On January 26, 2016, the United States has an official national debt of a mind-boggling $18.93+ trillion.
That’s just the official figure we are told. Economists maintain the real debt is much higher. (See “Ex-GAO head: US debt is three times more than you think“)
The national debts of some other countries are even worse.
The debt-to-GDP ratio is a measure of a country’s debt compared to its economic output, which is calculated by dividing its national debt by its GDP, which is the total output of all goods and services of a country and is the primary measure of economic growth or the lack thereof. To illustrate, if the national debt is $1.5 million and the GDP is $1 million, then the debt-to-GDP ratio is:
$1.5m ÷ $1m = 150%
Here are the top 7 worst countries in debt-as-a-%-of-GDP, as of September 2014 (Forbes):
- Japan: 227.2%
- Greece: 175.1%
- Italy: 132.6%
- Portugal: 129%
- Singapore: 105.5%
- USA: 101.5%
- Belgium: 101.5%
As you can see from the table below, all 7 countries ignored their indebtedness in 2004, and got even more indebted in the 10 years since.
In 7 years of the Obama presidency, our national debt increased by $8,314,529,850,339.07, according to official data published by the U.S. Treasury. That equals $70,612.91 in net federal borrowing for each of the 117,480,000 households that the Census Bureau estimates were in the United States as of September. (CNS News)
When your debt exceeds your GDP, the prospects of ever paying off that debt are slim to non-existent, unless the country experiences an enormous and sustained burst of economic productivity. The debt situation is so dire that in 2013, the International Monetary Fund (IMF) recommended to indebted governments not just higher taxes, but confiscation of citizens’ assets. More perversely still, the IMF’s recommendation of assets-seizure is intended merely to make the national debt “sustainable,” not to actually pay off the debt.
Note: The International Monetary Fund (IMF) is an international organization headquartered in Washington, D.C., of “188 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.” Formed in 1944 at the Bretton Woods Conference, it came into formal existence in 1945 with 29 member countries and the goal of reconstructing the international payment system. Countries contribute funds to a pool through a quota system from which countries experiencing balance-of-payments difficulties can borrow money. As of 2010, the IMF fund had about US$755.7 billion. Since July 2011, the IMF’s managing director is a French politician named Christine Lagarde.
Bill Frezza reports for Forbes, Oct. 15, 2013, that in its October Fiscal Monitor report Taxing Times, the IMF paints a dire picture for advanced economies with high debts that fail to aggressively “mobilize domestic revenue.”
The IMF recommends that drastic measures are called for, from increasing income and consumption taxes to the direct confiscation of assets in the form of a “capital levy” — a “one-off tax” of about 10%, not on the super rich, but on all households with “positive net worth,” i.e., everyone with retirement savings or home equity. The IMF counsels that it’s best that such a tax be “implemented before avoidance is possible and there is a belief that it will never be repeated,” never mind the fact that high earners have been forking over more money, a higher percentage of their gross income, and a larger share of aggregate national tax revenue in recent years.
Amazingly, the IMF regards this confiscation of at least 10% of all private “wealth” to be merely “an exceptional measure to restore debt sustainability,” which means:
- The IMF knows there are not enough rich people to fund today’s spend-thrift governments.
- Confiscation of private property will not pay off national debts, but will merely “restore debt sustainability,” allowing free-spending politicians to keep borrowing.
Should politicians fail to muster the courage to engage in this kind of wholesale robbery, the IMF posits public debt repudiation and hyperinflation as the only alternative scenario. In other words, the IMF does not and will not consider structural reforms of the Ponzi-scheme entitlement programs that are bankrupting the United States.
Forbes opined that “If ever there were a roadmap for prompting massive capital flight and emigration of productive citizens toward capitalism’s nascent frontiers in Asia, this is it.” But the IMF has already anticipated that with a suggestion on how governments can restrict the mobility of the rich:
“Financial wealth is mobile, and so, ultimately, are people. … There may be a case for taxing different forms of wealth differently according to their mobility … Substantial progress likely requires enhanced international cooperation to make it harder for the very well-off to evade taxation by placing funds elsewhere.“
In 2010, the Obama administration did just that, with the Foreign Account Tax Compliance Act (FATCA), that requires financial firms across the world to disclose foreign accounts held by U.S. citizens and report them to the IRS or face steep penalties.