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Exponential

February 13, 2024 | Posted in: Wealth Strategies

Most of us are generally aware of our mounting government debt and there are frequent articles in both the financial and mainstream media predicting dire consequences as a result of our fiscal profligacy. They warn of the potential for crowding out of other areas of the Federal Budget leading to cuts in popular programs, possible upward pressure on inflation and interest rates, the potential for tax increases, the possible impact on foreign demand for our Treasury Bonds, and so on. On the other hand, these warnings have occurred continuously since the 1980’s and there is a school of economics that argues that the level of debt denominated in your own currency is not of concern. I will leave it to economists and think-tanks to fight this one out and simply report the numbers. I came across a particularly powerful way to depict the growth in U.S. Government Debt:

• It took 219 years for the U.S. to reach $10 trillion in outstanding debt
• The next $10 trillion was accumulated in 9 years
• The next $10 trillion was accumulated in 5 years

We currently stand at $34.3 trillion, and it is forecasted to reach $51.99 trillion by 2033. If these bullet points did not get your attention, take a look at the following graph!

There is a very sophisticated term to describe such a trajectory- a “hockey stick.”