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Charting US Debt And Deficit Since Inception

Tyler Durden's picture




 

In the recent aftermath of the US just concluding its fourth consecutive fiscal year with a $1 trillion+ deficit, we have been flooded with requests to show how the current fiscal situation stacks up in a big picture context. Very big picture context. For all those requests, we present the following chart showing total US Federal debt/GDP as well as Deficit/(Surplus)/GDP since inception, or in this case as close as feasible, or 1792, which appears to be the first recorded year of historical fiscal data. We can see why readers have been so eager to see the "real big picture" - the chart is nothing short of stunning.

Some observations:

  • Beginning with the Anglo-American war of 1812, and continuing through the US civil war, World War I and World War II, the major military shocks to the US fiscal system are clearly obvious.
  • Just as obvious is the impact of not only The Great Moderation which started in the early 1980s just before the 1987 arrival of Alan Greenspan at the helm of the Fed, which allowed the US to exchange fiscal prudence for ever cheaper debt which could and would be used to fund an ever greater budget deficit, and lead to a surge in the Federal debt.
  • The increasingly more unstable system, which saw the additional layering of another $23 trillion in shadow banking debt at its peak in 2008, as well as countless trillions in household, corporate and financial debt, as well as hundreds of trillions in underfunded welfare liabilities, led first to the Internet bubble, then the Housing and Credit bubble, and finally, to the Great Financial Crisis of 2008 which climaxed with the failure of Lehman brothers, and resulted in the central bank bailout of every developed bank, and shortly thereafter, the backstop of every peripheral country in Europe.
  • The gravity and impact of the Great Financial Crisis on the US economy is stark, very visible, and can only be compared to previous instances of destructive military conflict in terms of lost output and impact on the US economy.
  • Total US Debt/GDP is currently just over 103%. This number is expected to rise to 125% by the end of 2016, which will eclipse the peak debt/GDP seen in World War II, and be the highest in US history.
  • Whereas in the past episodes of fiscal catastrophe were accompanied not only by a surge in debt (black line), but by a parallel explosion in fiscal deficits (red bars), this time the deficit spike has been more modest (peaking at about 10% of GDP), but more protracted, with even the CBO expecting deficits of around $1 trillion to last for the next several years.
  • One possible interpretation is that due to the Fed's relentless interest rates intervention, the polarized US government feels no burning desire to promptly balance its budget, and even overshoot, and through a combination of aggressive spending cuts and/or revenue increases, result in a much needed surplus which would be used to reduce the sovereign debt. This is graphically seen in the ongoing Fiscal Cliff debate, when any proposal for substantial spending cuts - the true problem at the core of America's deficit habituation and welfare statism - is greeted with shrieks of Mutual Assured Destruction.
  • This is not a political issue: politicians on both sides of the aisle are perfectly aware that setting the US on a sustainable fiscal course would mean massive pain for the common citizen, and an immediate termination of all existing political careers: after all the myth of the welfare state is at stake. It is in everyone's interest - both GOP and Democrat - to perpetuate the unsustainable deficit status quo indefinitely. Any theatrics out of the GOP demanding fiscal conservatism are therefore just that - theatrics.
  • There is no question that it is unsustainable: US GDP is currently growing at a pace of 1.5%-2.5% at best. Total 2012 US debt will have risen at a rate of 8%, and will continue rising in the 6%-8% range.  
  • More disturbing is the influence of the Fed, whose policy of ZIRP and outright debt monetization (recall even JPM has now admitted the Fed will monetize all US debt issuance in 2013) is the only permissive factor that has allowed the US to delay the inevitable moment of reckoning as long it has.
  • Indicatively, a modest rise in the average US interest rate, which is currently at all time blended lows, to just 5%, would mean that in 3 years the US would spend, pro forma, $1 trillion in cash interest each year. At that point the US will approach Japan status, where the government needs to borrow just to fund interest outlays. Actually, instead of Japan, Weimar would be a better analogy.
  • Finally, on all previous historical occasions, there was at least one backstop of last reserve, a central bank, standing ready to step in and provide the necessary liquidity, and monetize the needed debt to keep the show running. Since 2009, all the central banks have also gone all in on the Keynesian endgame: at this point the next shock to the status quo system will be the last, as there is no more backstops. 
  • At that point the only two options will be outright monetary devaluation, though not relative in the closed monetary loop of modern monetarism, but absolute, where every currency is concurrently devalued against a hard asset (potentially with the forceful concurrent confiscation of said hard asset by the host government, think Executive Order 6102), in order to generate a terminal currency and debt debasement, or outright global debt moratoria, and the end of the modern financial system as we know it (but not before the financial "leaders" of our time have converted enough of their paper wealth into hard asset format and transferred it to more peaceful, more "gun-controlled", non-extradition territories).

And there you have it.

Oh, and whoever said the advent of the Federal Reserve, or the end of "hard money" standard courtesy of Richard Nixon, made catastrophic or systematically shocking events less frequent, probably should have their head examined.

 

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Tue, 12/18/2012 - 00:06 | 3073757 Insideher Trading
Insideher Trading's picture

Japan has a debt to gdp of 200% (double that of the U.S) and they still manage to buy UST's (3rd largest foreign holder)

Tue, 12/18/2012 - 00:20 | 3073787 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Because the domestic ownship of JGBs is high.

Tue, 12/18/2012 - 00:21 | 3073801 Tyler Durden
Tyler Durden's picture

In 3 years the Fed will own about 60% of marketable US debt with duration risk (i.e. with a maturity over 3 years) and will remit all interest back to the Treasury. Does that count as "domestic"?

Tue, 12/18/2012 - 00:34 | 3073823 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

If I am wrong then please correct me but from what I understand the domestic holdings of Japan (and it could be Japanese pensions) is high.  I think something like 90% of JGBs are owned by Japanese people.

Domestic demand should have a much stronger role in buying bonds than a Central Bank would for the domestic demand has a vested interest in the outcome of the Nation-State.

Tue, 12/18/2012 - 00:49 | 3073856 flacon
flacon's picture

Debt divided by GDP..... isn't government spending (debt) = GDP when you boil down Keynes' equation? I guess I'm just unsure that debt/GDP is a real metric just like GDP is a real metric. 

Tue, 12/18/2012 - 02:08 | 3073965 SafelyGraze
SafelyGraze's picture

what we need is High Value Notes

hey -- that was last thursday. Dec 13 2012 from 9:30 to 10:00 am at the Banknote 2012 Exhibition Hall!

anyone go? anyone take notes?

get it? "take notes"? hahahahaha

no, seriously. give us a full report.

HIGH VALUE NOTES — "THE NEW GOLD" AND WHAT THIS MEANS TO THE CENTRAL BANKS AND THE CURRENCY INDUSTRY
Tom Ferguson, Former Director, US Bureau of Engraving and Printing 
Genie Foster, Former Cash Manager, Board of Governors of the Federal Reserve


Genie Foster, former "cash manager" Board of Governors of the Federal Reserve --- we know you read ZH. how about uploading a video of your talk? 

http://banknoteconference.com/agendas.html

scroll down, click to reveal Dec 13

who went http://banknoteconference.com/attendees.html

Tue, 12/18/2012 - 02:22 | 3073986 economics9698
economics9698's picture

Everyone notice how Ronald Reagan and Bush I got this NWO bull shit going.

Tue, 12/18/2012 - 02:32 | 3074000 Big Slick
Big Slick's picture

Long Red, Short Black

Tue, 12/18/2012 - 08:41 | 3074240 GetZeeGold
GetZeeGold's picture

 

 

Slick points out the obvious.

 

And of course screw Reagan.....cause dead men can't fight back. Big props go out to Clinton for that NAFTA crap.

Tue, 12/18/2012 - 02:34 | 3074006 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Shitsmearconference.com.  Where Bush accepts voodoo economics and Reagen is blamed for WWIII.

Tue, 12/18/2012 - 08:44 | 3074243 GetZeeGold
GetZeeGold's picture

 

 

Time to own it bitchez - Nancy Pelosi

Tue, 12/18/2012 - 09:22 | 3074295 GMadScientist
GMadScientist's picture

"Go shopping!"

"I am not worried about the deficit, it's big enough to take care of itself."

Tue, 12/18/2012 - 10:36 | 3074512 ISEEIT
ISEEIT's picture

I would appreciate a credible source pinning this crap on a knowing Reagan. The bush cretins are obviously all over it. My understanding is that Reagan was essentially forced to take HW as VP. Don't misunderstand...Reagan is no hero of mine but I do think he was more of a dupe than anything and may have sincerely desired to work for the good of our country.

No question about it though that from HW to the fraud in chief pretending to be president today, a plan has been and is being carried out. The final act ain't gunnu be pretty either.

Tue, 12/18/2012 - 05:05 | 3074090 Snidley Whipsnae
Snidley Whipsnae's picture

Safelygraze... Interesting link, thanks. Below is a paragraph from the conference 'overview'... I have a question: What per cent of sales at big box retailers are made in cash? I'm guessing that it's a low per centage. Therefore, I suspect this conference was more about credit cards than cash useage... though that could change as fewer shoppers have access to credit cards.

"As the definitive forum on the emerging trends in the banknote industry, Banknote 2012 provides an unparalleled opportunity to engage in interactive discussions with peers, from both government and industry, on the state of the banknote industry today. With presentations ranging from counterfeit deterrent technologies, to banknote design, to production, issue, and cash handling, Banknote 2012 offers immense value and invaluable opportunities for delegates attending this dynamic event."

http://banknoteconference.com/overview/about-banknote-2012.html

Tue, 12/18/2012 - 05:53 | 3074126 JKearney3153
JKearney3153's picture

All the more reason to print money for our debt to ourselves. Well, are we even "printing" money anymore? Or just adding a bunch of zeroes to the balance sheets...

Tue, 12/18/2012 - 09:54 | 3074379 GetZeeGold
GetZeeGold's picture

 

 

Of course we don't actually print.....that would cost way too much money....or something like that.

Tue, 12/18/2012 - 06:27 | 3074140 Disenchanted
Disenchanted's picture

 

 

"In 3 years the Fed will own about 60% of marketable US debt with duration risk (i.e. with a maturity over 3 years) and will remit all interest back to the Treasury."

 

They never lie at the FED or at Treasury.

 

Tue, 12/18/2012 - 09:05 | 3074273 SWRichmond
SWRichmond's picture

In 3 years the Fed will own about 60% of marketable US debt with duration risk...

Clearly, then, and factoring in the obvious conclusions from anyone looking at the chart, in order for the Fed to complete its work of total debt enslavement, we need more war.  Libertarians are very fond of saying "war is the health of the state", and for a very good reason.  Confirmation only requires a glance at the chart.

Tue, 12/18/2012 - 02:39 | 3074008 philipat
philipat's picture

@Because the domestic ownship of JGBs is high"".

For now. But with an ageing population cashing out JGB's to live on (Especially with ZIRP) that will change quickly.

Tue, 12/18/2012 - 07:44 | 3074180 Dr Benway
Dr Benway's picture

Yeah, like any ponzi, when cash redemption requests exceed new sucker cash inflows, the game is up

Tue, 12/18/2012 - 00:36 | 3073826 ball-and-chain
ball-and-chain's picture

America is the new Japan.

The big collapse is over and done with.

Now comes the hard part.

We stagger along like a gut-shot bear for the next twenty years till the baby boomers die off.

Happy days are here again.

http://www.angrysinner.blogspot.kr/2012/12/yesterday-i-hiked-ten-miles-through_17.html

Tue, 12/18/2012 - 02:01 | 3073953 AldousHuxley
AldousHuxley's picture

unlike Japan, US has illegal aliens slaves and slaves in China and slaves in Middle East.

 

 

Tue, 12/18/2012 - 09:23 | 3074304 GMadScientist
GMadScientist's picture

You think Japanese companies don't manufacture anything they aren't worried about being lifted in China too?

The US has slaves in Fontana, CA loading Wal-Mart trucks, slick.

Tue, 12/18/2012 - 02:44 | 3074023 philipat
philipat's picture

America is following the "Japanese Model"of Zombie Banks so can also look forward to wasted decades, unless the USD collapses before. That is unlikely though because of the Global race to the bottom.

Iceland/Sweden would have been a better approach IMHO. Temporarilt take over the Banks, fire ALL the Managements, wipe out the shareholders and bondholders but protect depositors. Writr off the bad stuff, recapitalize and IPO with the proceeds going to the taxpayer. As opposed to the Banksters.

Tue, 12/18/2012 - 07:48 | 3074184 Dr Benway
Dr Benway's picture

Sweden did that? Must have missed it. But you're right in that banksters don't manage to steal quite as much loot in Sweden (or Germany), just several average annual salaries, not hundreds of times the average worker salary like in the US.

Tue, 12/18/2012 - 09:30 | 3074315 GMadScientist
GMadScientist's picture

http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?_r=0

In the future, all these asshole will be forced to put up convertible bonds and have capitalism decide if they live or die.

Tue, 12/18/2012 - 10:18 | 3074441 falak pema
falak pema's picture

this is what the french government should do in the coming year, if the french banks do a Jamie Dimon/Hank Paulson on it when the shit hits the fans as it eventually will. 

But it has to be in concertation with all EURozone, as its ONE currency. I guess that decision belongs to Mutti. 

Tue, 12/18/2012 - 09:05 | 3074272 punxsutawney phil
punxsutawney phil's picture

TRAVEL: $3,629,622

The biggest expense is President Barack Obama’s round trip flight to Hawaii via Air Force One.

A Congressional Research Service report released in May 2012 said the plane typically used by the President, a Boeing 747, costs $179,750 per hour to operate. The U.S. Air Force has listed the cost of travel as high as $181,757 per flight hour.

Travel time for Air Force One direct from Washington D.C. to Hawaii is about 9 hours or as high as $1,635,813 each way for a total of $3,271,622 for the round trip to Hawaii and back.

 

http://www.hawaiireporter.com/residents-alerted-to-obamas-hawaiian-holid...

Tue, 12/18/2012 - 09:25 | 3074305 -1Delta
-1Delta's picture

but... add domestic, household, business, and other liablitlties in the Z report... 800% of GDP

 

gov't is the smallest piece in reality

 

to wit:

 

http://content.screencast.com/users/wprosser/folders/Jing/media/df3213ea...

 

http://content.screencast.com/users/wprosser/folders/Jing/media/f74fb745...

 

just saying......

Tue, 12/18/2012 - 00:09 | 3073767 Alcoholic Nativ...
Alcoholic Native American's picture

Private interest have been cheering on an infinate growth model of economics as public debt skyrocketed for a while now.  Why exactly are we in a crisis again? I was born in 1984 and this has ALWAYS been the status quo.  Behind every private fortune is publically pooled debt.   Ask any billionaire you know.

This aint socialism.

Tue, 12/18/2012 - 00:16 | 3073781 H E D G E H O G
H E D G E H O G's picture

"(but not before the financial "leaders" of our time have converted enough of their paper wealth in hard asset format and transferred it to more peaceful, non-extradition territories)." THIS is key, these "leaders", bankers, politicians, TPTB, et al, have and continue to fleece the sheep.  When the shearing is over, they'll be high and dry with gold and silver, you'll just be another dumbass naked sheep. Baaaaah...........

Tue, 12/18/2012 - 00:17 | 3073783 disabledvet
disabledvet's picture

the idea of "Government no longer existing thus causing a massive stock market rally" is actually not new. In other words "the only person Wall Street has to worry about under this scenario is Chairman Bernanke of the Federal Reserve." if true that streamlines...ahem..."decision making" ahem...A LOT.

Tue, 12/18/2012 - 00:19 | 3073791 illyia
illyia's picture

Again - this is why I read ZH.

Tue, 12/18/2012 - 00:19 | 3073793 sgorem
sgorem's picture

wall street = federal reserve = wall street. no worry here

Tue, 12/18/2012 - 00:30 | 3073812 Dr. Engali
Dr. Engali's picture

With each progressive war we ran the deficit to GDP up to new highs. I wonder how far we can push that sucker with the mother of all wars coming up. Seeing as how we are flat ass broke and no real economy I'm going to guess we run it up to 75% deficit to GDP.

Tue, 12/18/2012 - 01:17 | 3073911 PhattyBuoy
PhattyBuoy's picture

Easy to see a parabola there ... so 75% or more is a reasonable estimate.

Big war coming ...

Tue, 12/18/2012 - 00:27 | 3073816 newengland
newengland's picture

ZH, simply the best, nobody does it better.

Tue, 12/18/2012 - 06:51 | 3074152 Tommy Gunner
Tommy Gunner's picture

I pop onto the MSM finance sites from time to time for a laugh...  read their rah rah shit... then I go to ZH and I find out the real story...

Best example was the great vehicle sales - not a mention of subprime car loans and channel stuffing anywhere - except ZH

This is by FAR the best finance site in existence.

Tue, 12/18/2012 - 00:32 | 3073827 Seer
Seer's picture

I think that the "Great Fiscal Crisis" label doesn't fit in with the rest.  Only wars seem to do these sorts of things, so let's use the label "War on Terror."  We were told that this war would last our lifetimes... (didn't say that we'd live to a ripe old age- the exponential curve can only go so far before the wheels blow up).

Tue, 12/18/2012 - 00:56 | 3073869 Stuck on Zero
Stuck on Zero's picture

Note that from World War II to the present the U.S. has been in a state of continual warfare and armament. That's pretty much reflected in the chart.  The chart does not indicate the unfunded liabilities such as Medicare and Social Security.

 

 

Tue, 12/18/2012 - 02:43 | 3074020 Big Slick
Big Slick's picture

Good point about endless war.  And though the chart wouldn't ever really show unfunded liabilities (only liabilities added in on a per year basis) your comment makes me wonder what the chart will extend to as the $100 Trillion + of unfunded get worked in year after year. 

There is a new currency regime coming.  I cannot remember the name of the guest, but Martenson had a December interview with a guy (Bob W.?) who hypothesized that this is all occurring to usher in the new regime ASAP.  Does anyone really think the Fed doesn't know what they are doing??  The endgame cannot come soon enough for these guys.

Its like being in a poker tournament and you are short stacked and approaching the end of the buy-in period. You start shoving all-in so you can either make it back or bust and re-buy.  ONLY OPTION FOR US IS RE-BUY!

BUY Au!  BUY Ag!  BUY Pb!

Tue, 12/18/2012 - 00:58 | 3073874 i_fly_me
i_fly_me's picture

Looks like it's about time for some moar war.  Mr Bass has this nailed.

Tue, 12/18/2012 - 02:34 | 3074007 Big Slick
Big Slick's picture

Long Nickels

Tue, 12/18/2012 - 01:01 | 3073880 tooriskytoinvest
tooriskytoinvest's picture

22 Stats That Prove That There Is Something Seriously Wrong With Young Men In America. We Have Raised An Entire Generation Of Young Males That Don't Know How To Be Men, And Many Of Them Feel Completely Lost.

http://investmentwatchblog.com/22-stats-that-prove-that-there-is-somethi...

Tue, 12/18/2012 - 02:22 | 3073985 Flakmeister
Flakmeister's picture

 No shortage of symptons, that is the easy part...

What went wrong?

Can it be fixed in time?

Tue, 12/18/2012 - 05:45 | 3074119 JKearney3153
JKearney3153's picture

Being 23 years old, I hope that I'm not defined with this "Peter Pan Generation". I don't play video games and I don't have a TV, now all I need for success is to get rid of this damn laptop so I stop wasting time with you old geezers on this damn website, haha

Tue, 12/18/2012 - 06:16 | 3074136 SanOvaBeach
SanOvaBeach's picture

Young vs old.  I win, why?  Cause your stuck paying for it all!  Ha, Ha!  Next payck u get, check out the SS deduction.  Thanks for helping my retirement income.  You lose, dude!  U can always leave the country.

Tue, 12/18/2012 - 09:34 | 3074323 GMadScientist
GMadScientist's picture

Enjoy your limp dick, liver failure, and inevitable painful death.

Tue, 12/18/2012 - 09:51 | 3074360 GetZeeGold
GetZeeGold's picture

 

 

Being 23 years old, I hope that I'm not defined with this "Peter Pan Generation".

 

Just sign here......now you can go.

Tue, 12/18/2012 - 09:58 | 3074392 GMadScientist
GMadScientist's picture

No one gets out alive.

Tue, 12/18/2012 - 10:05 | 3074421 SheepDog-One
SheepDog-One's picture

I wouldnt count on video game slackers with pants halfway down their ass paying for your comfy retirement income....I'd be real worried.

Tue, 12/18/2012 - 11:03 | 3074608 unrulian
unrulian's picture

i hope your still alive when SS runs out so you have to eat shit

Tue, 12/18/2012 - 08:24 | 3074214 Ghordius
Ghordius's picture

rah, rah, rah, "there is something seriously wrong with young in America" - I call BS

there is nothing wrong with young men in America - they are fine if you consider what they were submitted to

what all those journalists, writers and so called experts completely forget is that

what is happening is that young women are getting politically whatever they ask for, in the US, in the UK, the Commonwealth and Scandinavia

and they - led by non-conservative thinking since three generations - are asking for and getting:

- diploma mills that cater for their interests, after schools that adjusted themselves to give them an edge over boys (including changing optimal, tested teaching techniques for new, "improved" versions that are sub-optimal but PC, and damned the drugged boys that don't get any motivation out of them)

- financial services that fund their shopping, including their diplomas

- a work environment that caters for their sensibilities (safety from danger, from confrontation, from anything typically male, and damned the male needs for competition)

- a work/life path that does not include any early hard decisions about family (you can do it on your own, you have time, grrrrl!) which leads them to start looking for a suitable husband way too late, in a moment in life where their expectation for Mr. Right have ballooned to impossible (remember that all girls respect and search for something superior compared to their own standards - shorthand: more)

we have in the above mentioned countries a new generation of supergirls. we just all forgot that in order to achieve that, boys had to give, a lot

now the supergirls are looking for men, and won't find much to their liking. and so they start to bash the "immature boys" in the same way that got them where they are, by asking more

 

it's a bit like a girl lending for a sports car, not paying back the loan and then bashing the hapless, broke male creditor for not having another, better car she could admire him into - because actually this girl would prefer to look up to him, and the whole car biz is worthless for her if he hasn't a better, sexier model

besides, he does not have to impress her with cars (or whatever - insert any achievement, physical, moral or imaginary here) anymore, he gets more than enough sex from all the younger, not yet in search of commitment girls

 

just compare to how conservative the rest of the world looks now if you want to get the full picture

we continental europeans, from Portugal to Normandy to Sicily to Sibiria are just watching amazed

Sat, 12/22/2012 - 10:47 | 3089621 flattrader
flattrader's picture

Yes.  It was young women who started all the wars that jumped the debt in the US and elswhere.

Gawd, you really are an idiot.

Tue, 12/18/2012 - 08:50 | 3074247 falak pema
falak pema's picture

oh, I thought US porn industry made the US men feel very manly and women put in their places...

Are you then saying the US porn revolution should be junked like the US "guns for everyone without control" thingie?

Now that, would be a cultural change of magnitude. 

If you could add to that :  No drones, no ME military bashing, no Corpocracy  Oligarchy selling junk foods, junk drugs, junk GM seeds, junk financial derivatives and junk industrial wastes in general, floating on the Oceans or dunked into festering pits, we would have a cultural revolution that could save the planet...in the land of 25% world consumption and global trend setter! 

Just think of it, the US changes its paradigm, its way of life "non-negotiable" to the NWO cabal, and the WHOLE world suddenly becomes a better place! 

Wowie. Lets hope NEWTOWN rides on the emotional wave to establish true guns regulation BIGTIME in memory of those innocent toddler lives.  Like the rest of USA. 

Tue, 12/18/2012 - 10:11 | 3074438 GMadScientist
GMadScientist's picture

Make porn, not war!

Tue, 12/18/2012 - 10:16 | 3074453 falak pema
falak pema's picture

you are not replying to the gender divide amongst millenium generation, between super gal and depressed guy, when you say  that!

That was the starting point! 

As long as super gal says "I'm fine with that" and Super depressed guy says "I can handle that! ..."

Now you got me to laugh! On Sad Sack's predicament.

Tue, 12/18/2012 - 09:35 | 3074324 GMadScientist
GMadScientist's picture

Okay that was a complete fucking waste of a minute and a half.

Tue, 12/18/2012 - 10:34 | 3074508 tango
tango's picture

Why should young men growing up without a male model of social and economic responsibility turn out differently?  It's directly tied to the collapse of hard work.  Capitalism is SO successful that it plants the seeds of its own destruction.  In terms of material wealth, food, health and invention no other system comes close.

Yet one day, someone says, IT'S NOT FAIR. "Why should they have more than we do?" That conversation has occurred around the world with predictable results.  Forced egalitarianism has many consequences:  Entrepreneuship declines, R & D disappears, hard work is ridiculed, debt explodes and money shuffling jobs abound (the epitome of Europe). 

For young males, a work ethic comes from...work.  Which is why in the Olympics and in sports, the vast majority of athletes are from rural areas.  

 

Tue, 12/18/2012 - 01:10 | 3073881 Dr Benway
Dr Benway's picture

Just says it all, really

Tue, 12/18/2012 - 01:05 | 3073889 kito
kito's picture

Poor Tyler, didn't read ray Dalios tome on how economies work. Ray says its nothing more than "beautiful deleveraging"......shirley the man with the biggest hedge fund knows everything......relax.....we will get back to the good ol days soon enough.....its all cyclical......ray says so....

Tue, 12/18/2012 - 08:11 | 3074206 mendigo
mendigo's picture

I think this chart is one that Bernanke would wave to justify his current policy.

However it may be differt this time as in the past the spending had purpose and was somewhat focused (one might argue) while this time it is unguided handouts to the ruling class - drinks all around.

Tue, 12/18/2012 - 01:10 | 3073902 mean divergent
mean divergent's picture

So if Rome is any lesson, we only have 200 more years of this shit before America will be officially "fallen"?

Tue, 12/18/2012 - 01:18 | 3073913 i_fly_me
i_fly_me's picture

Nah, Rome had to physically pound different metals into actual coinage to debase its currency.  We have computers for that now and they're waaaaaaaay faster.

Tue, 12/18/2012 - 02:38 | 3074011 mean divergent
mean divergent's picture

My guess is most of today's 40 year olds will be dead long before the US falls.  (-1 if you're over 40 and hoping to make a killing short SPX.) 

Tue, 12/18/2012 - 03:34 | 3074057 Hobbleknee
Hobbleknee's picture

So they will be exterminating us soon?

Tue, 12/18/2012 - 09:37 | 3074326 GMadScientist
GMadScientist's picture

Oil won't last that long.

Tue, 12/18/2012 - 01:58 | 3073949 jonjon831983
jonjon831983's picture

"Somebody" is bound to say: "Well gee, it was worst during WW2 and we did pretty well since then."

 

Sigh... where to start.  Galactic War will save us.

Tue, 12/18/2012 - 02:01 | 3073950 j-dub
j-dub's picture

America should have never stuck its nose in the U.S. Civil War.  If you look at the chart, that was the beginning of the end.

Tue, 12/18/2012 - 09:40 | 3074340 GMadScientist
GMadScientist's picture

The chart needs to reflect the debts racked up in the "Continental" currency as well as the Whiskey Rebellion in response to paying for it.

Tue, 12/18/2012 - 02:10 | 3073966 freedogger
freedogger's picture

And I thought Friday was depressing. Bravo ZH.

Tue, 12/18/2012 - 02:20 | 3073982 q99x2
q99x2's picture

The FED is clearly a crimminal parasite on the system.

Tue, 12/18/2012 - 02:33 | 3074003 Uber Vandal
Uber Vandal's picture

Kind of interesting how the ONLY time in the history of the USA that we had VIRTUALLY ZERO national debt was when the charter for the Second Bank of the United States was revoked by Andrew Jackson.

But, the panic of 1837 is quite often blamed on this as well.

 

Tue, 12/18/2012 - 04:31 | 3074078 Bazza McKenzie
Bazza McKenzie's picture

Interesting the chart shows only "hot" wars and not "cold" ones.  Reagan waged a bloodless war that destroyed the USSR, ended the Cold War and removed the prior threat of nuclear annihilation that hung over everyone.

Anyone who was an adult in the 70s and 80s will remember the widespread fear of nuclear devastation.  In WWII, other than the troops, most people in the US did not feel seriously personally threatened.  In the 60s, 70s and early 80s, large numbers did.  Yet because troops were not getting killed, we forget about that war.

The proportional growth in debt during the Reagan years was much smaller than in WWII and even WWI, despite Reagan removing a real existential threat to the survival of the US that was not the case in either of those other wars.

Tue, 12/18/2012 - 05:16 | 3074096 Some Bloke
Some Bloke's picture

Afghanistan ended the USSR, not Reagan. The greatest existential threat to to most people is the US.
I've no problem with you having a wank over a picture of Ronny, but change your name mate, your sort of crap comments take down a great Australian character.
You're such a raw prawn you probably think Australians drink Fosters...

Sat, 12/22/2012 - 10:50 | 3089623 flattrader
flattrader's picture

Chernobyl helped as well.

Sat, 12/22/2012 - 10:50 | 3089624 flattrader
flattrader's picture

Chernobyl helped as well.

Tue, 12/18/2012 - 05:50 | 3074123 JKearney3153
JKearney3153's picture

Reagan was a pawn on a one-sided chess board

Tue, 12/18/2012 - 09:54 | 3074359 falak pema
falak pema's picture

hegemonial chess boards are always "one-sided". The other king's death march is programmed to his final burying ground.

In this case, under RR, it was the USSR demise allowing NWO birth, under PAx Americana hegemony and clash of civilization hubris.

As for Reagan's role (alike Maggie of UK financial City sister), he was not a pawn but a "power broker" and "silver tongued spokeman- Elmer Gantry" of the then Oligarchy cabal, the Bohemian Grove set that would subsequently morph into the Texas-Bush- Halliburton-Enron-Carlyle nebulous/cabal of NWO matrix. All around the OIL-Saud/reserve currency/MIC massive supremacy AXIS to  terrorise the "rogue states" and recalcitrant heretics to imperial Pax Americana's will.

Until they hit the great financial crisis asymptote thru "forever upward SUper Cycle growth" hubris. 

Now its a towering fiat inferno.

Its always that way, here is a reminder thru an historical parallel with Republican Rome's demise :

8 Parallels Between Contemporary America And The Fall Of The Roman Republic - Business Insider

Tue, 12/18/2012 - 09:45 | 3074352 GMadScientist
GMadScientist's picture

Anyone alive in the 70s and 80s remembers black bag ops out the ass in support of "freedom fighters" everywhere that certainly weren't free, but weren't declared either.

If you don't think people in CA felt threatened by the Japanese in WWII, you're a motherfucking moron (otherwise, what's with the concentration camps?).

From 30% of GDP to 60% of GDP in less than 8 years? And that "removed existential threat"...wants Georgia back and can't wait for a hot war in Syria, dipshit.

"I owe $125k to China and all I got was this Patriot Missile Battery"

Tue, 12/18/2012 - 05:13 | 3074094 cxp
cxp's picture

TNI feed is free to view

http://tnifeed.com/?page_id=1943

Tue, 12/18/2012 - 06:05 | 3074131 SanOvaBeach
SanOvaBeach's picture

Who gives a fuck!  Keeps gett'in proped-up.  Bears are eventually right, but when baby!  Maggots well be eat'in my flesh when it all eventually comes down.  In the mean time; consume. consume, consume.  Got a big oil derrick painted on the side of my Ferrari.  When I drive like-a-bat-out-of-hell, I get 7 MPH.  You really think I give a fuck.

Tue, 12/18/2012 - 08:33 | 3074230 forwardho
forwardho's picture

Tyler's, why, oh why would you not include 2008- 2012? Isn't the wost recent data the most pertinant? Does that parabolic arc continue streight up at 45 degree angle, or 80?

Are we off the chart now.

Finish the chart and show how far we have blown past war time defecit.

we are living a complete fantasy.

Tue, 12/18/2012 - 08:46 | 3074250 Tyler Durden
Tyler Durden's picture

Did you even look at the title of the chart, or any part of the article at all?

Tue, 12/18/2012 - 08:56 | 3074257 Ghordius
Ghordius's picture

he probably had the impression it ends in 2008 because that is the last printed year at the bottom

CEO material, from my experience in how some people read charts

good chart, btw, congratulations and many thanks

I particularly like the Clinton budget surplus area, wasn't an accounting trick involved in that?

as always your fan, even when I could strangle you for some of your views

Tue, 12/18/2012 - 09:22 | 3074297 falak pema
falak pema's picture

(but not before the financial "leaders" of our time have converted enough of their paper wealth into hard asset format and transferred it to more peaceful, more "gun-controlled", non-extradition territories)....

Prescient ominous prediction. Are we seeing that in Japan now?

Tue, 12/18/2012 - 08:43 | 3074244 Woodrox
Woodrox's picture

one of these

the debt caused the wars, the war caused the debt, the deficit can grow to 25% of gdp before the next war, post wars deficits shrink.

Tue, 12/18/2012 - 08:52 | 3074254 Quinvarius
Quinvarius's picture

Showing debt as a percentage of GDP is misleading.  It should be shown in raw numbers.

Tue, 12/18/2012 - 09:00 | 3074262 Tyler Durden
Tyler Durden's picture

Unclear if Excel supports a big enough chart

Tue, 12/18/2012 - 09:01 | 3074263 Ghordius
Ghordius's picture

in dollars or gold? both can be misleading over generations, so I hereby defend Tyler's choice of debt and budget deficit as a percentage of GDP

it's really about how much compared to that time's calculations they decided to under- or overspend - that's the important part that shows how much the US government is trading the future for the present, as you usually do in wars

Tue, 12/18/2012 - 09:55 | 3074382 GMadScientist
GMadScientist's picture

Isn't GDP itself a bit of a synthetic metric (full of "broken windows", as it were) anyway?

Graphs of US debt in dollars to say...inflation-adjusted median household income...would be just as shocking.

Tue, 12/18/2012 - 09:22 | 3074299 madcows
madcows's picture

Who cares.  I'm leaving it for my great, great, great, great, great, great, great, grandkids to fix.  Party on.

Tue, 12/18/2012 - 09:38 | 3074332 GMadScientist
GMadScientist's picture

Hasten the end: use a condom.

Tue, 12/18/2012 - 09:47 | 3074322 Overdrawn
Overdrawn's picture

 

Charting US Debt And Deficit Since Inception - talking of which I notice the chart matches Mrs. Greenspans menstural cycle exactly, and it also matches the chart for GBP/USD for Nov-Dec 2012.

 

You will notice that the first period (known as the Red period), covers days 1 to 5 of the chart.  This period is characterised by bearishness in the markets and no vaginal sex.  Many rookie accounts bleed dry during these periods.   

The second stage of the chart illustrates the emergence of the bullish overian phase of the cycle, leading to a peak around days 12-14.  This part of the cycle is characterised by the markets banging ahead at full steam regardless of risks and unplanned accidents.  This is also a good period for long term investors looking to gain from child maintenance payments in  future divorce settlements.

The latter part of the cycle brings a degree of tension and instability, only the fearless would engage against the PMT indicator characteristic of this part of the cycle.      

Eat your heart out Regie Middleton.   Further infomation on this new scientific approach to trading can be obtained by sending me lots of money. A more in depth study, 'An Economists Guide to Shit Financial Policies'  is available online at www.shitcongoingon.com   As a gesture of goodwill you may watch the first video for free: http://www.openculture.com/2012/05/walt_disneys_the_story_of_menstruatio...

Tue, 12/18/2012 - 09:55 | 3074374 orangegeek
orangegeek's picture

The hot chick from Bad Idea T shirts ad on the home page leaning over flashing her cleavage makes it difficult to concentrate.

 

I can't get motorboating off my mind.  BRRRRRRR  BRRRRRR BRRRRR!!!

Tue, 12/18/2012 - 09:56 | 3074388 GMadScientist
GMadScientist's picture

"You'll notice, the faster I whack, the more Simpson sounds like a speedboat!" - Gary Larson

Tue, 12/18/2012 - 10:15 | 3074447 Smuckers
Smuckers's picture

The game will officially end, when the Fed can no longer print enough money to buy replacement toners.

 

 

Tue, 12/18/2012 - 11:14 | 3074644 unrulian
unrulian's picture

They will start filling them with blood

Tue, 12/18/2012 - 11:24 | 3074671 edifice
edifice's picture

The "Great Financial Crisis" was just the second leg up. Scary. 300%, here we come!!

Tue, 12/18/2012 - 11:32 | 3074687 redd_green
redd_green's picture

don't waste our time with this Debt/GDP nonsense.  The problem is much, much. much worse than these useless graphs portray.  In 1940, did the GDP numbers contain nonsense like "the amount of rent you would pay yourself if you rented the house you now own"?      Ditch that graph and use numbers computed by, e.g. John Williams. 

Tue, 12/18/2012 - 12:45 | 3074982 Flakmeister
Flakmeister's picture

The above chart combined with the increase in OECD oil production  (The North Slope and North Sea) is all you need to understand the apparent success of Reaganomics....

A Keynsian is a Keynsian by any other name...

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