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For some time now, I have been promising myself that I would sit down for a day or two and do some arithmetic on the debt numbers, to see if my gloomy outlook is really justified. The object of the exercise would be to establish the "point of no return" of the debt levels in the various sectors. That is, how far further debt can expand before it has to increase just for the economy to stay even. Or, the point at which newly-created dollars do not increase GDP at all. Or, the point at which debt can only increase and can never be paid off because debt service exceeds disposable income less basic expenses.

Life, however has become so utterly wonderful since I retired from my job that arithmetic of that sort falls into the bottom of the list of opportunites that compete for my time.

It was with great interest then that I came upon an article today that calculated federal govt. debt service into the future, and graphed it out. With fairly conservative assumptions, a case was made for debt service to rise from today's paltry 40% or so of revenues to 100% of revenues by the year 2011. I didn't check the math, but it seems about right to me.

Even now, after paying out debt service, entitlements and defence costs, there is only a very small percentage of revenue left for discretionary spending. With the kind of deficits we are running, I am sure the discretionary amount will turn negative very soon. Putting it another way, they'll have to borrow money just to pay the recurring bills. After that, of course, the downhill vortex is inescapable, if it isn't already.

If anyone comes across any more credible data on this question, I would be very grateful for a link. Please don't tell me about Clinton-era surpluses because we all know what phantoms they were. I'd be particularly interested in the household and business sectors.

I am sure there is plenty of comparative data from other countries that have gone bust because of an excess of debt. If I'm right in my opinion that the last great depression was caused by an excess of debt, then that is frightening because there is a wealth of data showing how more we are leveraged now than in 1929.

I'm just not sure that anyone is doing the math in Washington and staying on top of this fundamental analysis. Just as, while everyone is wailing about global warming, PCB's and other nonsense, I have not heard about anybody doing any studies on the planet's oxygen balance. With rainforest destruction and rapidly rising worlwide oxygen consumption, is there a huge unused capacity for plants to produce more oxygen as CO2 levels rise, or is there a point of instability somewhere relatively close where the plants will not be able to keep up? My personal opinion is that the plankton, grasses, etc. can easily carry the load for a long time, but what do I know? I would like to think that someone is checking on this too, rather than flying to Kyoto in jet planes for silly conferences.

Another conundrum. If so many people are now long-term unemployed, why don't we have a crime wave? (If we did, you can be sure we would hear about it in an election year. Crime usually has a strong correlation with the unemployment numbers. And what is this about "leaving the work force"? How do they eat when their unemployment runs out? The underground economy must be growing by leaps and bounds I suppose.

Ed.
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