This Chart Should Terrify You

By: ispeculatornew
Date posted: 10.09.2012 (5:00 am) | Write a Comment  (9 Comments)

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It’s a chart that you’ve probably seen so many times and as we get exposed to it, there’s a temptation to downplay the gravity or the effect. The fact is that the US debt levels are already very high, have been rising at a record pace in the past few years with no end in sight. In fact, no matter which candidate ends up being elected in November, they don’t even hope or pretend like that number is coming down anytime soon. It’d be difficult to say other wise.

US Public Debt as % of GDP Chart

US Public Debt as % of GDP data by YCharts

Why It’s Only Getting Worse

We have a slow economy and millions of unemployed that are resulting in less revenues for the government and the population. On the other side, holding expenses in control is proving to be a big challenge because exploding health care expenses among so many other things. It’s not looking very good, that’s for sure.

We’re Not So Far From Europe

We keep looking at what’s going on in Europe as if it could never happen to us but the reality is that we’re much closer than you might think. In fact, if you think about it, the US public debt as a % of GDP is 102.94… just think of a few troubled nations in Europe and let’s see where they are:

-Greece 160.81%
-Italy 120.11%
-Portugal 106.79%
-Ireland 104.95%
-US 102.94%
-Iceland 99.19%
-France 86.26%

Is it me or is the US not that far off?

How It Impacts Every One Of Us

In a scenario where debt continues to increase, there will always be a risk for both inflation and rising rates. Those are 2 fairly scary scenarios.

What It Means

More than ever, it’s important for all of us to manage our finances and investments efficiently. We simply cannot depend on the government, our employer, etc.

What are your thoughts on the crippling debt numbers? Are you worried at all?

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9 Comments

  1. Comment by Hans — October 9, 2012 @ 9:09 am

    This finical insanity needs to be addressed and quickly…The debt to GNP is growing somewhere between 5 to 10% per year and by 2020 it will be to late, as SS and Medicare and Medicad explode the budget…

    The longer we wait, the greater the pain…We shall find the solution by examining what Canada and Sweden did to confront their financial crisis…

  2. Comment by Bryan — October 9, 2012 @ 11:48 pm

    Speaking of Sweden and Canada… Ditching obamacare and instead opting for socialized medicine would bring healthcare costs in line with the rest of the developed world and do a lot to confront the deficit.

  3. Comment by Hans — October 10, 2012 @ 9:31 am

    Bryan, government is rarely a low cost provider..

  4. Comment by Bryan — October 10, 2012 @ 1:56 pm

    Hans, America has the some of the highest, if not the highest, healthcare costs in the world. America is also one of the only developed nations that doesn’t have some form of socialized healthcare. The evidence seems to contradict your opinion. For example America spends over 50% more on healthcare than Canada does and America a still has higher infant mortality and a lower life expectancy.

  5. Comment by Bryan — October 10, 2012 @ 2:00 pm

    I should add that not only is total healthcare costs higher per capita in America than Canada, the amount the government spends is also higher in America than Canada.

  6. Comment by Hans — October 10, 2012 @ 8:56 pm

    Bryan, I agree with much of what you say, nevertheless, government is rarely a low cost provider…

    Our current health care system, is both costly and broken. But look at the English health care system, it is also broken, with inadequacy in care, for its clients.

    How many Canadian come to America for care because of the rationing ?

    America certainly does need to address our current health industry and drive prices down without impacting services..

    The solution will be free enterprise and not a governmental unit, which has no skin in the game.

  7. Comment by Bryan — October 11, 2012 @ 9:53 am

    Hans, your ideological position contradicts the evidence. As much as you want to claim that the government is rarely a low cost provider, in the realm of healthcare, it is. America has the highest healthcare costs and is the only developed nation to focus almost entirely on private healthcare. google highest healthcare costs and America pops up.

    According to the WHO America spend about 17% of it’s GDP on healthcare, Canada spends under 12% of GDP. If America could bring there costs in line with Canada, they could use the saving to eliminate the deficit immediately. That’s a lot faster than any plans Obama or the GOP have. The problem is a lot of capitalists(like us) getting rich off the healthcare industry would make less money. That’s a sacrifice we should be willing to make to bring healthcare costs down, pay off the debt, and provide decent healthcare to everyone. Because those things will end us paying us back more in the long run. The companies we own stocks in won’t need expensive insurance plans, employees will be healthy and more productive, and taxes can be lowered as the debt is paid off.

    As for wait times, while they are inconvenient, they rarely threaten anyone’s health. Studies have shown wait times can reduce the number of unnecessary surgeries, which may reduce risks of serious health complications. America has rationing of healthcare, but it is economic rationing, where those without good insurance or a lot of money have to suffer from reduced care.

  8. Pingback by Dividend Link Time | The Dividend Guy Blog — October 12, 2012 @ 4:01 am

    […] 3. This Chart Should Terrify You @ IS. […]

  9. Comment by Hans — October 14, 2012 @ 11:22 am

    Byran, half of the GNP spending on healthcare comes from government..

    As always, government has no motive to keep costs low; so their only effect means in controlling cost is to reduce services or their quality..

    Insurance, itself, may be part of the problem in containing costs…When I seek quotes on dental work, the first question is always – what kind of insurance do you have? That is affectingly saying, your cost are none or little, until of course, the next billing cycle…

    I suspect, the only way cost will ever be contained is with greater involvement by the end user..

    No matter which system becomes the most economical it may still entail reduced services..

    Furthermore, there needs to be tort reform, so doctors do not practice defensive medicine and helps to reduce their very high cost of insurance, which is pasted onto the patient…

    Medicare, cost 3.5% of GNP, according to the NYS..
    Why buy rest home insurance, when your neighbor will pick up the tab…Hell, let’s party!

    http://economix.blogs.nytimes.com/2008/12/12/why-does-us-health-care-cost-so-much-part-iv-a-primer-on-medicare/

    Or in the case of a former friend (owned a home) who got a free medical ride, at the ER and hospital stay, because he did not have insurance, but money for drugs and hookers and then promptly filed bankruptcy to avoid payment…Happens all the time…

    How about those individuals who simply show up at the ER, on our dime?

    Let’s not forget all the governmental regulations (a 2% tax in Minnesota for medical use) which drive away competition and raise costs..

    This issue is long over due for a solution, but I can assure that government (in any form) will never property address this economic cost crisis..

    They just kick the can down the road…

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