The last combined debt figure was $200+ trillion. Now, a new Wall Street report says it’s actually 2000% of US GDP. Yet, the US government still has maintained its $750 billion annual Pentagon budget. How can the Americans tolerate that?
$400 TRILLION HOLE? Actual US debt may be 2,000% of GDP, says Wall Street report
A new report suggests that the real US debt level may be $400 trillion, or 20 times higher than the country’s gross domestic product. The calculation includes government, state, local, financial and so-called entitlement debt.
AB Bernstein, a global asset management firm based on Wall Street, came up with these figures by including in its analysis not only traditional levels of public debt, such as bonds, but also financial debt as well as future obligations for entitlement programs. These include social security, Medicare and public pensions.
In its report, AB Bernstein took debt from a number of sources and compared it to GDP. Using this methodology, federal, state and local government debt combined amounted to 100 percent of GDP. Households and firms accounted for 150 percent, while debt held by financial firms came to 450 percent. Another 27 percent came from trusts for social insurance programs, 484 percent from promises under current social insurance programs, and 633 percent from obligations for social programs. The total debt therefore amounted to 1,832 percent.
“US debt is large. And it’s growing. But if we want to think about debt problems (in any sector – sovereign, households, firms or financials), the conditions rather than the levels are more significant,” Philipp Carlsson-Szlezak, chief US economist at AB Bernstein, said in the report.
It suggests that, although the figures seem depressingly large, it is important to understand that not all of the debt obligations are concrete, and there may be leeway. This is especially true for the government programs, which form the biggest potential debt but can be changed by legislation or accounting.
While the picture is dire, such numbers don’t prove we are doomed or that a debt crisis is inevitable.
“Debt problems could, arguably would have, already happened at lower levels of debt if the macro conditions forced it,” Carlsson-Szlezak noted. He also explained that crisis measures work both ways. An apparently smaller level of debt can cause major problems at a time when the economy is at its weakest, for instance in a financial crisis. At the same time, larger levels of debt can be harmless if other conditions, for example leverage levels, or debt to capital, are sustainable.
The total federal outstanding US debt has recently jumped to $22.5 trillion, or about 106 percent of GDP, CNBC reported. Without the intergovernmental obligations, debt held by the public amounts to $16.7 trillion, or 78 percent of GDP.
Carlsson-Szlezak noted in the report, however, that different debt carries different risks and its impact on individual parts of the economy would vary.
“A default on US treasury bonds would be catastrophic to the global economy – whereas changes in policy (while painful for those whose future benefits were diminished) would barely register on the economic horizon,” he stated.
So, just imagine if the Pentagon budget is reduced to nil, it might still take 100 years at least [400 years with simple calculation and if based on the real Pentagon annual budget of $1 trillion] for the US economy to fully recover.
The other alternative is to just go back to the gold standard. A bill “to define the dollar as a fixed weight of gold” under HR5404 has already been filed to that effect in 2018.[scribd id=425633295 key=key-eFNhIQgrGyCwwtnfErZd mode=scroll]
Meanwhile, Russia has fully recovered from Western sanctions, and China is busy spreading its wealth around, i.e. multi-trillion budget for the One Belt One Road Eurasia-wide economic development. Both countries are aggressively buying the most gold in the market today.
War, indeed, is inevitable if we fail to neutralize the Western media and tech companies from lying and manipulating online conversation.
You can actually participate in crippling the Deep State organized criminal cabal, while enjoying healthcare freedom at the same time, by boycotting Big Pharma for good.