Tuesday, August 23, 2011

A revealing chart

 The chart below shows the gross internal debt in the U.S. from 1920 to 2010. It is one of many indicators that show the economic predicament of the country and how it really cannot be connected to President Obama.  Internal debt is the money owned to lenders that are based within the country.  It includes the federal and other government debts that is owned to American lenders.

However, it does not include the external debt owned to foreign lenders, which is less around 94% of GDP.

Many people make the mistake of thinking that internal debt is not so bad as external debt.  While this may be the case when things are running smoothly, it is not the case if there is trouble paying the debt.  In the latter situation, it is the American financial system that gets hit hardest with high internal debt.  Both the Great Depression and Japan's "lost decade" were due more to internal debt rather than external debt.

As you can see in the chart, internal debt was high before the start of the Great Depression in 1929. It soared even higher as Americans tried to borrow their away out of the economic malaise.  However, this only led to the market meltdown of 1937-8 in which America sunk to the lowest levels of the Great Depression.

You can also see that in modern times, American internal debt began rising again in the Reagan years and has not abated ever since. Americans are completely addicted to borrowing at the governmental level, business level and especially at the consumer level.

By the time Obama came into office, he had inherited a huge deficit.  And the need for economic stimulus made it difficult not to borrow even more money.



Artist Christopher Terrell said...

www.ObamaArtMuseum.com have a look!

zunot said...

soared even higher as Americans tried to borrow their away out of the economic malaise

Steven Believin' said...

Obama is mentally breaking down, he has no political significance accept that his presence in the white house is the only thing stopping the passage of the Glass-Steagall Act, which would solve at least the monetary crisis and create the grounds for solving the physical crisis. Obama is a bankers pet and no one needs him, stop defending his horrific presidency because he's continued all of Bush's policies and I think everyone who is paying attention knows that.

Anonymous said...

Obama is a dope and I can't wait until he's voted out.

Rachel said...

Thank you for this post! This is exactly the point I have been trying to make to people, too: Obama came into a government overburdened with debt and could not possibly be expected to have cleaned it all up in his first four years in office!

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