The Ever Ballooning US Gross National Debt
During fiscal 2014, ended September 30, the US Government piled $1.086 trillion in new gross national debt on top of the existing mountain to bring it to $17.824 trillion. Money that the US government owes the Chinese, Japanese, Russians, and so on, and a large number of US investors too, including the Social Security “Trust Fund.”
Some of these entities had no choice but to accept US debt. Others made conscious decisions to buy it, betting that this debt, which is supposed to be their most conservatively invested asset, will somehow turn into a good investment albeit with a very low yield that ranges currently from near zero for 13-week T-bills to 2.95% for 30-year T-bonds. Those folks holding Treasuries with longer-dated maturities are praying that their asset won’t be eaten up by a bout of inflation in the future, and they’re praying even harder that yields won’t rise anytime soon because that would actually cut the value of their asset. If both happened at the same time…. Better not even contemplate this scenario.
Back in October, I wondered how the debt could jump $1.086 trillion in a fiscal year when the government claimed that it had reduced the “deficit” to $483 billion. And this is what the Gross National debt looked like through fiscal 2014 with its near exponential growth since 2001, a bipartisan fiasco without equal during my lifetime:
Even the so-called “surpluses” between 1998 and 2001, which exceeded 2% of GDP at one point and should have brought down the gross national debt, instead increased it in every one of those four years, by a total of $394 billion. Deficits as figured by government accounting never quite match reality. And that reality is the increase in debt.
And now, that debt jumped by another $181 billion over the first two months of fiscal 2015 and hit the next milestone: $18 trillion. Or to be precise, $18,005,549,328,561. A glorious moment to celebrate.
But the joys of celebration are wearing thin. Hitting that trillion-mark has become all too routine in recent American budgetary history: it took till 1982 to hit it the first time. It took the following 20 years to hit the next five trillion-marks. But then, we hit trillion-marks 12 times in 14 years! With consequences for generations to come. But hey, the volcano hasn’t erupted yet. So let’s not worry about it. Let’s just party on.
In these crazy times of ours, it always pays to be cautious when other investors get greedy. Read… I’ve Been Thinking About How the Current Madness Will End