One Economic Chart That You Should Permanently Burn Into Your Memory
Today most Americans are completely obsessed with the silliest of things. They wonder how Lindsay Lohan is going to fare in jail and they agonize over who LeBron James is going to play basketball for. But when it comes to the things that really matter, most Americans are completely clueless. For example, while most Americans would agree that we are experiencing difficult economic times right now, most of them would also argue that our economic system is in fundamentally good shape and that things will get back to "normal" at some point. Those of us who are trying to warn America of the impending economic nightmare are dismissed as "doom and gloomers" and "conspiracy theorists". But of course, as with so many things, the passage of time will tell who was right and who was wrong. Below there is a chart that I want all of you to burn into your memory. It is a chart of total U.S. debt as a percentage of GDP from 1870 until 2009. This chart clearly and succinctly communicates the horror of the debt bubble that we are currently dealing with. When this debt bubble pops, it is going to make the Great Depression look like a Sunday picnic. 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.... 1 - Back in the 1930s, tens of millions of Americans lived on farms or knew how to grow their own food. Today the vast majority of Americans are totally dependent on the system for even their most basic needs. 2 - A vast horde of Baby Boomers is expecting to retire, and the "Social Security trust fund" has nothing but 2.5 trillion dollars of government IOUs in it. According to an official U.S. government report, rapidly growing interest costs on the U.S. national debt together with spending on major entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every dollar of federal revenue by the year 2019. This is a financial tsunami the likes of which Americans back in the 1930s could never have even dreamed of. 3 - American workers never had to compete for jobs with workers on the other side of the world back in the 1930s. But today, millions upon millions of our jobs have been "outsourced" to China, India and a vast array of third world nations where desperate workers are more than happy to slave away for big global corporations for less than a dollar an hour. How in the world are American workers supposed to compete with that? July 28, 2010 Copyright © 2010 The Economic Collapse Blog
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