A Sobering Thought

This quote puts into perspective the alarming debt problem that the US government faces:

"Despite the frugality of households and companies, total U.S. debt edged up 1.2% as state, local and federal governments borrowed to finance massive deficits. Government debt, including the liabilities of state and local governments, rose 4.6% to $11.1 trillion in the second quarter. That's nearly $38,000 a person."

Whitehouse, Mark, 2010. Americans' net worth falls. The Wall Street Journal, Sept. 17.

Though I do not know for sure, the above quote is probably low because of all of the off-budget borrowing by government agencies.

Imagine, the national government debt for a family of four approaching $160,000. As a society, what on earth are we doing!!!???

For the approaching fiscal year, there might be more than $1 trillion dollars added to the national debt raising it almost 10% year over!

The US is running huge government budget deficits along with significant trade deficits. This trend has accelerated during the past 10 years.

I recall attending an event given almost 5 years ago on campus where the speaker mentioned that the US trade deficit was inconsequential. Without going into details, the speaker indicated that this was a national policy. I took great objection at the time regarding the policy.

Of course when an economy is growing, the trade deficit is of less importance. In times of prosperity, people at all levels of society become complacent about financial matters.

Besides ultra low interest rates, I think the trade deficit has played a complex role in hamstringing the US economic recovery. It is partially responsible for the "leakage" associated with stimulus spending. In my opinion, the seeds of the 2008 Financial Crisis were sown in mid decade and before. There were many signs that government leaders, business managers, and the public missed, or refused to believe.