Total US Debt has reached at least $60 Trillion as of Q1 2009!!! Debt to GDP ratio 425%!!!

It appears that this crucial statistic has escaped the attention of most of the MSM commentators and independent bloggers alike. The privately owned Federal Reserve reported on June 11, 2009 in its series issue Z.1 Flow of Funds Accounts of the United States, line Debt growth, borrowing and debt outstanding tables (see spreadsheet d3.csv inside the zip archive) the latest calculated debt levels by category of sector in the US economy. Once the category items are added up, an astonishing figure of $59933.6 billion or nearly $60 Trillion results. Has this been mentioned at all on the MSM or on the blogs? I can’t recall a single instance of it. Everyone still operates with the $53 Trillion figure from 2007 reports and the 350% Debt/GDP ratio.

By that measure if we were to take the Q1 2009 reported US GDP of $14,097.2 billion and divide Q1 2009 total US debt level of $60 Trillion by that GDP number we would get an astonishing record Debt to GDP ratio of 425%.

This is unprecedented and is showing that the US economy is being crushed by the debt that is growing in both absolute and relative terms thanks to all kinds of US Government and privately owned Federal Reserve’s liquidity injection and asset prop-up schemes while at the same time the GDP is shrinking. Hence, the conclusion is logical that these efforts are not working while they are piling on unprecedented levels of debt outstanding that are not possibly going to be payed back, and therefore will be defaulted on by definition. This is going to blow up in a quite dramatic deflationary bust event soon enough. One can only surmise whether it will be some kind of a credit event such as default by major US coroporation(s) or fear driven bond price drop that may lead to jump in interest rate. But in any case this is going to be deflationary as the gargantuan US debt bubble begins to crack at the seams in earnest. It is only a matter of time. By the way, in the week before Labour Day of 2009 gold prices spiked up to nearly $1000 which is indicative of credit stress as investors flee to safety of gold from even the safest U.S. Treasuries. Gold as we know is nobody’s liability and therefore rises during credit stress situations in the economy. Surely this spike was not caused by rising inflationary expectations as gold performs abysmally during periods of inflation as any one can verify it by looking at the gold price decline since 1980 through early 2000’s when economy was in its expansionary boom years.

As a side note, the above mentioned Federal Reserve spreadsheet pegs U.S. Federal debt only at $6.7214 Trillion which is obviously excluding the Treasury debt that various Agencies of the Federal Government are holding and therefore make it appear as if the Government ows it to itself. The $60 Trillion figure is therefore a conservative estimate.


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