Tag Archives: Money/Economy/Taxes

34 Shocking Facts About U.S. Debt

open quote#1 During fiscal year 2011, the U.S. government spent 3.7 trillion dollars but it only brought in 2.4 trillion dollars.

#2 When Ronald Reagan took office, the U.S. national debt was less than 1 trillion dollars. Today, the U.S. national debt is over 15.2 trillion dollars.

#3 During 2011, U.S. debt surpassed 100 percent of GDP for the first time ever.

#4 According to Wikipedia, the monetary base “consists of coins, paper money (both as bank vault cash and as currency circulating in the public), and commercial banks’ reserves with the central bank.” Currently the U.S. monetary base is sitting somewhere around 2.7 trillion dollars. So if you went out and gathered all of that money up it would only make a small dent in our national debt. But afterwards there would be no currency for anyone to use.

#5 The U.S. government spent over 454 billion dollars just on interest on the national debt during fiscal 2011.

#6 The U.S. government has total assets of 2.7 trillion dollars and has total liabilities of 17.5 trillion dollars. The liabilities do not even count 4.7 trillion dollars of intragovernmental debt that is currently outstanding.

#7 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

#8 It is being projected that the U.S. national debt will surpass 23 trillion dollars in 2015.

#9 According to the GAO, the U.S. government is facing 34 trillion dollars in unfunded liabilities for social insurance programs such as Social Security and Medicare. These are obligations that we have already committed ourselves to but that we do not have any money for.

#10 Others estimate that the unfunded liabilities of the U.S. government now total over 117 trillion dollars.

#11 According to the GAO, the ratio of debt held by the public to GDP is projected to reach 287 percent of GDP by 2086.

#12 Others are much less optimistic. A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.

#13 The United States government is responsible for more than a third of all the government debt in the entire world.

#14 If you divide up the national debt equally among all U.S. taxpayers, each taxpayer would owe approximately $134,685.

#15 Mandatory federal spending surpassed total federal revenue for the first time ever in fiscal 2011. That was not supposed to happen until 50 years from now.

#16 Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.

#17 During Barack Obama’s first two years in office, the U.S. government added more to the U.S. national debt than the first 100 U.S. Congresses combined.

#18 When you add up all spending by the federal government, state governments and local governments, it comes to 46.6% of GDP.

#19 Our nation is more addicted to government checks than ever before. In 1980, government transfer payments accounted for just 11.7% of all income. Today, government transfer payments account for 18.4% of all income.

#20 U.S. households are now actually receiving more money directly from the U.S. government than they are paying to the government in taxes.

#21 A staggering 48.5% of all Americans live in a household that receives some form of government benefits. Back in 1983, that number was below 30 percent.

#22 Back in 1965, only one out of every 50 Americans was on Medicaid. Today, one out of every 6 Americans is on Medicaid.

#23 In 1950, each retiree’s Social Security benefit was paid for by 16 U.S. workers. According to new data from the U.S. Bureau of Labor Statistics, there are now only 1.75 full-time private sector workers for each person that is receiving Social Security benefits in the United States.

#24 The U.S. government now says that the Medicare trust fund will run out five years faster than they were projecting just last year.

#25 Right now, spending by the federal government accounts for about 24 percent of GDP. Back in 2001, it accounted for just 18 percent.

#26 If the U.S. government was forced to use GAAP accounting principles (like all publicly-traded corporations must), the U.S. government budget deficit would be somewhere in the neighborhood of $4 trillion to $5 trillion each and every year.

#27 If you were alive when Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now. But this year alone the U.S. government is going to add more than a trillion dollars to the national debt.

#28 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

#29 A trillion $10 bills, if they were taped end to end, would wrap around the globe more than 380 times. That amount of money would still not be enough to pay off the U.S. national debt.

#30 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 470,000 years to pay off the national debt.

#31 If Bill Gates gave every penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.

#32 According to Professor Laurence J. Kotlikoff, the U.S. is facing a “fiscal gap” of over 200 trillion dollars in the future. The following is a brief excerpt from a recent article that he did for CNN….

The government’s total indebtedness – its fiscal gap – now stands at $211 trillion, by my arithmetic. The fiscal gap is the difference, measured in present value, between all projected future spending obligations – including our huge defense expenditures and massive entitlement programs, as well as making interest and principal payments on the official debt – and all projected future taxes.

#33 If you add up all forms of debt in the United States (government, business and consumer), it comes to more than 56 trillion dollars. That is more than $683,000 per family. Unfortunately, the average amount of savings per family in the U.S. is only about $4,735.

#34 The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was created back in 1913.close quote (Read more)

Euro breakup looking more likely

Banks Build Contingency for Breakup of the Euro open quoteFor the growing chorus of observers who fear that a breakup of the euro zone might be at hand, Chancellor Angela Merkel of Germany has a pointed rebuke: It’s never going to happen.

But some banks are no longer so sure, especially as the sovereign debt crisis threatened to ensnare Germany itself this week, when investors began to question the nation’s stature as Europe’s main pillar of stability.

On Friday, Standard & Poor’s downgraded Belgium’s credit standing to AA from AA+, saying it might not be able to cut its towering debt load any time soon. Ratings agencies this week cautioned that France could lose its AAA rating if the crisis grew. On Thursday, agencies lowered the ratings of Portugal and Hungary to junk.

While European leaders still say there is no need to draw up a Plan B, some of the world’s biggest banks, and their supervisors, are doing just that.

. . . .

Banks including Merrill Lynch, Barclays Capital and Nomura issued a cascade of reports this week examining the likelihood of a breakup of the euro zone. “The euro zone financial crisis has entered a far more dangerous phase,” analysts at Nomura wrote on Friday. Unless the European Central Bank steps in to help where politicians have failed, “a euro breakup now appears probable rather than possible,” the bank said.close quote (Read more)

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Premarket: Now Germany can’t sell bonds open quoteOne of Germany’s worst bond sales since the launch of the euro sparked concerns the debt crisis was even beginning to threaten Berlin.The Bundesbank was forced to buy 39 per cent of the 6 billion euros of debt Germany had hoped to sell to investors after banks bought just 3.644 billion euros of the issue. close quote (Read more)

Secret Fed Loans Gave Banks $13 Billion in Profit Undisclosed to Congress

open quoteThe Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse. close quote (Read more)

The world exported $331 billion more than it imported in 2010

Imagine I walk across the street and buy a loaf of bread from a baker. I hand money and wanted bread, so I am happy. The baker had bread and wanted money, so he is happy. The world has become a better place with more people having had their more urgent needs satisfied.

This explanation should be identical if the street happens to be, say the U.S.-Canadian border. Alas, it is not. Suddenly macro-economists in both governments either rejoice or grieve, for a trade deficit and a trade surplus of $2.99 has been created.

Of course, this is macro-economic nonsense. It stems from a collection of fallacies, starting with they fallacy that countries trade. They don’t. A country is a collection of people held together at gun point and forced (also at gun point) to pay taxes to the same group of criminals. Countries don’t trade, individuals do.

open quoteECONOMISTS are constantly urging governments to adopt policies that would reduce global imbalances—which, in crude terms, means that China should slash its current-account surplus and America its deficit. Yet they ignore the biggest imbalance of all: the current-account surplus that planet Earth appears to run with extraterrestrials. In theory, countries’ current-account balances should all sum to zero because one country’s export is another’s import. However, if you add up all countries’ reported current-account transactions (exports minus imports of goods and services, net investment income, workers’ remittances and other transfers), the world exported $331 billion more than it imported in 2010, according to the IMF’s World Economic Outlook. The fund forecasts that the global current-account surplus will rise to almost $700 billion by 2014.close quote (Read more)

One Failed European Intervention Leads to Another

From Open Europe‘s news summary of November 22nd:

Commission wants right to intervene directly in member states’ budgets;
German government: Eurobonds no “panacea” for eurozone crisis
In an interview with FTD, EU Commissioner for Economic and Monetary Affairs Olli Rehn argues for “the functioning of the eurozone to be improved through better coordination and tighter fiscal surveillance”, which would include having to clear national budgets in Brussels in order to ensure that rules on budgetary stability are adhered to. According to a draft copy of the Commission’s legislative package seen by Süddeutsche Zeitung, member states would have to submit their draft budgets to Brussels by April 15 in order for the Commission to provide comments and suggestions. The budget would then be discussed nationally and resubmitted by October 15 in order to get the Commission’s final approval. Rehn argues that the Treaty changes urged by Germany would not be necessary to achieve this, although he added that the Commission did not exclude this possibility. Handelsblatt reports that a source close to German Chancellor Angela Merkel has said that her goal is a Treaty amendment which allows for similar budgetary intervention and an enforcement role for the European Court of Justice, and according to experts, such a change can be achieved through a protocol added to the EU Treaties.

Commentary by Patrick Barron:

The crisis in Europe is a textbook example (Austrian economics textbook, that is…) of how the adverse consequence of one failed market intervention leads to another and another until the state, or in this case the European Union super state, controls all economic life at the expense of personal liberty.

The failed attempt at establishing a common currency has created a tragedy of the commons (see Philipp Bagus’ excellent book The Tragedy of the Euro), whereby the most irresponsible nations are rewarded for their irresponsibility. Now, instead of simply abandoning the failed project and considering something with a real track record–dare I say “gold standard” or money freely chosen by the market?–the elitists of Europe plan to move to the next step of trying to run the supposedly independent and sovereign countries that comprise the European Monetary Union from their cushy desks in Brussels.

Council on Foreign Relations: ‘Free-Markets Need Our Help’

open quoteThat isn’t a headline from the left-leaning Huffington Post, or a comment on Glenn Beck’s right-wing populist blackboard. It is, instead, the conclusion of a rigorous analysis bearing the imprimatur of the U.S. establishment: the paper’s lead author is Michael Spence, recipient of the Nobel Prize in economic sciences, and it was published by the Council on Foreign Relations. – Reuters Blog/ Chrystia Freeland

Dominant Social Theme: It’s official. Free markets don’t work very well. Or maybe they work too well. In any case, they need help.

Free-Market Analysis: This thoughtful article that Chrystia Freeland has written for her Reuters’ blog presents the conclusions that capitalism is not lifting all boats equally; or, to mix metaphors, technology is proving to be a two-edged sword. Productivity has risen but middle class wages and opportunity have not kept pace.

The conclusion is not hers alone but that of Michael Spence and co-author, Sandile Hlatshwayo. In her blog-article published a few days ago, Freeland reports on their scholarly paper examining the past 20 years of corporate and economic history. In this article, we’ll examine Freeland’s analysis to try to show how once more how arguments developed in a certain manner inevitably lead to certain conclusions.

As she is a mainstream business reporter, we are not surprised that Freeland comes to the conclusions she does, but it is instructive to follow the logic. What we end up with is a situation where the arguments have been framed in a certain way to develop a certain result. For anyone interested in thinking beyond this format, understanding how this occurs is critical.

Freeland doesn’t come right out and say it, but if technology is leading to increasing middle class difficulties, then some extracurricular force will have to be brought into play to rectify the situation. This is one of the oldest and hoariest dominant social themes of the power elite: Market failures demand government relief. It is elaborated on many ways round the world every day.close quote (Read more)