Obama On Pace To Increase The Debt By Stunning $2.4 Trillion This Year

Tyler Durden's picture

Submitted by Simon Black via SovereignMan.com,

OK, this is pretty nuts.

According to data released by the Treasury Department yesterday, the US national debt has soared by a whopping $294 billion since the start of the 2017 fiscal year, just 45 days ago.

That’s an annualized increase of 14%.

So if they keep up this pace, the national debt will increase by $2.4 trillion this fiscal year, surpassing $21 trillion by next September.

It’s hard to believe how rapidly the debt is growing; debt growth is far outpacing the growth of the US economy… and there’s no way to pretend that this is good news.

That doesn’t stop leading economists from trying.

Nobel Laureate Paul Krugman says “debt is good” because the US economy has grown so much over the last 200 years despite not having been debt-free since 1835.

This kind of logic is astonishing.

Aside from a few anomalies like World War II and the American Civil War, debt levels over most of early American history were low.

100 years ago in 1916, US debt was about $3.6 billion; as a percentage of GDP (i.e. the size of the US economy), that was about 7%.

Today’s debt of $19,867,119,032,053.28 is actually bigger than the entire US economy at over 106% of GDP.

Yet in Krugman’s view, the fact that America prospered a century ago when the debt was 7% of GDP means that the nation will continue to prosper with a debt at 106% of GDP.

Amazingly enough, Krugman has been awarded our society’s most esteemed prize for intellectual achievement. It boggles the mind.

To be fair, there is such a thing as “good debt” versus “bad debt”, and it’s not difficult to distinguish between the two.

If you can borrow money at 5% in order to make a safe investment that has a 25% return, for example, that may very well qualify as “good debt”.

If you borrow money at 5%… or even 1%… and then squander the borrowed funds on useless trinkets, that’s clearly “bad debt”.

In 1803, the startup US government negotiated the Louisiana Purchase from France, a real estate acquisition that doubled the size of the US.

It was the mother of all distress sales. France was desperate for cash, and the administration of Thomas Jefferson negotiated a price that valued the land at around $15 million.

Adjusted for inflation to 2016 dollars, Thomas Jefferson paid about 40 cents per acre to acquire the land that comprises fifteen states and has generated trillions in economic activity.

Naturally the US government had to borrow money that year to conclude the Louisiana Purchase with France, so the national debt increased slightly in 1804.

But when you consider the extraordinary economic benefit of that purchase, it clearly qualifies as “good debt”.

Fast-forward to our modern era and we see that the debt is increasing by more than a trillion dollars each year.

What are the good citizens of the United States receiving in exchange for taking on so much debt?

It’s not like the government bought up half of Mexico or colonized Mars.

No, instead they wasted $2 billion on the Obamacare website, most of which went to a company whose top executive just happens to be an old friend of Michelle Obama.

Today, the US government has to borrow money just to pay interest on the money it’s already borrowed. This is almost the textbook definition of bad debt…

In fact, the government now spends nearly all of its tax revenue just on mandatory entitlement programs like Social Security and Medicare, plus interest on the debt.

The real kicker is that Social Security and Medicare are massively underfunded and quickly running out of cash… so they’ll both require a major bailout (i.e. MORE debt).

Interest payments, meanwhile, total hundreds of billions of dollars each year even though interest rates are at record lows.

Today the government pays less than 2% interest on its debt.

Ten years ago in 2006, the average interest rate on US debt was over 5%.

Back then 5% was considered incredibly low compared to the higher interest rates of the 1980s and 1990s.

But today, 5% would bankrupt the US government. It’s pitiful.

So unless interest rates stay at these record lows forever (or perhaps go negative), the government’s interest payments are going to explode.

Debt… particularly bad debt… is an absolute killer.

Excess debt has been responsible for bringing down some of the largest companies in the world. It bankrupts individuals.

And excess debt has caused the decline of some of the largest superpowers in the history of the world.

There are a lot of people, led by their cheerleader Paul Krugman, who outright ignore this problem and pretend that the US government can continue expanding its debt forever without ever suffering a single consequence.

And I know there are a lot of people keeping their fingers crossed hoping that a new administration will steer the ship in the right direction.

Look, I’m all for hope and optimism.

But it’s important to stay rational. These problems aren’t going away.

And you won’t be worse off for having a Plan B that provides solid protection from the consequences of these obvious trends.

Do you have a Plan B?

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ACES FULL's picture

All that campaigning for Hillary.

nibiru's picture

All that promises given to Soros...

Handful of Dust's picture

The wookies' vacations are expensive.

Mr. Universe's picture

“It will be so refreshing to have a classy, handsome , dignified President back in the White House.” “I’m tired of seeing a Ape in heels.”

Holy hand grenade of Antioch's picture
Holy hand grenade of Antioch (not verified) Mr. Universe Nov 17, 2016 4:09 PM

I 'O'u a BOMB ugh!

JRobby's picture

"I'm gonna wreck this fuckin' place before I'm done"

Everyone else is getting their lines of credit slashed! WTF?

Shemp 4 Victory's picture

Obama's legacy is assured.

BTW, what the fuck is this?

Amazingly enough, Krugman has been awarded our society’s most esteemed prize for intellectual achievement. It boggles the mind.

Simon, Simon, Simon, how much longer are you going to be an enabler for this charade? The Nobel Prize in Economics is phony. Fake. Not real. A charade. It was invented by the Swedish central bank in 1969. It's a marketing gimmick that tries to pass off economics as a real science. It's fraud sprinkled with gold-colored glitter.

https://en.wikipedia.org/wiki/Nobel_Memorial_Prize_in_Economic_Sciences

Holy hand grenade of Antioch's picture
Holy hand grenade of Antioch (not verified) Shemp 4 Victory Nov 17, 2016 4:36 PM

Barry 'Stun EM'

PrayingMantis's picture

   ...> "Obama On Pace To Increase The Debt By Stunning $2.4 Trillion This Year"

       ... $2.4T? ... which enemy country's ransom did he pay that the public wasn't aware of? ...

    ... but I'm not surprised ... Obumboclot is on pace to be the worst Dindu Nuffin POTUS ever ... and even had the gall to take a farewell world tour on taxpayers' dime despite the blooming debt which will saddle every living American for decades to come ...

... here's one example of his "legacy" ...

... Flashback Jan 2013
>>> "The Scandal That Will Bring Obama Down" ... >>> "It’s even worse than we previously thought. A retired four-star admiral is now claiming that Barack Obama intentionally conspired with America’s enemies to stage a bogus attack and the kidnapping of an American ambassador so he could “negotiate” the release of a “hostage” and bolster his mediocre approval ratings just prior to the election!  The Washington Examiner, quoting retired Four-Star Admiral James Lyons, writes: “the attack on the American Consulate in Benghazi… was the result of a bungled abduction attempt…. the first stage of an international prisoner exchange… that would have ensured the release of Omar Abdel Rahman, the ‘Blind Sheik’…   But something went horribly wrong with Obama’s “October Surprise.” Although the Obama Administration intentionally gutted security at the consulate prior to the staged kidnapping, former Navy SEALs Tyrone Woods and Glen Doherty disobeyed direct orders to stand down, saved American lives, single-handedly killed scores of attackers…and the attackers, believing that Obama had betrayed them, tortured Ambassador Chris Stevens and dragged his body through the streets. ...”

... more here >>> http://www.westernjournalism.com/the-scandal-that-will-bring-obama-down/

 

 

Tarzan's picture

All this is baffling, how they could be so dumb, if they really were...

Amazingly enough, Krugman has been awarded our society’s most esteemed prize for intellectual achievement. It boggles the mind.

It's only baffling for those who still cling to the idea that Obama, Krugman, and their buddies are trying to fix America, that they're for the American People.

They're not!  They're trying to overwhelm us with debt, unpaid mandates, unaccounted for Trillions and Trillions wasted, ON PURPOSE, to bring America under a unified international flag, and a unified electronic currency based on the number of your name!

They will attempt to identify the entire world's population with a number, everyone they don't kill!  The goal is control of buying and selling, and control of the world's population, something they will in the end find fleating.

It's a controlled, planned financial crash they're up to.  To hide their theft, and unleash electronic "money".  They're doing a damn good job of the crash part, although, the control part will slap them in the face one day, when they're grip on our face is thrown off, when the People of the world revolt and Oligarchs go nuts with their evil plans to kill millions of the unwanted masses!

If your not preparing for this day, If your still baffled at what they're up to, Your in big trouble, because the shit hits the fan in 3,2,1..........hop to it, time is short!

Vatican_cameo's picture

 

The House Nigger will do his best to Scorch every last bit of Earth before Trump takes office.  A certifiable Piece of Shit to the very end.

BeanusCountus's picture

Hey Mant. Not a fan of Obummer, but key words are "on pace" to hit 2.4 T deficit this year. October big for sure, but it's predicted to be. Some months are higher than others. December and Jan are usually way lower (even surplus) due to year end bonuses etc. Just sayin.

auricle's picture

Krugman won a nobel prize in ponzinomics. Obama won a nobel prize in rhetoric. Just another propaganda arm of globalists. 

B-Bond's picture

DOJ has rating agencies under control, including maverick Egan-Jones.

Moneypenny hand me DOJ assignment file.

Place your bets!

BrownCoat's picture

Not just Economics, the whole Nobel Prize charade is a popularity contest. Do you really think Barry deserved a "peace prize" for not being Bush Junior? Turns out, the Swedes were wrong, Obama acted just like Junior!

Lumberjack's picture

It's the great green crony giveaway. He can claim that the economy was great when he left office and then the Dems will blame President Trump when the bill comes due.

El Vaquero's picture

What people need to understand is that the USD is a Ponzi scheme. If the private sector doesn't create enough debt, the government will damned sure take up the slack. It's built into the system. If the USD somehow miraculously survives the next 8 years, expect the US debt to be around $40 trillion.

Paying off the debt is destroying the money supply that is needed to pay the interest. It is the interest that forces the creation of more debt to create more money just so that we can service the debt.

Stuck on Zero's picture

Now I know why gold is going down. Huh????

Justin Case's picture

It's like hosting a poker game with 4 guys and yoar the non participating host. So there is a fee for hosting, say $100 buck an hour. So as long as these guys keep playing you will collect a hundred from each of then. Eventually you will have all the money the players brought to the game. So to keep them playing, you lend them money, and again, host ends up with all the money, now keep repeating as in the first time they ran out of money. That's our system.Interest is the vacuum cleaner for money circulating.

Interest accelerates the removal of money from the economy. That's why interest rates rise during inflation, to remove money from the economy to balance the output of available goods with the money in circulation. Today we have over capacity and not enough buyers. Buyers have borrowed future earnings for goods today, so even nearly free money doesn't get borrowed b/c the borrowers ar at max debt capacity. Incomes or inflation need to rise to reduce debt  burdens, then new borrowing starts and the economy moves along again, until consumers stop taking on moar debt. If people wouldn't borrow money, then that would be a balanced economy.

John_Coltrane's picture

Wow, can Americans handle an alpha male heterosexual married to a beautiful, feminine first lady after 8 years of our "first gay president married to a tranny" to paraphrase poor Joan Rivers, suicided during routine surgery for her frank honesty and humor.

RIP Joan we miss your humor.

Boris Alatovkrap's picture

Just untangle of wookie hair for photo shoot or red carpet appearance is major expenditure.

SILVERGEDDON's picture

Boris - eye bleach for the Magic Negro after trimming the bush is expensive.

Plus, he did a magic trick.

" Twenty Trillion Dollars. Now you see it, now you don't ! Disappeared right up Bernanke's butt, it did. Along with all that free bail out banker money no one talks about " 

new game's picture

10 t and deeply divided. red vs blue = all red(r-b) at 25-30t...

Il Dottore's picture
Il Dottore (not verified) Handful of Dust Nov 17, 2016 4:02 PM

And Libya, Ukraine Syria, Yemen plus CIA revolutions in Tunisia, Egypt, Hong Kong, Venezuela.

Also fo the Israelis.

Son of a bitches, may they rot in hell

Uzda Farce's picture
Uzda Farce (not verified) Il Dottore Nov 17, 2016 8:42 PM

"War is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few." -- James Madison, 1795

Boris Alatovkrap's picture

Only with enduring effort, persistent labor, abject ignorance, and utter selfishness can goal like $20T debt be achieved. Bravo boy king!

nibiru's picture

Golden boy Barack did it! In da hood he gets mad props for being black and cool, when he leaves everyone gets back to wondering why is it so bad if he is so cool.

Perimetr's picture

US destroyed, Mission Accomplished!

Next, crash the financial system and blame it on Trump.

Holy hand grenade of Antioch's picture
Holy hand grenade of Antioch (not verified) Perimetr Nov 17, 2016 4:13 PM

OBAMA (ranting about his own LEGACY)

 

https://www.youtube.com/watch?v=GmdICjVUIWc

kralizec's picture

Need real grassroots with torches...

The Saint's picture
The Saint (not verified) nibiru Nov 17, 2016 4:11 PM

Figures used to show that by 2018 debt service and entitlements will take about 100% of tax revenues.  If that still holds, Trump had better get busy with creating fast growth and high inflation while maintaining lowish rates.

UPDATE: Looks like the Heritage Foundation has moved that day of reckoning out to 2031 because of the low current debt service rate.

 

Il Dottore's picture
Il Dottore (not verified) ACES FULL Nov 17, 2016 4:02 PM

,

Clock Crasher's picture

Obama On Pace To Increase The Debt By Stunning $2.4 Trillion This Year

Just doing my job.
-Obama

SubjectivObject's picture

How does Congress feel about its role in this rate of debt expansion?

new game's picture

about 530 heads so far up their asses i can see their eyes down their throat...

justin423's picture

This story and the comments are so off the mark.
CONGRESS sets spending, which is controlled by Republicans.
The debt being sold is how we cover the gap between tax receipts and spending.
You want to blame anybody for the debt, how about deficits don't matter Cheney, which is who the Republicans in Congress are following.

Coletrane's picture

but but but but duh deficit is down ..........

Hohum's picture

Actually up about 33% in FY 2016 versus FY 2015.  But October 2016 (FY 2017) was good because October 1st payments moved back into September.

onwisconsinbadger's picture

Well, Republicans have majority now so freaking fix it. See you in 4 years. This is all Bill Clintons fault.

jal's picture

duhhh the republican had majority before

WhollyShiite's picture

Yeah. And these are *his* numbers.

Son of Loki's picture

$2.4 trillion does not even include Obama's promises to buy 3,876 winter jackets for his protesters

Snow may fall in northeastern US as temperatures plunge up to 50 degrees this weekend

http://www.msn.com/en-us/news/other/snow-may-fall-in-northeastern-us-as-...

Rainman's picture

The new First Lady's got nice titties so at least we got that goin for us