Debt "Deal"? The Fundamental Mathematics Of Failure

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Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
Debt "Deal"? The Fundamental Mathematics Of Failure

http://market-ticker.org/akcs-www?post=188993

 

So crows Bloomberg this morning:

President Barack Obama and Republicans are narrowing the debate on a deficit-cutting plan to a reduction of $1 trillion to $2 trillion, though whether that would settle the issue through the 2012 presidential election remains in doubt, according to budget and debt experts.

White House press secretary Jay Carney insisted yesterday that a “significant” deal is still possible, even as Republicans and Democrats show little signs of compromise on entitlements and taxes, and Republicans remain firm in their demand for spending cuts in excess of the debt-limit increase.

The problem, at its core, is this:

Which has produced this:

Notice that the percentage of debt service (in terms of GDP) increases every single year.

Now I want you to take the 100 years of data and insert a graph on the first three columns.

It looks like this:

 

The absurdity of believing that the United States can have $60,000 trillion (that's 60 quadrillion) of debt outstanding in 100 years is, well, beyond stupid.  That's more than one thousand times as much debt as is outstanding right now.

 

 

 

Travlin's picture
Travlin
Status: Diamond Member (Offline)
Joined: Apr 15 2010
Posts: 1322
Nice find

Johhny

Very nice find.  Denniger has a way of making sense of things.  This fits nicely with a quote that I think sums up our situation very well.  It's been used around here before, but it fits this article perfectly.

There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved. - Ludwig Von Mise

Travlin 

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
There is no means of

There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved. - Ludwig Von Mise

 

Truer words were never spoken.

dshields's picture
dshields
Status: Platinum Member (Offline)
Joined: Oct 24 2009
Posts: 599
sad

I have looked at Fed Gov revenue and spending numbers over and over again.  And, when you do that it becomes apparent that we simply can not do what we have committed to - not even close to it.  So, great unhappiness will come upon the land.

 

sundarb's picture
sundarb
Status: Bronze Member (Offline)
Joined: Jan 10 2011
Posts: 72
Economic Armageddon and You

I saw this simple video that explains neatly the debt problem.

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