Whispers from the Edge of the Rainforest: US Debtclock

Tuesday, December 28, 2010

QE... do the math.

Yesterday we talked about how the US Federal Reserve has to keep increasing the amount of Quantatative Easing (QE) it must pump into the American economy.

QE means only one thing: more US Debt.

And the numbers are getting stupid.

Should the current conditions persist, where will the United States be in 4 short years (2015)?

Usdebtclock.org is a fascinating little website that allows you to extrapolates future US debt at current rates of advancement.

The current US debt ceiling is approximately $14 trillion. That's the level at which goverment (supposedly) won't allow debt to pass. Mind you everytime they get close, goverment simply raises the ceiling and will do so again in spring of next year.

Small wonder.

If you thought $14 Trillion was bad in 2010, by the time 2015 rolls around the US national debt will hit $24.5 trillion.

Compounding that is the fact US Unfunded Liabilities are estimated at $144 trillion.

That, btw, is roughly $1.2 million for each and every American taxpayer.

These are numbers that cannot be ignored.

And when you consider how Washington fell into virtual gridlock earlier this month at the mere thought of ending the Bush tax cuts (and increasing government revenue to offset debt), there is no way you can even remotely believe government is going to be able to tackle the looming problem.

As you watch the travails of Greek and Irish bondholder, it is self evident that those problems will be nothing compared to what those unlucky enough to be in possession of US debt in 2015 will have to go through.

No one is going to wait for 2015 for the sh*t to hit the fan.

Moves are already going on behind the scenes to get out of US debt.

In fact some believe this is the real reason behind QE2. America had no choice but to monetize all debt issuance for 6 months because no one was willing to buy it.

This trend is going to intensify in 2011.

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