U.S. Debt as a Percentage of GDP Means No Growth for 50 Years

From UK site Market Oracle comes a great little piece on US GDP growth being funded entirely by debt and how the last 50 years of our growth has come from an 11.5 Trillion dollar increase in borrowing.

Apparently, a bazooka wasn’t enough. Last summer, that is what then Secy. of the Treasury Henry Paulson asked for when he made his case for sweeping financial powers. Instead, Congress gave him a nuke, and apparently that wasn’t enough either. Making the jump from completely absurd to the absolutely ridiculous, Timothy Geithner became the latest in a long line of Treasury Chiefs to run to Congress to ask for an increase in the nation’s debt ceiling.

The fact that he is asking for the increase should not be a surprise to anyone given the massive deficits already racked up over the past 18 months. What would be laughable if it weren’t so serious, however, were the comments made in his request letter to Congress.

"It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations,"

How exactly does digging your hole even deeper inspire confidence? How does borrowing nearly 50 cents of every dollar you spend inspire confidence? How can anyone with two bits of common sense to rub together take this as anything less than an overt devaluation of the Dollar?

The aricle then goes one to show the a table of GDP and total debt outstanding. It includes the governments estimates over the next 5 years as well where they assume a resumption of 5% GDP growth. The article then questions this unrealistic assumption by showing that the money supply (the discontinued M3) has continued to grow at a 5% clip. THIS IS THE RATE OF INFLATION! I understand that the govt uses CPI because they can can massage and manipulate the data to show whatever they want. The fact is Bernanke discontinued M3 so he could do just that, inflate M3 and not report it.

Finally he concludes that if one were to discount the GDP growth from the past 50 years by the 5% average that M3 grew you would get 0 growth from anything other than the increase in debt. So keep this in mind when the congress raises our debt ceiling again.