Total US Debt Soars To 101.5% Of GDP

Tyler Durden's picture


There is nothing quite like a $70 billion debt auction settlement at the last day of a month to bring total US debt to a record $15.692 trillion, which happens to be just $600 billion shy of the $16.394 trillion debt ceiling. (and no, contrary to simple economic textbook lesson, this does not mean that the private sector just got another $70 billion in debt capacity courtesy of taxpayers, as explained here). And now that we know what Q1 GDP was at the end of Q1, or namely $15.462 trillion, it is simply math to divine that today alone total US/debt to GDP rose by 50 bps to a mindboggling 101.5%.

Below is a chart of two lines with different slopes. We leave it up to readers to figure out which line is GDP and which is total debt.

And as noted yesterday, now that the end of month auction has settled, one can easily see why the Treasury forecast of debt issuance through the end of September will only be correct if somehow the Treasury finds a way to print its own money without reliance on the Fed, or else every US taxpayer somehow hikes their tax payments by 15% voluntarily. Good luck on both counts.

Then again who cares about the short term. Here is what the total US debt/GDP will look like, frankly under either administration as both the presidential candidate and the incumbent have absolutely no idea how to fix an excess debt problem without issuing more debt (nor do they have any interest to).

And for those who still believe that insurmanoutable debt is suicide, we have good news, you are right, at least according to a new paper by Reinhart, Rogoff and Reinhart (via The American):

– We identify 26 episodes of public debt overhang–where debt to GDP ratios exceed 90% of GDP–since 1800. We find that in 23 of these 26 episodes, individual countries experienced lower growth than the average of other years. Across all 26 episodes, growth is lower by an average of 1.2%.

If this effect sounds modest, consider that the average duration of debt overhang episodes was 23 years. In 11 of the 26 high debt overhang episodes, real interest rates were the same or lower than in other periods.

– Obviously, it is possible that new developments in technology and globalization will provide such a remarkable reservoir of growth that today’s record debt burdens will eventually prove quite manageable. On the other hand, the fact many countries are facing “quadruple debt overhang problems”—public, private, external, and pension–suggests the problem could in fact be worse than in the past, a question we do not tackle here.

– Nor have we paid attention here to the likely possibility of significant “hidden debts”, especially public sector, which Reinhart and Rogoff (2009) find to be a significant factor in many debt crises, and as documented in detail in the Reinhart (2010) chartbook. Another line of reasoning for dismissing concerns about public debt and growth is the view the causality mostly runs from growth to debt.

Our analysis, based on these cases and the 23 others we identify, suggests that the long term risks of high debt are real.

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Tue, 05/01/2012 - 16:39 | 2389259 NewThor
NewThor's picture

FUBAR bitchez!

Tue, 05/01/2012 - 16:48 | 2389295 resurger
resurger's picture

The beginning of the end Bitchez

Tue, 05/01/2012 - 16:50 | 2389306 mayhem_korner
mayhem_korner's picture



The end of the beginning...

Tue, 05/01/2012 - 16:54 | 2389326 BoNeSxxx
BoNeSxxx's picture

How long before "Treasury Forecast" becomes as oxymoronic as "Military Intelligence"?

Tue, 05/01/2012 - 21:52 | 2389875 AldousHuxley
AldousHuxley's picture

Patriotic Rant


Amerika, fuck yeah!

#1 in debt you betcha!


Savings for suckers, just spend money you don't have!

Double down on Facebook IPO, you've got it made!

Buy a house or two,

illegal Mexicans can do it too.

that's the American way,

the American Dream!


Sheila Blair giving everyone $10,000,000,

and millionare's tax is only 15%!

God Bless Bernanke and the federal money machine!

God Bless Amerika, we don't have to produce anything ever again.


It's true that poor are fat in Amerika.

It's true that idiots are rich in Amerika.

It's true that taxes don't pay for healthcare.

It's true that taxes don't pay for education.


We are coming for you Iran,

To liberate you of your oil.

New World Order,

Is here for all of yall.


We do it again and again

USA, USA, USA......#1!

We do all this with only debt!


Tue, 05/01/2012 - 21:36 | 2389876 Pairadimes
Pairadimes's picture

...or "Congressional Ethics Panel?"

Tue, 05/01/2012 - 17:35 | 2389436 Mark Carney
Mark Carney's picture

"This is not the end, this is not even the beginning of the end, but this is the end of the beginning"


-Winston Chruchill

Tue, 05/01/2012 - 17:39 | 2389448 sablya
sablya's picture

That curve of debt vs time into 2084 shouldn't be linear!  It fails to take into account compounding which is a biatch when it is working against you.  All debt systems are exponential and so the curve should look linear only on a LOG scale.  

Tue, 05/01/2012 - 17:44 | 2389458 Chaffinch
Chaffinch's picture

$16 trillion isn't what it used to be...

Tue, 05/01/2012 - 20:34 | 2389778 Sam Clemons
Sam Clemons's picture

Krugman told us we shouldn't be concerned about the debt yet.  

Tue, 05/01/2012 - 19:40 | 2389661 sablya
sablya's picture

The Debt clock predicts that, on this day in 2016, the gross debt to GDP ratio will be 127%, according to the current rates.  It might even be worse than that if GDP takes a turn for the worse, housing doesn't pick up, the student loan crisis blossoms, war with Iran or some other country becomes a reality, etc., etc.  

Tue, 05/01/2012 - 21:58 | 2389925 banker99
banker99's picture

Why does nobody ever add in the $5.5 trillion of debt on the books of Fannie Mae and Freddie Mac in looking at the U.S. total debt picture. Uncle sam is on the hook for that as well and continues to fund the quarterly losses and preferred dividends to itself. With this debt the U.S. debt is really 21.4 trillion, or 135% of GDP, or well on the way to being Greece.  

Tue, 05/01/2012 - 22:04 | 2389943 AldousHuxley
AldousHuxley's picture

When inflation is 4%, zero rate coupon on treasuries is a net loss.


Dumbass Chinese are losing money they gained on hard slave labor.



Tue, 05/01/2012 - 22:10 | 2389966 KickIce
KickIce's picture

Dumbass Chinese are also buying gold, oil and food commodities.

Tue, 05/01/2012 - 22:02 | 2389936 AldousHuxley
AldousHuxley's picture

Who cares about debt to GDP?

Those that do, we invade.


maxing out credit is good,

when you know you will never pay it back.


If you going to commit suicide tomorrow,

does it matter if you pay today with cash or credit?



Tue, 05/01/2012 - 22:32 | 2390031 CURWAR2012
CURWAR2012's picture


Tue, 05/01/2012 - 17:56 | 2389476 Mary Wilbur
Mary Wilbur's picture


Tue, 05/01/2012 - 19:42 | 2389666 smiler03
smiler03's picture

Churchill if you want to get it right.

Tue, 05/01/2012 - 18:54 | 2389587 francis_sawyer
francis_sawyer's picture

So what if it's the fucking end... It is a friend...


Tue, 05/01/2012 - 16:53 | 2389320 NewThor
NewThor's picture

When Ben Bernanke was appointed the national debt was $7,932,709,661,723.50.

It's almost double in 7 years.

obaMABUSh = the bernank

Tue, 05/01/2012 - 16:58 | 2389346 mayhem_korner
mayhem_korner's picture



Spending comes before printing (which, in turn, precedes spending).

Are we clear on this?

Tue, 05/01/2012 - 17:02 | 2389365 NewThor
NewThor's picture

Crystal clear.

....but if the Federal Reserve buys 63% of treasuries,  then it is a TOTAL ENABLER of the debt.

Tue, 05/01/2012 - 17:04 | 2389373 mayhem_korner
mayhem_korner's picture



The Fed doesn't buy just stores obligations for your grandkids.

Tue, 05/01/2012 - 17:23 | 2389420 flacon
flacon's picture

except it won't be them that will have to deal with it, it will be us. 

Tue, 05/01/2012 - 20:12 | 2389736 vast-dom
vast-dom's picture

No chance there's so much more hopium left it's kinda funny actually... when debt is a 199% of gdp then maybe....maybe then.....

Tue, 05/01/2012 - 21:42 | 2389881 Road Hazard
Road Hazard's picture people make me laugh. You think the US hitting 101% is bad, take a look at Japan's debt to GDP ratio but I have to warn you, prepare to piss yourself while your head explodes! Even with Japan's debt to GDP ratio WAY beyond our own, they carry on. Heck, they're even covered in nuclear waste yet life continues and on here, you people that are affraid of your own shadows, freak out at our debt/GDP raio hitting 101%. DOOM AND GLOOM.......PANIC, BUY SILVER, BUY GOLD........DOOM GLOOM!!!!!!!!!!!!!!!!!!! AHHHHHH! GRAB YOUR BUG OUT BAG, HEAD FOR THE HILLS........STOCK UP ON AMMO, WATER, FOOD AND TAMPONS?!?!#?!@@!# ? $@??!` THE END IS NEAR!!!!!!!!!!!!


Tue, 05/01/2012 - 22:04 | 2389941 RafterManFMJ
RafterManFMJ's picture

I concur. And I'm pretty sure fukushima will be a net boon to their economy; their exports of circus freaks will ramp up in the coming years. Yes, you've convinced me -  I'm going to the big city on Friday and sell blood plasma so I can buy Yen.

Wed, 05/02/2012 - 02:12 | 2390366 Lednbrass
Lednbrass's picture

You have convinced me.  The circumstances of the US and Japan are entirely the same as is the structuring of the debt.  Our societies are also remarkably similar.  Thank God you came here to shine your brilliance on the subject to clear everything up.

Now go stick your head in an oven.


Tue, 05/01/2012 - 16:50 | 2389307 MillionDollarBonus_
MillionDollarBonus_'s picture

This figure looks inaccurate to me. I don't know where you're getting your data from, but I suspect this article is overexaggerating. Just typical doomer fear mongering. 

Tue, 05/01/2012 - 16:53 | 2389319 mayhem_korner
mayhem_korner's picture



What does "overexaggerating" mean?

Tue, 05/01/2012 - 17:00 | 2389354 Dr. Richard Head
Dr. Richard Head's picture

It's like masturbating, but after a Greek penis extension operation, while having to reach over a protruding, morbidly obese American gut.  You know what I am talking about right MDB?

Tue, 05/01/2012 - 17:01 | 2389364 mayhem_korner
mayhem_korner's picture



Did you just watch Seven?

Tue, 05/01/2012 - 19:30 | 2389645 Muppet Pimp
Tue, 05/01/2012 - 22:35 | 2390036 CURWAR2012
CURWAR2012's picture

Love the name man

Tue, 05/01/2012 - 21:38 | 2389878 theTribster
theTribster's picture

+1 on the name.

Tue, 05/01/2012 - 20:04 | 2389725 eaglefalcon
eaglefalcon's picture

It means mid overestimating

Tue, 05/01/2012 - 17:07 | 2389378 WatchingIgnorance
WatchingIgnorance's picture

Nothing like MDB coming along reminding us of green shoots (sh*ts) all over the place, blah, blah, blah. I wish you shopped where I did. The faces of the sufferring are everywhere. And with each passing month, there are more and more.

Okay, MDB, would you please pass the blunt? Maybe that is what I am missing . . .

Tue, 05/01/2012 - 20:19 | 2389748 Bay of Pigs
Bay of Pigs's picture

MDB just isn't fucking that chicken like he used to.

Tue, 05/01/2012 - 17:07 | 2389381 fuu
fuu's picture

You should go back to being Robert Brusca, you were funnier then.

Tue, 05/01/2012 - 17:21 | 2389415 NotApplicable
NotApplicable's picture

I LOLed.

Tue, 05/01/2012 - 18:27 | 2389542 divide_by_zero
divide_by_zero's picture


Tue, 05/01/2012 - 23:16 | 2390148 akak
akak's picture

Yeah, whatever happened to Mr. Bruschetta here on ZH anyway?

One might say that his credibility ended up as, um, toast.

Wed, 05/02/2012 - 09:06 | 2390817 fuu
fuu's picture

Rubber Balls has been MIA for a while.

Tue, 05/01/2012 - 18:00 | 2389483 BigDeuceLittleToilet
BigDeuceLittleToilet's picture

FUBU Biatchez!

Tue, 05/01/2012 - 18:05 | 2389494 Elwood P Suggins
Elwood P Suggins's picture

Good.  Only 118.5% to go and we'll catch Japan.  I'm tired of seeing them so far ahead of us.

Tue, 05/01/2012 - 19:32 | 2389650 Peter Pan
Peter Pan's picture

A debt is only a debt for as long as it is acknowledged and for as long as the creditors are happy to see the debt  snowball gather size and momentum. Both of these conditions will at some point no longer apply. Foreigners and Americans be warned.


Tue, 05/01/2012 - 16:39 | 2389260 Badabing
Badabing's picture

debt hogs

Tue, 05/01/2012 - 16:40 | 2389265 outamyeffinway
outamyeffinway's picture

Now I sell my gold and buy Apple stock...

Tue, 05/01/2012 - 16:41 | 2389268 GeneMarchbanks
GeneMarchbanks's picture

Krugman says another 30% is no problem. Relax.

Tue, 05/01/2012 - 16:47 | 2389291 cpzimmon
cpzimmon's picture

But the NYT says that Krugman is slick...or  was it  that he's a dick?

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