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Since the latest installment of the Star Wars franchise is due out soon (featuring a 73 year old Han Solo), it is appropriate to revisit the Death Star from the original Star Wars. Or Debt Star given the US ravenous appetite for debt financing.
Yes, total US debt is almost $66 trillion, three times larger than the oft-mentioned $18 trillion in US Public Debt. And don’t forget about unfunded Medicare liability of $28 trillion which will likely become government debt.
How did we get to this point? Starting in 2008, US public debt exploded in growth even though GDP growth was far slower in growth. But what really stands out is the growth in household debt starting in the mid 1990s.
If I look at year-over-year (YoY) changes, you will see that household debt growth was higher than GDP growth from the early 1990s to 2008.
A huge expansion in household debt (primarily residential mortgages) begat a housing bubble and burst that begat a massive increase in Federal debt.
As The Brookings Institute said, “Under the CBO estimates used by Congress, we have a huge debt hole. Under the more comprehensive fiscal gap measurement, we have a chasm. But little if any Congressional action is planned to deal with the notorious level of debt. We’re headed toward a fiscal black hole.”
If you want to be depressed, here is the CBO’s Budget Outlook for 2015-2025.
Fiscal black hole? Definitely! A Debt Star? Yes, it is fully operational.
Maybe the United States of America should be renamed the United States of Alderaan.
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