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starbucks4ever (98.52)

Debt is now 100% of GDP



January 10, 2010 – Comments (4)

Officially, public debt is something like 85-86% of GDP. However, it is important to remember that the official GDP figure of $14+ trillion is a lie. The fictitious component of GDP is well known and has been discussed in detail many times in Caps and elsewhere. The bottom line is, the actual GDP is roughly 12.2-12.4 trillion, and the current debt level ($12.3 trillion) represents 100% of GDP plus or minus one or two percentage points. It's unfortunate that the point is lost on the financial media. Most people are well aware of this accounting trick, but very few care to make the required correction.

4 Comments – Post Your Own

#1) On January 11, 2010 at 3:29 AM, EconGrapher (< 20) wrote:

Scary thing is that even without any adjustments the US govt is fast approaching 100% of GDP. It just isn't sustainable to run such high deficits for so long - in the end the market either teaches you a bitter lesson or you play tricks like inflating the debt away or get discipline and tighten your belt.....

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#2) On January 11, 2010 at 4:38 AM, JibJabs (93.30) wrote:


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#3) On January 11, 2010 at 8:29 AM, ChrisGraley (29.27) wrote:

The debt level is also a lie and there are also unfunded obligations. Together it totals about $60 trillion or 5 times GDP. I suggest that you buy a boat and a few passports.

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#4) On January 11, 2010 at 9:08 AM, russiangambit (29.25) wrote:

> I suggest that you buy a boat and a few passports.

The unfortunate part is that the US is underpinning much of the world's economy. That was clearly demonstrated in 2008 when trouble in the US caused tzunami in the rest of the world's economies.

Where would you go on that boat? No, better stick around and try getting the mess fixed.

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