A 106-year-old American nun living in a convent in Rome could well be the oldest person to vote in the 2008 US Presidential election.
Sister Cecilia Gaudette, who last voted for President Eisenhower in 1952, has registered to vote and says she will vote for Democrat Barack Obama. [WOW!]
Although hard of hearing, she keeps herself informed by reading newspapers and watching TV at the convent.
"I'm encouraged by Senator Obama," she says.
{so am I, otherwise I would not have registered Democrat this year!}
"I've never met him, but he seems to be a good man with a good private life. That's the first thing. Then he must be able to govern," she adds.
Sitting in her modest office in the convent where she has lived for the past 50 years, the diminutive nun appears uninterested in the row inside the American Catholic church over Senator Obama's support for pro-choice policies on abortion.
Asked about her hopes for the US under an Obama presidency, she says: "Peace abroad. I don't worry about the Iraq war because I can't do anything about it. Lord knows how it will end."
"It is very complicated," she said. "Those Eastern people are not like we are."
But despite taking part in the 4 November election, Sister Cecilia does not intend to return to the US.
"I have no plans for the future. I am too old to go back to the US. Life has changed too much." Yes sister, I agree. I am not fond of American "living" as it is today
But she still watches "very important events" on TV.
The election comes under this category.
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