Friday, July 6, 2012

Holy Crap! Total U.S. Debt (combining government, financial, non-financial and household) Has Increased 12-fold Since 1980!

That's just one of the factoids from UBS:
...Our approach is based on an acknowledgement that the economy has become reliant, in large part, on debt and its creation. As of Q1 this year, US domestic outstanding debt (combining government, financial, non-financial and household) stood at $52.4 trillion; this is compared to a mere $4.2 trillion at the same stage of 1980 (a twelvefold increase or a 7.9% continuously compounded growth rate over the past 32-years)....
-from FT Alphaville's "UBS tackles the negative yield puzzle"

This was the point I was getting at in Sunday's "The Real Problem With Stimulus", we grow debt in good times and bad and are not getting returns on our indebtedness.
This was also the point of April's "So Much for the Keynesian Multiplier: $359.1 billion Q1 Deficit Buys $142.4 billion Q1 GDP Growth":
We are past the point of no return.

The Austerians will come in with their lies and crash Gross Domestic Product.
They will be followed by the Inflationistas and their lies.
If one has even a grade school grasp of economics this is a terrifying graph.
It was bad enough back in the day when we presented the comparison in terms of percentage growth of debt and GDP. When the presentation is in dollars...
From ZeroHedge:

Presented without much commentary, because little is necessary: the only ratio that matters for the US economy, the change in US public debt ($359.1 billion) and US GDP ($142.4) in the first quarter, hit 2.52x and rising.

It takes $2.52 in new debt to "buy" $1 of economic "growth
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