Debt, debt and more debt

US Total Government Debt - 1966 to 2012 basedlined at 1966=100

The problem with numbers, especially big numbers is after a while we get desensitised. A billion here, ten billion there, hundred billion or so on top, after a while nobody is paying attention because there are so many zeroes! So I thought I’d present US Total Government debt a little differently; the chart above shows US debt in relative terms. The Total Government debt load is baselined at 100 in 1966 and only goes up from there. I’ll let the presentation speak for itself, but across the period 1966 to 2012 we’ve seen an increase in US Government debt of 840% (almost an order of magnitude), while from 2008 to the Q1 of 2012 we’ve seen an increase of a little over 50%. In March 2012 alone the United States spent almost $200 billion more than was generated by tax revenue.

Ignoring the units (billions, trillions, who pays attention after a while?) these are eye popping increases but that’s not all. The 4th quarter of 2012 we’re looking at what some are calling taxmageddon – one of the sharpest increases in taxes the United States has ever seen, leading Ben Bernanke to warn of an impeding fiscal cliff. In other words, the US economy will fall off a cliff if the Bush tax cuts expire, the payroll tax cuts are not extended and cuts required by last summer’s debt ceiling deal all happen at the same time. And what will the response be? More then likely, more debt.

Happy times eh? Oh well, I still like gold & silver myself.

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