In Q2 America Added $2.33 In Debt For Every $1.00 In GDP

Tyler Durden's picture


As noted before, courtesy of the GDP revision, all the kneejerk reactions in the past 3 years to various GDP headlines (preliminary, first and final revisions at that), were all for nothing. In fact, today's GDP number will be revised and re-revised in the next two months, then re-re-re-revised at the annual revisions in 2013, 2014 and 2015. In other words, the number after (and likely before) the decimal comma is irrelevant. One thing however stands, and that is the trendline change in actual GDP compared to the change in debt used to "buy" said GDP. Which is why we present our favorite chart showing how much more total federal debt was added per quarter over the GDP. Bottom line: in Q2, the US added $274.3 billion in debt while adding $117.6 billion in GDP (from the revised data: Q1 GDP of $15,478 billion rising to just $15,595 billion in Q2). Probably what is more indicative, is that in Q2 the delta change between debt and GDP rose from 2.28x in Q1. But that too is largely noise and will be revised. What won't be revised is that over the past two years, the US has added 2.42x more debt than it has added GDP.

Another way of visualizing the above courtesy of two trendlines- that of US debt and of GDP:

And that is all that matters (and all who say corporations benefit from the relevering of the sovereign host due to some wrong equation they learned in Econ 101 may want to take a long hard look at Q2 corporate revenues and then explain why it has just printed the first year over year decline since the Lehman collapse).

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Fri, 07/27/2012 - 10:14 | 2656376 veyron
veyron's picture

At least someone is lending to america ...

Fri, 07/27/2012 - 10:16 | 2656386 Dr. Engali
Dr. Engali's picture

Yeah the fed.

Fri, 07/27/2012 - 10:25 | 2656417 Vagabond
Vagabond's picture

Normally ponzi schemes collapse sooner because the investors run.  There is no where left to run in the global fiat ponzi, and the paper will eventually be worthless anyways... So just keep piling on and kicking the can, giving more rats time to abandon ship.

Fri, 07/27/2012 - 10:39 | 2656481 flacon
flacon's picture

Here is a technical understanding of what we are witnessing:



Fri, 07/27/2012 - 10:46 | 2656508 TruthInSunshine
TruthInSunshine's picture

At this rate, even negative yielding treasury bills won't be enough to save the Ponzi.

Good job, Congress, POTUS and The Non-Federal Reserve-less Non-Bank. (Golf Clap)

Fri, 07/27/2012 - 10:55 | 2656545 TPTB_r_TBTF
TPTB_r_TBTF's picture

Maybe The Plan does not call for saving the old system?

if i am the guy running the old Ponzi, why would i want to save it?  I would just start another one and con the sheeple again, and again...

Easier to start a new ponzi than save an old one.

Fri, 07/27/2012 - 11:21 | 2656654 camaro68ss
camaro68ss's picture

The goverment just needs to spend more money to get us out of the hole. ahahaha

This is not going to end well

Fri, 07/27/2012 - 11:28 | 2656681 TPTB_r_TBTF
TPTB_r_TBTF's picture

Did anyone ever promise you an exit from your hole? ahahaha

This will end well for the guys at the top of the Ponzi.  The new Ponzi will start well for them too.  Same as it ever was.


Fri, 07/27/2012 - 21:19 | 2658429 engineertheeconomy
engineertheeconomy's picture

Author made a BWA (Basic Wrong Asumption)

We are not in debt

We don't have a printing press. We didn't print any money. We didn't spend any money. We don't have the money

Ben has a printing press. He printed money. He spent the money on himself. He has all the weath that he printed. Ben is in debt and needs to pay that money back

Fri, 07/27/2012 - 11:27 | 2656676 Dan Conway
Dan Conway's picture

I completely agree.  The criminals behind the Euro are just buying time while they work on implementing plan G.  Enough sheeple will still fight to keep the old euro together.  You can easily change euro for us$ or Fed Reserve or blah blah blah. 

Fri, 07/27/2012 - 14:24 | 2657625 ATM
ATM's picture

It's not a new Ponzi they wish to start. It is the total destruction and shaming of the "capitalist" system as the cause of all the worlds ills. It's the greedy banksters, the hoarders, those that don't pay their fair share. The blsme is being laid so that the sheeple accept the new reality. That reality will be one where those very smart and very caring people take care of us and provide for everyones needs. We will give them all the powers they need to accomplish this as we will be so afraid we will have to.

Or at least that's how I see their strategy. Not saying it will work, just that it seems to be the plan.


Fri, 07/27/2012 - 11:06 | 2656584 blunderdog
blunderdog's picture

Awesome.  I've always loved that triple-curve, and to see it explained by Santa! 

Fri, 07/27/2012 - 12:30 | 2657008 A Nanny Moose
A Nanny Moose's picture

Will you ask him about the pony he promised me?

Fri, 07/27/2012 - 13:21 | 2657245 Anusocracy
Anusocracy's picture

Sorry, you're no better than the rest of us.

You're just going to get the same dog and pony show.

Fri, 07/27/2012 - 10:26 | 2656420 4shzl
4shzl's picture

Not to worry -- Kruggles has already 'splained that "we owe this money to ourselves" -- so it doesn't matter.  Through the looking glass with the NYTimes and its Nobel-winning shill.  

Fri, 07/27/2012 - 12:39 | 2657027 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

Krugman's theory is only correct if we are talking about one individual or entity (e.g. borrowing money from yourself and issuing an IOU or intercompany borrowing).  More than one single party and the argument is lost.  I'm guessing that future Social Security recipients would be mildly peturbed if the U.S. Treasury stiffed holders of inter-governmental debt because it's "money we owe ourselves".

Fri, 07/27/2012 - 12:39 | 2657047 Carl Spackler
Carl Spackler's picture


Good to see the Keynesian REVERSE MULTIPLIER in effect.

Someone put a sock in Krugman's beak.

His phoney intellectualism is so tiring, but the middle class has to "pay the piper" for the destructive acts of him and his association of clowns.    


Fri, 07/27/2012 - 11:29 | 2656689 BeetleBailey
BeetleBailey's picture

...with "money" created out of thin air...

Fri, 07/27/2012 - 12:25 | 2656984 A Nanny Moose
A Nanny Moose's picture

Which means taxpayers, current and future, does it not?

Fri, 07/27/2012 - 10:17 | 2656394 Seafarer57
Seafarer57's picture

will the adults who are supposed to be running the world, please report to your offices.

Fri, 07/27/2012 - 10:27 | 2656424 nmewn
nmewn's picture

Waaahhh!!!...I want my debt binky!!!

Gimmeee! ;-)

Fri, 07/27/2012 - 11:17 | 2656482 akak
akak's picture

You know you can't have your binky until after you get your crapped-up Keynesian diaper changed ---- it's full of Krugman again, and DAMN does that thing stink!

(At least changing crap-filled diapers contributes directly to GDP.  The more crap, the greater the economic expansion!  Pure Keynesianism in action.)

Fri, 07/27/2012 - 10:52 | 2656527 RSloane
RSloane's picture

Love it...."debt binky". +1

Fri, 07/27/2012 - 10:20 | 2656403 JustObserving
JustObserving's picture

Last year the Fed purchased a stunning 61% of the total net Treasury issuance

We don't need no lenders

Fri, 07/27/2012 - 10:45 | 2656474 fuu
fuu's picture

Stunning does not do it justice.

Fri, 07/27/2012 - 10:33 | 2656464 SheepDog-One
SheepDog-One's picture

In case anyone was confused, its called 'monetizing the debt'.

Fri, 07/27/2012 - 10:41 | 2656488 Whoa Dammit
Whoa Dammit's picture

For every $2.33 that America created in debt in an attempt to revive the economy, the bankers skimmed $1.33, and only $1.00 was left over to go toward the actual economy.

Fri, 07/27/2012 - 11:02 | 2656572 TPTB_r_TBTF
TPTB_r_TBTF's picture

It's not all that bad.  DonT forget about NIRP.  We got a really good interest rate on that debt!

Fri, 07/27/2012 - 12:35 | 2657032 A Nanny Moose
A Nanny Moose's picture

This is all I heard from 2003-2006. "Who cares about the principle, as long as your rate and payment are low?"

That worked out well. The government bubble will peak soon.

Fri, 07/27/2012 - 13:32 | 2657276 TPTB_r_TBTF
TPTB_r_TBTF's picture

But you ainT on good terms with Ben.  The US Govt and Ben have a gentleman's agreement, which you didnT have.

Fri, 07/27/2012 - 10:15 | 2656381 Getting Old Sucks
Getting Old Sucks's picture

Guess the other $1.33 went to banker bonuses.  Good going Timmy!

Fri, 07/27/2012 - 11:28 | 2656685 Dan Conway
Dan Conway's picture

The banksters are getting a great ROI on their investments!

Fri, 07/27/2012 - 10:15 | 2656383 Dr. Engali
Dr. Engali's picture

But what about the multipier affect? I guess it's now a divider affect.

Fri, 07/27/2012 - 10:18 | 2656398 lizzy36
lizzy36's picture

Multipier effect - divider effect.......its all greek to me ;)

Fri, 07/27/2012 - 10:36 | 2656469 Dr. Engali
Dr. Engali's picture

Ugh. I hate that.

Fri, 07/27/2012 - 10:15 | 2656384 Hype Alert
Hype Alert's picture

The Multiplier Effect!   With fractions.

Fri, 07/27/2012 - 12:17 | 2656928 fresno dan
fresno dan's picture

What we lose in GDP growth, we make up for with volume...

Fri, 07/27/2012 - 10:17 | 2656388 LULZBank
LULZBank's picture
In Q2 America Added $2.33 In Debt For Every $1.00 In GDP


You DID build That, Bitchezz!!!

Fri, 07/27/2012 - 10:21 | 2656406 SheepRevolution
SheepRevolution's picture

... out of thin air!

Fri, 07/27/2012 - 10:30 | 2656445 LULZBank
LULZBank's picture

...thin air!

Now That, you DID'NT and will be taxed accordingly by Ministry of Al Gore.

The air you breathe... You think it just got to your nostrils like that, you mouth breathers!

Fri, 07/27/2012 - 11:05 | 2656581 TPTB_r_TBTF
TPTB_r_TBTF's picture

Oxygen is still free to breath.  They only charge you Carbon Credits when you exhale CO2.  Hold your breath!

Fri, 07/27/2012 - 12:38 | 2657044 A Nanny Moose
A Nanny Moose's picture

Can I get a credit for planting abunch of trees to cancel out my carbon footprint?

Fri, 07/27/2012 - 13:33 | 2657288 TPTB_r_TBTF
TPTB_r_TBTF's picture

Well, either plant the trees before you breath out or buy futures.

Fri, 07/27/2012 - 10:32 | 2656447 Dr. Richard Head
Dr. Richard Head's picture push on the string of aggregate demand.  Krugmanomics suck donkey dick. 

I think WBonzai should consider a Tijuana inspired Donkey Show with Krugman.  The question becomes, who would Kruman be - Donkey or Juicy Lucy?

Fri, 07/27/2012 - 11:08 | 2656596 eclectic syncretist
eclectic syncretist's picture

Not out of thin air, out of air thick with the stench of fraud and immorality.

Fri, 07/27/2012 - 10:17 | 2656392 Cursive
Cursive's picture

This answers the question, "Why are you so skeptical of the recovery," or "Why are you so bearish about the future?"  Well, because we've borrowed from the future to party today.  Tomorrow, when it gets here, is going to be a bitch.

Fri, 07/27/2012 - 10:26 | 2656422 Vagabond
Vagabond's picture

Nobody is paying this back.

Fri, 07/27/2012 - 10:31 | 2656452 Cursive
Cursive's picture


That misses the real problem - this monetary regime can continue for a long time further and within that system, we will have much slower growth and a lowered standard of living.  Easy money has faciliatated good times and now that punchbowl is being taken away.

Fri, 07/27/2012 - 10:39 | 2656484 Weisbrot
Weisbrot's picture

digital currency is the future ultimate gloabl fiat

Fri, 07/27/2012 - 11:09 | 2656600 TPTB_r_TBTF
TPTB_r_TBTF's picture

 e$ coming soon to that terminal in your pocket (mobile phone).  Optionally you may choose to have a chip implanted, or use the RFID chip on your new Id card.

Freedom!  Freedom of choice.  Choose your new method of payment.

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