Breaking Down America's Worst Long-Term Challenges: #1- Debt

Authored by Simon Black via,

On October 22, 1981, the national debt in the United States crossed the $1 trillion threshold for the first time in history.

It took nearly two centuries to reach that unfortunate milestone.

And over that time the country had been through a revolution, civil war, two world wars, the Great Depression, the nuclear arms race… plus dozens of other wars, financial panics, and economic crises.

Today, the national debt stands at more than $21 trillion– a milestone hit roughly two months ago.

This means that the government added $20 trillion to the national debt in the 37 years between October 22, 1981 and March 15, 2018.

That’s an average of nearly $1.5 BILLION added to the national debt every single day… $62 million per hour… $1 million per minute… and more than $17,000 per SECOND.

But the problem for the US government is that this trend has grown worse over the years.

It took only 214 days for the government to go from $20 trillion in debt to $21 trillion in debt– less than eight months to add a trillion dollars to the national debt.

That’s an average of almost $52,000 per second.

Think about that: on average, the US national debt increases by more in a split second than the typical American worker earns in an entire year.

And there is no end in sight.

At 105% of GDP, America’s national debt is already larger than the size of the entire US economy. (By comparison the national debt was just 31% of GDP in 1981.)

Plus, the government’s own projections show a steep increase to the debt in the coming years and decades.

The Treasury Department has already estimated that it will borrow $1 trillion this fiscal year, $1 trillion next year, and another trillion dollars the year after that.

They’re also forecasting the national debt to exceed $30 trillion by 2025.

To be fair, debt isn’t always bad. In fact, sometimes debt can be useful.

Businesses and individuals use debt all the time to shrewdly finance productive investments.

Real estate investors, for instance, often borrow most of the money they need to purchase a property once they determine that the rental income should more than cover the debt service.

In this way, when applied prudently, debt can actually help build wealth.

And the US federal government did the same thing in its early history.

It was an incredibly astute move on the government’s part, for example, to go into debt to finance the Louisiana Purchase back in the early 1800s, which dramatically expanded the size of the budding nation.

These days, however, the government flushes money down the toilet in the most wasteful ways imaginable, both big and small.

We’ve covered some of the more ridiculous examples in our normal conversations, from that $2 billion Obamacare website to the $856,000 that the National Science Foundation spent teaching mountain lions to run on treadmills.

Even the government’s more legitimate expenses are absolutely colossal now.

Last year the government spent HALF of its budget just to pay for Social Security and Medicare.

The situation is so dire that the government spends more than its entire tax revenue just on these mandatory entitlement programs, plus Defense and interest on the debt.

Even if you could eliminate entire departments of government, they would still be running a budget deficit and going deeper into debt.

The larger the national debt becomes, the more interest the government has to pay each year.

And interest payments increase even more rapidly as rates continue to rise... which is exactly what’s happening now.

A few years ago, the government paid less than 1.5% on its 10-year Treasury note. Today the rate has doubled.

This has a profound impact on Uncle Sam’s cash flow: they have to borrow MORE money just to pay interest on the money they’ve already borrowed… and spend a larger and larger share of the budget on debt service.

It’s a financial death spiral.

Think about it: if the government is having this much trouble making ends meet when they’re paying 2% interest on $21 trillion in debt, what’s going to happen when they’re paying 5% on $30 trillion?

It’s foolish to think that this trend has a consequence-free outcome. No nation in history has ever become prosperous by borrowing record amounts of debt to finance reckless spending.


EuroPox cheka Mon, 05/14/2018 - 17:58 Permalink

"At 105% of GDP..." - well that assumes they are not lying about GDP - which would be a false assumption.  In reality it is way more than 105% of what the real GDP number would be.

GDP has been massaged for many years to maintain the illusion of 'growth' - which has actually been negative pretty much since 2007.  EPS growth has come through share buybacks; corporate growth has been through acquisition not organic growth, etc..

In reply to by cheka

Sonny Brakes Mon, 05/14/2018 - 17:31 Permalink

Creditors have a way of getting their due. It's not personal, it's business. There's no risk involved in being a creditor except for the fact that fiat currency continues to lose its purchasing power. Control over debtor's labour trumps the return on money invested.

DingleBarryObummer Mon, 05/14/2018 - 17:33 Permalink

The debt is meant to expand exponentially, it's part of the ponzi scheme that is the Federal Reserve act of 1913.  There is always more debt  than currency that is "printed" (because interest is added onto it), so it can never be paid fully off.  Fiscal hawkishness is really a farce.  This central banking system is untenable.  Our quality of life will continue to get worse as long as these central banks exist.

Andrew Jackson called the Central Bankers a "Den of Vipers" and got rid of them (though they weaseled their way back in in 1913).  Donald Trump will not even mention the problem, let alone try and tackle it.  

adr Mon, 05/14/2018 - 17:48 Permalink

The #1 problem is the protected class that runs the BIS and it's subsidiaries.

The people who handcuff eight year olds to bedposts for their pleasure and discard the bodies in the nearest dumpster.

Those who eat the pituitary glands of young girls with hazel eye specks.

The "special" billionaires.

The name Rothschild needs to be purged from the gene pool along with a few hundred other families that are responsible for killing a few hundred million humans so they could aquire trillions.

All a president needs to do is say, "Fuck you, we're printing our own money and tearing up the Fed's contract." Sure Wall St. goes to zero, but is that really a problem?

Balance-Sheet Mon, 05/14/2018 - 17:56 Permalink

The National Debt will tend to rise over the years and decades given the way we finance government spending. We use the debt mechanism in order to make it possible to withdraw excess currency if that seems necessary.  One of the REAL reasons the USG sought independence was to have control of its own credit management system to foster economic development so there may be some period when debt rises very quickly like WW2 then declines very quickly as during the 1950s but outside such periods debt will always tend to increase.  Prior to the 1907 Financial Crisis most credit management was in private hands such as JPM. After the creation of the Fed up until WW2 private finance still held the major role with the Fed in a supportive conservative position but after the Vnam War the role of the USG and the Fed in operating the financial system has tended to increase and now the private banks are in the supportive role. The money you borrow and spend into the economy to purchase goods and services is created when you borrow it not before.

NYC_Rocks Mon, 05/14/2018 - 18:02 Permalink

It's very simple... a form of default is coming.  No one knows when, but this is not sustainable.  Either more money printing and death by a thousand cuts with monetary inflation or the govt just won't pay / off balance sheet services won't be provided.  Either way it's a form of default.  Diversify and get out of the $US.  It's strong now on a relative basis to other fiat, but it's not going to last.  No fiat currency lasts forever.  The state always abuses its power and messed it all up.

Bluntly Put Mon, 05/14/2018 - 18:47 Permalink

Since 1933 our government has increased the debt around 8.5% a year, every year. Do the math, start with our national debt in 1933 and work up to today.

That means our debt doubles every 8.5 years (1+0.085)^8.5 = 2 That also means by 2030 our debt will be $21t x (1+0.085)^12 = $56 trillion

I don't know why all these analysts can't figure this out.


venturen Mon, 05/14/2018 - 19:17 Permalink

the get the money the poor get the debt!


tell have a Billion Dollar unrealized capital gain that is 20 years much income tax do you pay?


You make $3ok a often do you pay income tax? 

squid Mon, 05/14/2018 - 19:26 Permalink

yah, well....

add the states, counties and municipalities to that and you have the whole picture.... and its not good.



Let it Go Mon, 05/14/2018 - 19:29 Permalink

Three major obstacles face America's future prosperity. Regardless of record new highs in the stock market and the positive predictions being made by the media, there is no guarantee as to how long the current growth trend will last. America must confront and deal with its low job participation rate, exploding national debt, and the fact it is still a "high-cost producer" of goods which means jobs are not about to come rushing back because of the recently passed tax reform bill. More details can be found in the article below.

 http://Three Reasons America Faces A Difficult Economic Future.html

Blankfuck Mon, 05/14/2018 - 19:46 Permalink




U. Sinclair Mon, 05/14/2018 - 19:47 Permalink

The problem is that several generations are used living on debt.
They all assume it's the normal way off life and see no danger whatsoever.
All our Keynesian Central bankers think that they can get away with it, because it worked every time, so far.
But at one point debt can turn against you like Frankenstein's monster.
And it will be a ferocious attack out of nowhere and erode all confidence in no time.

Talk to people you know and ask them if this financial system is sustainable.
They will look at you like you are some kind of lunatic because this is the life they know and they can not imagine any other life.

Just like in the 30's in Europe.
Warning signs where everywhere but people thought, in their optimism, that everything would turn out just fine. 
The world will be in total shock because no one saw it coming or refused to see it.

Lie_Detector Mon, 05/14/2018 - 20:07 Permalink

Sure, "borrowed" from central thieves, oh I mean banks that do not have it. They create the "currency" by typing a few keystrokes on a computer and press send. Suddenly we "owe" them for something a 3rd grade child could do. SHUT down the "Fed" (and other CB's) and arrest the traitor thieves behind the scene.

CrytpoFTW Mon, 05/14/2018 - 20:36 Permalink

You want sound money - go Crypto.  Just make sure that it cannot be fu#$ed with like what is going on with a shady futures market for Bitcoin.  

Walt Mon, 06/04/2018 - 19:32 Permalink

'..That’s an average of nearly $1.5 BILLION added to the national debt every single day… $62 million per hour… $1 million per minute… and more than $17,000 per SECOND..'

What. A. Scam.

Thanks jews.