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As you can see from the chart below, the total of all debt (government, business and consumer) is now somewhere in the neighborhood of 360 percent of GDP. Never before has the United States faced a debt bubble of this magnitude....
Most of us were not alive during the Great Depression, but those who were remember how incredibly painful it was for America to deleverage and bring the economic system back into some type of balance.
So if our current debt bubble is far worse, what kind of economic horror is ahead for us?
But the truth is that we are facing some circumstances that even the folks back during the Great Depression did not have to deal with....
Gross National Product (GNP) is the market value of all goods and services produced in one year by labor and property supplied by the residents of a country.
During FY 2009, the federal government collected approximately $2.1 trillion in tax revenue. Primary receipt categories included individual income taxes (43%), Social Security/Social Insurance taxes (42%), and corporate taxes (7%). Other types included excise, estate and gift taxes. Tax revenues have averaged approximately 18.3% of gross domestic product (GDP) over the past 40 years, generally ranging plus or minus 2% from that level.
The U.S. average national unemployment rate is 9.7 percent. Only those who are actively looking for work are included in this statistic. Among Black Americans, the rate is 15.5 percent and Latinos, 12.4 percent, according to the Bureau of Labor Statistics.
The Congressional Budget Office predicts that unemployment will remain almost unchanged in 2011, about 9.5 percent.
Many families have been surviving on small, weekly unemployment checks provided for 26 weeks by their state government, and an additional 73 weeks by the federal government. The first group of unemployed to run through both benefits hit that point Jul. 1, and today about a million people are receiving no assistance at all. About nine million more are still receiving unemployment payments.
Congress is considering extending federal assistance for another 20 weeks. The House approved the legislation, but the Senate did not. Congress left town for its holiday break until mid-July without passing the legislation.
In the Senate the issue fell almost precisely along party lines, with all but one Democrat for extending the benefit, and all but two Republicans against it, saying the 34- billion-dollar cost was not worth adding to the federal deficit.
President Obama's call last year for "shared sacrifice" doesn't extend to federal employees, at least based on the details of his administration's 2010 budget released this week.
At a time when the official unemployment rate is nearing double digits, and 6.35 million people are receiving unemployment benefits, the U.S. government is on a hiring binge.
Executive branch employment — 1.98 million in 2009, excluding the Postal Service and the Defense Department — is set to increase by 15.6 percent for the 2010 fiscal year. Most of that is thanks to the Census Bureau hiring 102,000 temporary workers, but not counting them still yields a net increase of 2 percent in one year.
There's little belt-tightening in evidence in Washington, D.C.: Counting benefits, the average pay per federal worker will leap from $72,800 in 2008 to $75,419 next year.
Meanwhile, according to Forbes' layoff tracker, there have been 558,087 layoffs since November 2008 at large public companies; even local school districts aren't immune. That's just a sliver of the total unemployed, which government data estimate to be 8.6 percent of the workforce, or an alternate method of reckoning that counts discouraged workers puts at 20 percent.
Some of the Feds' hiring increases have been stunning. If you look at the four-year period from 2006 to 2010, the number of Homeland Security employees has grown by 22 percent, the Justice Department has increased by 15 percent, and the Nuclear Regulatory Commission can claim 25 percent more employees. (These figures assume that Congress adopts Mr. Obama's 2010 budget without significant changes.)
Originally posted by mnemeth1The actual cause of the credit expansion is due to the criminal federal reserve artificially suppressing interest rates.
Its a great article, but it doesn't get to the heart of why debt is exploding other than saying government is responsible.
Originally posted by Come Clean
No one would be complaining if the bubble didn't burst. Remember all those tech sector guys becoming instant millionaires overnight? Well, 10 years later they couldn't pay their mortgage. Oh yeah, two wars and a stock market crash later.
Blame Reaganomics and Bushwhackernomics folks. Cut and Dry...