THE BOTTOM LINE
A Debt Summary
by Michael W.
Hodges, Author
Grandfather
Economic Report
June 19, 2005
Everyone is talking about debt these days. Perhaps more than ever before � with good cause. Huge debt levels with soaring trends can cause one to think America is becoming more addicted to debt than ever before. Like a drug junkie needing more each day, there are more and more debt junkies � in all sectors.
America used to be an economy based on production and savings, with a strong manufacturing base. Later it was said America had become what they called a 'service economy', as manufacturing and saving ratios declined and trade deficits soared. Perhaps some will say America now has become a 'debt society'. Who knows where that leads.
TWO GREAT QUESTIONS:
1. Can the production of debt forever replace the production of
goods and savings?
2. Can Americans forever borrow their way to prosperity? � forever and ever?
QUESTION > what does a summary of all debt in America look like? Answer > see below.
Knowledge is Power... provided it's based on hard data.
Two chapters of the Grandfather Economic Report series cover
Government Debt and Private Sector Debt in America - - telling
the debt story by use of color data graphics:
1. Federal
Government Debt Report
2. America's
Total Debt Report - includes private sector debt
Readers requested an additional web page summarizing debt in America in table form. Here it is.
BOTTOM-LINE
- - DEBT SUMMARY TABLE
AMERICA'S TOTAL DEBT
- $40 Trillion -
� add another $44 trillion for
contingent Social Security/Medicare �
(updated March 2005)
Our Federal Government Debt Report shows $7.6 Trillion of debt. The State & Local Government Report shows debt of $1.7 Trillion and $30.8 Trillion of private (household, business and financial sector) debt is revealed in America's Total Debt Report.
These sum to $40.1 Trillion - - equivalent to $136,347 per capita. (This sum does not include the federal government's un-funded contingent liabilities for social security/Medicare estimated at $44 trillion, plus additional amounts for unknown (?) contingencies listed below.)
The following table summarizes Total Debt in America - - as of January 1, 2005
| TOTAL DEBT IN AMERICA |
||
| DEBT TYPE | DEBT AMOUNT | Debt Per Child (per capita) |
| GOVERNMENT SECTOR DEBT: | ||
| Federal Government Sector debt - a record high (Treasury data and Federal Government Debt Report, (includes $1.9 trillion federal govt. owes foreigners, plus $2.5 trillion debt owed U.S. domestic public, plus $3.2 trillion surplus siphoned from and owed to trust funds) | $7.6 Trillion | $25,845 |
| State & Local Government Sector debt - a record high (State & Local Government Spending Report) | $1.7 Trillion | $ 5,699 |
| Un-funded Social Security contingent liabilities estimated looking forward * | $7 Trillion | $23,818 |
| Un-funded Medicare contingent liabilities, estimated * | $37 Trillion | $125,893 |
| Un-funded federal employee pension and medical contingent liabilities (incl. Postal service) | ? | ? |
| Un-funded state & local government employee pension & medical contingent liabilities | ? | ? |
| Other off-budget Federal Govt. borrowings* | ? | ? |
| SUM above Government Debt | $53.3 Trillion + ? | $181,255 + ? |
| PRIVATE SECTOR DEBT: | ||
| (see America's Total Debt Report) | ||
| Household Sector debt - soaring record high | $10.3 Trillion | $34,923 |
| Business Sector debt - record high | $7.8 Trillion | $26,695 |
| Financial Sector debt (domestic) - explosive record high | $12.0 Trillion | $40,830 |
| Other (extra foreign debt in addition to such included in numbers above sectors) | $0.7 Trillion | $ 2,432 |
| Un-funded business sector employee pension & medical contingent liabilities | ? | ? |
| Impact trillions of dollars of derivatives on business & financial sector debt | ? | ? |
| SUM above Private Debt | $30.8 Trillion +? | $105,003 + ? |
| SUM ALL DEBT |
||
| SUM Government + Private Sector Debt (including Contingent liability items*) | $84.1 Trillion +? | $286,258 +? |
| SUM All Government and Private Sector Debt (excluding contingent liability items*) | $40.1 Trillion | $136,479 per person |
| ? = No estimate available or there may be other contingencies * = for discussion some of above government items see the Grandfather Social Security Report, the America's Total Debt Report and Trust Fund Report articles. (Debt Data Sources: Federal Govt. Treasury Dept.; Private Sector and State & Local Govt. from Federal Reserve flow of funds accounts, table D.3) |
||
Note: Although above data is exactly as published from the sources, the author believes true debt is even higher. A few examples > corporate debt is under-stated as evidenced by many companies with off-balance sheet debt (Enron, etc.) and household debt above certainly does not include many areas of non-recorded debt. I think many will agree that individuals and corporations never over-state debt� instead, many purposely under-state same.
Note: If you believe in the reliability of data reported by the federal government and the Federal Reserve Board, then you must accept the above data, because those are the data sources. If you have data and sources for the unknown (?) areas in the above table, please email M. Hodges.
Summary:
The
above debt summary table shows excluding contingent
un-funded liabilities total debt (private and government) is
$40.1 Trillion ($9.3 trillion governments, $30.8
private sectors) equivalent to $136,258 per person
(including those in diapers), which is equivalent to $545,032 per
family of 4 and $30,000 more than last year.
This chart from the chapter 'America's Total Debt Report' shows the trend of that $40.1 trillion debt (red line) soaring up and up much faster than the economy (blue line).
If we include several un-funded liabilities, then total debt (private plus government) is $84.1 Trillion equivalent to $286,258 per person, which is equivalent to $1.1 million per family of 4.
Total debt of $40.1 trillion is 437% of net national income - a record high ratio � indicating an economy more debt-dependent than ever. Each year more debt is needed to produce a dollar of national income than the prior year a type of 'negative productivity.'
Zooming debt - - declining real savings - - soaring trade deficits > > very troubling trends !!
© 2005 Michael W. Hodges
Editorial Archive
Web note: The above editorial is a recent summary of an updated chapter from Michael Hodges series, Grandfather Economic Report. Be sure to read 2 debt chapters each with color data trend graphics to help tell the story of debt in America - since a picture is worth a thousand words:
1.
Grandfather
Federal Government Debt Report
2. Grandfather
America's Total Debt Report (includes private sector debt)
Contact Information
Michael W. Hodges | Grandfather Economic Report | Email
