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Thursday, October 4, 2012

A two-bit analysis of US national debt trending

As I have been writing earlier, the second derivative of US national debt is a quite fascinating thing to watch. I thought that looking into a tabular data isn't very illustrative and even a dull experience, so I did this little chart below that should be much more telling. As usual, the picture worth a lot of words, but just a couple of comments for your convenience:
  • Y-axis is measured in dollars/second. Yes, that's how much bigger the debts pool becomes bigger every second 
  • thin green line is a mean value of growth, and it seems pretty constant over time, but not let it fool you, because....
  • red line represents the trend (or second derivative of the national debts). Simply put it shows how fast US govt is loading up on debts. And that's what really matters
To put this in perspective: every second, there appears a new looser loaded with US$45K to pay for US govt spending spree. Until recently The Champion Looser of the World were Chinese people, who were holding the most of US debts. Now this prestigious award belongs to US central bank also known as Fed, that buys T-bills directly from US Treasury. Ok, technically, they buy this crap in the open market, but it doesn't change the overall picture, really.

I will continue publish this chart in a more automatic fashion for non-US readers entertainment.
For the US readers this won't be so entertaining, because essentially the situation will either lead to the currency collapse through inflation, or incredibly high taxes, or the debtor's default on its obligations. Although the first option is more likely than the others, either way means pain, pain and more pain for people who left holding the bag. Unless, they choose otherwise.

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