Official US Debt Clock/Dollar Collapse Thread

[Dissipate]

I propose we consolidate the US debt and dollar collapse threads here.

Take a look at this debt clock:

http://usdebtclock.org/

There are multiple time bombs on this clock, not just the national debt. Everything from unfunded liabilities to massive personal debt. It is not looking good. In the end I believe the politicians and the Fed will destroy the dollar. That's what governments do when they can't pay the piper. Any rhetoric from these goons regarding 'strong dollar' policies are just more lies.

Also, take a look at this graph of total debt:

http://market-ticker.denninger.net/uploads/Z1-2009-12/total-debt-2009-12.png

Total debt has absolutely exploded in the past 10 years. What is interesting is that it is household debt and financial instrument based debt that has completely spiraled out of control. Hat tip to Zebo for providing this graph.

Here is what the politicians/banksters are secretly chanting:

Destroy the dollar! It's good for exports!

Destroy the dollar! Grandma on a fixed income can eat dog food!

Destroy the dollar! We will be dead before a gallon of gas costs $1,000!

Update1: Looks like Moody's is threatening to downgrade US securities: http://www.bloomberg.com/apps/news?pid=20601068&sid=a0a8xAghPS8I

The cracks are starting to form!

 

[First]

You'd figure the inflation kooks would stop talking about inflation about being wrong about it for a good few years now. Expect to continue to be wrong going forward.

 

[Dissipate]

You'd figure the inflation kooks would stop talking about inflation about being wrong about it for a good few years now. Expect to continue to be wrong going forward.

Any reason why you think we aren't heading for inflation?

 

[Matthiasa]

Any reason why you think we aren't heading for inflation?

Any good economy has inflation, he's talking about hyperinflation...

 

[Dissipate]

Any good economy has inflation, he's talking about hyperinflation...

Any reason why we aren't heading for hyperinflation?

 

[Matthiasa]

Any reason why we aren't heading for hyperinflation?

Well weren't not by the very definition of what it is, oh yeah and our currency has actually been strengthening.
Basically any massive level of inflation that is going to happen from the excess government spending would already be showing up if it was going to have a major effect, but that is not the case.

Fact of the matter is our debt is still low compared to other countries as a percentage of GDP.

 

[totalnoob]

Hyperinflation, no.
Uberinflation, yes.

I don't think we can rule out 10-12% annual inflation for a decade or so unless we get another Paul Volcker in office who is determined to choke it off to protect the dollar, which I seriously doubt. There is simply no way to fund our current welfare/warfare state with a strong dollar. According to the CBO the national debt will be at $20 trillion in 9 years. It's unlikely taxes will be raised enough to cover the interest payments on that so the gubmint is likely going to take the easy way out and use the indirect tax of inflation.

 

[Dissipate]

Well weren't not by the very definition of what it is, oh yeah and our currency has actually been strengthening.
Basically any massive level of inflation that is going to happen from the excess government spending would already be showing up if it was going to have a major effect, but that is not the case.

Fact of the matter is our debt is still low compared to other countries as a percentage of GDP.

Do you agree the current path is clearly unsustainable?

 

[Matthiasa]

Do you agree the current path is clearly unsustainable?

Well of course its not, the politicians also probably know that as well though... hopefully.
When they no longer have to spend so much, ideally they will lower their spending. Will that happen well that's anyones guess, but keeping it up to long it will eventually significantly raise inflation(unlikely to true hyperinflation levels though), but that won't just effect the US.

 

[Steeplerot]

Why do you use a socialist flag Dissipate? Are you not a uber capitalist? Quite ironic.

 

[First]

Any reason why you think we aren't heading for inflation?

Strictly speaking we almost always have inflation, just nowhere near a worrisome amount (we've averaged 3% annually for 30 years now and 4% since 1930). Inflation in the future is probably a forgone conclusion; inflation that should be considered worrisome (anywhere from 6%-15%, more specifically double digit inflation) simply is not likely and nowhere near a forgone conclusion. Despite hundreds of billions already injected in worldwide economy with trillions by the time it's done in a handful of years, we're still seeing nothing but 0%. Those are just the numbers, and it's the beauty of corrections; they correct asset prices and dampen inflation quite nicely. Besides, we're already raising interest rates despite a 0% increase in prices for 2+ years now. It's not unheard of to combat, Volcker did it quite nicely 30 years ago.

 

[Pocatello]

Don't worry, Obama will take care of us. He's the one with the plan, for everybody.

 

[Acanthus]

We have had powerful pressure the other way for 3 quarters.

CPI has been climbing, but at a slower than normal pace.

 

[Craig234]

The rules change for the world's most powerful, internationally distributed economy. It's a little like 'too big to fail' logic, economic factors that otherwise apply are forced to be held back.

 

[Moonbeam]

I'm predicting rain.

 

[Acanthus]

The rules change for the world's most powerful, internationally distributed economy. It's a little like 'too big to fail' logic, economic factors that otherwise apply are forced to be held back.

That, and the simple logic that when everyone is unemployed you cant charge $6 for a bag of corn at walmart anymore.

 

[werepossum]

Hyperinflation most benefits those with relatively large debt and most harms those with great wealth accumulation in currency or on account.

Um, whom would you say runs our government and the Federal Reserve?

 

[JS80]

Hyperinflation most benefits those with relatively large debt and most harms those with great wealth accumulation in currency or on account.

Um, whom would you say runs our government and the Federal Reserve?

You are assuming wages will keep up with hyperinflation.

 

[werepossum]

You are assuming wages will keep up with hyperinflation.

No, although I'm assuming that investment income will (since wealth can be invested in other, more stable countries if necessary.) My core assumption though is that wealthy people largely run this (and every other successful) country, that wealthy people have money on account in dollars which would be largely wiped out if the dollar is hyper-inflated, and that wealthy people will avoid that which will make them poor people no matter how much better that might seem to thsoe already poor people. Wages never keep up with hyperinflation. Nor do government checks. But the wealthy don't depend on wages, they depend on capital gains (and sometimes wages disguised as capital gains.)

 

[MotF Bane]

Bets on when our debt reaches 100% of GDP?

 

[Zebo]

It's the ultimate bubble.

From 1776 to 1980.....America accumulated approximately $5 trillion in total debt.

From 1980 to 2000....Debt ballooned to $25 Trillion providing massive stimulus our economy

From 2000 to 2008....Debt more than doubled to over $50 trillion.

It is very easy to feel rich selling $25 trillion of debt in eight years.....add in derivatives and the numbers are staggering.

However, debt obligations to each other that can't be serviced unless we are increasing credit... essentially taking on the nature of a Ponzi Scheme.

The BIG question is how do you tell the American population their economy and retirement hopes were based on a Ponzi Scheme of ever increasing debt that would blow up once there was nothing left to leverage and the banking system cut off the economy from credit? Going to be fun. Prepare.

How do you service 55 Trillion in debt with much lower incomes? You don't.

Keep in mind these debts make up the value of our money market accounts, life insurance policies, community banks, mutual funds assets, IRA assets, 401K assets, Pension Fund Assets and investment accounts they will all burn to the ground soon.

 

[First]

^ You don't know what a Ponzi scheme is.

 

[totalnoob]

From 1980 to 2000....Debt ballooned to $25 Trillion providing massive stimulus our economy

From 2000 to 2008....Debt more than doubled to over $50 trillion.
The BIG question is how do you tell the American population their economy and retirement hopes were based on a Ponzi Scheme of ever increasing debt that would blow up once there was nothing left to leverage and the banking system cut off the economy from credit? Going to be fun. Prepare.

How do you service 55 Trillion in debt with much lower incomes? You don't.

Link to those numbers please?

 

[Zebo]

Link to those numbers please?

http://market-ticker.denninger.net/uploads/Z1-2009-12/total-debt-2009-12.png

 

[Zebo]

^ You don't know what a Ponzi scheme is.

It's exactly a ponzi. Just like all of Madoff's clients, we are happy as long as we get our checks every month problem is with inevitable credit shutting down everything else will too from receipts to government to value of debt instruments which is practically everything.