In 1980, total debt—private, corporate, state, and federal—was 1.75 times the GDP. Today, it is around 3.8 times. Think of it this way: in 1980, we had $175,000 of debt for every $100,000 of GDP. Today $100,000 of GDP equates to $380,000 of debt.
The U.S. has become dependent on consumer spending for economic growth. Debt has fueled much of that spending. In 1980, the total government, corporate, and personal debt was around $5 trillion. Today, it is around $80 trillion or roughly 7% growth a year.
The federal government ran a deficit of $3.1 trillion in 2020. If passed, President Biden’s $1.9 trillion COVID-19 relief proposal will pay for much of itself with bond sales. With all this debt supply, you would think that if demand does not increase, then interest rates would have to rise.
The federal government ran a $3.1 trillion deficit in the fiscal year 2020, more than triple the fiscal year 2019. This year’s debt was 15.2% of the GDP, the most significant deficit as a share of the economy since 1945.
Bitcoin is a novelty. Its value comes from a misplaced view of where the money comes from, together with its scarcity. (Bitcoin’s founder, Satoshi Nakamoto, limited the number of bitcoins to be mined.)
In capitalism, private banks, through their loan-making process, produce most of the money. The government provides the currency—the dollar bills—but the only way to get them is to exchange bank money for currency.
Anyone reading today’s financial press would think the U.S. economy is accelerating—finally taking off from its post-financial crisis lackluster performance to what Tom Brokaw called “a roaring economy” on Meet the Press this past weekend.