Debt for Dum Dums.

24 Mar

America is staring into the abyss of bankruptcy. Yet, “fiscal conservatives” seem to be the only people concerned. Every day, I meet more people who are simply unaware of the looming disaster. Therefore, I have made these 3 easy-to-understand charts to help explain in the simplest terms why every American, not just conservatives, should be alarmed by what is happening under our very noses!

I know that all of you have heard “we have too much debt” since you were kids. So, why is this time any different? After all, nothing really terrible has happened yet, and we have had this supposed debt problem for ages. The difference is that the world has never seen anyone accumulate this much debt in such a short period of time. Reference the National Debt Chart. As you can see, our nation was virtually debt free up until the 1980s. In the mid 80’s, although we began to take on more and more debt, the rate at which we were borrowing was relatively smooth, and remained somewhat in-line with the growth of our country. At the turn of the millennium, our government had managed to accumulate nearly 6 trillion dollars worth of debt. That is to say, it took us a lifetime as a country to spend 6 trillion more than we have. As you continue along the chart, you quickly notice that our current debt level is right at 12 trillion! This means that we have doubled in less than a decade what it took our predecessors centuries to spend. This is the graphical depiction of the proverbial “unsustainable path.” You can see the results of an unsustainable path by reading this story.

This idea of an “unsustainable path” is further identified by the Rate of Change Chart. This graphic is worth a thousand words. It simply shows the change in the amount of spending from year to year. The past 2 years has seen unprecedented spending by our government. That wouldn’t be so bad if our economy were growing at a rapid pace. Do you think that our economy is growing or shrinking lately? Do you think that we will have the income necessary to pay these bills?

This brings me to the Revolving Credit Chart. This is a running count of Americans’ short-term debt. This does not include mortgages, only short-term facilities such as credit cards and car loans. In our vain quest to wear $300 jeans while driving a car with a $500 payment, we have managed to rack up nearly 1 trillion dollars of personal, short-term debt. So, before we get started on paying off the 12 trillion debt that our government has put on our shoulders, we must first pay off the 1 trillion to Chase, lest we face personal bankruptcy.

The government has thrown in a trillion dollar health care plan, and the forecast for 2010 is to be in over our heads by well over 14 trillion dollars. I don’t have 14 trillion. Do you?

I will be doing some follow-up pieces describing the dangers associated with this mounting debt. Please stay tuned and informed!

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