Some observations on the total U.S. debt (the number are conservative) without commentary. The total is subject to interpretation and the probabilistic treatment of contingent liabilities and guarantees as well as the netting of derivative notionals.
Total US Debt so far: $115 – $315 Trillion dollars? (excluding/including derivatives notional)
$380,000 – $1,037,000 per person.
The break out:
$9.7 Trillion in bailouts
$11 Trillion in national debt
$17 Trillion in corporate/financial debt, and $13.8 Trillion in household debt
$1 Trillion in credit card debt
$10.5 Trillion in mortgages
$52 Trillion in social security/medicare obligations
Like other government trust funds (highway, unemployment insurance and so forth), the Social Security and Medicare Trust Funds exist purely for accounting purposes: to keep track of surpluses and deficits in the inflow and outflow of money. The accumulated Social Security surplus actually consists of paper certificates (non-negotiable bonds) kept in a filing cabinet in a government office in West Virginia. These bonds cannot be sold on Wall Street or to foreign investors. They can only be returned to the Treasury. In essence, they are little more than IOUs the government writes to itself.
$200 Trillion in U.S. bank derivatives (notional)
Total excluding derivatives: $115 Trillion
Total including derivatives: $315 Trillion
In budgetary context:
$2.3 Trillion budget deficit this year, $10 Trillion in the next 10 years.
In the context of the consumer balance sheet:
$20.5 Trillion of residential real estate
$8.8 Trillion of equities
$7.7 Trillion of deposits and cash
$4.1 Trillion of consumer durable goods
$1.6 Trillion of corporate bonds
$960 Billion of municipal securities
$920 Billion of agency paper
$273 Billion of treasury notes and bonds
Total: $44.9 Trillion
My question is: everyone knows the social security underfunding can not be funded – it is a matter of 10 years at most before we hit the SS wall… and yet we brush it under the carpet. Does this mean we have 10 years at best before the economy collapses and thus we will just speculate on increasing market volatility, gambling more and more each day, until the emperor’s clothes are revealed? What are the unintended consequences of trading for the sake of trading and increasing volatility?What happens after the SocSec obligations can no longer be postponed. Is this a problem that can be inflated as well, and is the magnitude of the inflation necessary to plug a $50 trillion domestic hole too big for the global financial system?