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It's official (at least according to Zero Hedge): The U.S. debt-to-GDP ratio now exceeds 100%....

It's official (at least according to Zero Hedge): The U.S. debt-to-GDP ratio now exceeds 100%. U.S. debt net of all settlements for already completed bond auctions today surpassed the latest annualized GDP figures, based on ZH's numbers.
Comments (8)
  • johnybutts
    , contributor
    Comments (64) | Send Message
    21 Dec 2011, 06:28 PM Reply Like
  • Jeremy Johnson, CFA
    , contributor
    Comments (790) | Send Message
    Debt to GDP for the U.S. calculated according to international standards is 69%.


    That compares to ~80% in Germany, France and the U.K., ~200% in Japan, ~40% in Canada, Sweden and Switzerland, and 120% in Italy.
    21 Dec 2011, 06:32 PM Reply Like
    , contributor
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    Jeremy....regardless of the stardard, the Debt number is ginormous. Now I happen to hold the opinion that it doesn't really matter in the case of the US. I would just as soon see the US Treasury print up about $15 Trillion in $10,000 bills and redeem all UST's. Then maybe we'd get some money moving towards a more productive investment. Not like we're going to really grow an economy investing $1.5 T a year in new Treasuries.
    21 Dec 2011, 06:38 PM Reply Like
  • J 457
    , contributor
    Comments (990) | Send Message
    "International standards."


    Go read the BEA website.


    I swear it seems to be the new norm for people to just make up whatever they think its fact.


    People seem not overly concerned with 15 trillion debt because they have yet to pay it back. For now, its not an issue since the FED has been successful in artificially suppressing rates. But someday when borrowing rates revert back to more normal levels, and much more of every tax dollar collected is applied to pay the interest carry on the debt, then people will pay attention. But then it will be too late.


    If today the govt announced a cut in SS or medi-care payments for sake of reallocating those funds to pay interest on debt, we would have an uproar. For now, heads continued to be buried well under the sand. You can't continue to run a 1.5-2 trillion annual deficit and not eventually reach a tipping point. That is under the condition the money will also be redeemed.


    Next question for all you folks "in the know" is to find out who the USA actually owes the 15 trillion. Surprise....
    21 Dec 2011, 07:34 PM Reply Like
  • Jeremy Johnson, CFA
    , contributor
    Comments (790) | Send Message
    Yes, it is the international standard to report it as I did.


    Draw a note to yourself for $100k, are you suddenly $100k more in debt? No. If Germany did it with 10% of GDP, would they be? What about Canada that in fact has gross debt of 80% of GDP, but it is always reported correctly at 40%, since half is intergovernmental.


    The entire concept of a S.S. trust fund is political, not economic. Yes, there is an unfunded liability associated with it and yes, the amount of cash flow needed to service it 5 years from now will be larger and more difficult to generate. But it is not bonded debt. The actual amount of intergovernmental debt would be very easy to "pay off", just shift revenue from S.S. to the general fund and pay it down. In fact, with S.S. payroll tax cuts, this may already be happening.


    If you are going to have a real debate about S.S., you have to get past these phoney accounting entries and talk about the real economics. You aren't going to get change referencing some ratio with no economic substance to scare people or score political points.


    70% debt to GDP -- that is the concrete reality of the situation.
    21 Dec 2011, 07:47 PM Reply Like
  • anonymous#12
    , contributor
    Comments (552) | Send Message
    The biggest problem isn't the current deficit per se. It is mostly because of the economic malaise. But the demographic trends and thus the unfunded liabilities....we need to raise taxes and cut spending before the changes are too hard to make or drastic for the people.


    We have the best opportunity right now. Low yields can provide us with capital to invest in new infrastructure, technological advances, higher education and favorable tax structure to small businesses.
    21 Dec 2011, 06:46 PM Reply Like
  • lone2boy
    , contributor
    Comments (27) | Send Message
    A new goal of 150% ?
    It does seem to be intentional.
    21 Dec 2011, 06:48 PM Reply Like
  • DaleW
    , contributor
    Comments (70) | Send Message
    Work with me here... What if we built enough nuke plants to lower our cost of energy to half of avg cost of today. Add tax to repay the cost of building them over 30 years(say 10%) and 15% toward Fed debt reduction. This creates lots of skills labor jobs. Then, mandate all rolling stock to Nat Gas( again creating lots of skill jobs and taxes from builders). Light truck to diesel. Sell all remaining oil to other nations(dollars stay at home). Business profits would rise due to 25% lower energy costs. Raise taxes on profits say 5%. All increased tax revenues into a sinking fund on the Fed debt. This would allow the Fed to raise rates to curb the inflation some of this would create and go a long way toward some of the housing problems. Sorry, I forgot we don't need a energy plan or we want low energy leverages versus high. My bad.
    9 Jan 2012, 01:00 PM Reply Like
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