MESSAGE
| DATE | 2017-05-22 |
| FROM | Rick Moen
|
| SUBJECT | Re: [Hangout of NYLXS] deficit is how much you spend in one year
|
Quoting Mancini, Sabin (DFS) (Sabin.Mancini-at-dfs.ny.gov):
> Ever hear of the Financial Stability Board ? The $20+ trillion
> current US debt is a serious threat. Are they doing anything about it ?
(Possibly old material for you, Sabin, but I'll post this for the
benefit of the readership generally.) To correctly understand public
debt, one must first back out intragovernment transfers, and then
express it as a percentage of GDP. (When thus corrected and scaled, its
currently level indeed does remain a matter of considerable concern.)
2011 article:
[...]
In the narrow sense in which all of the public debt is accounted on a
gross basis, the total debt at present amounts to about 95% of GDP. But
after netting out the “debt owned to itself” (mostly the Federal
Reserve), the US public sector owes to the private and external sectors
about 60% of GDP (see for example, UN/DESA 2011a). If “financial” assets
(like gold reserves, foreign currency, state bonds, etc) are discounted
from the calculations, one can obtain a more meaningful estimate
of net debt. Weeks (2011) shows, based on Organisation for Economic
Cooperation and Development (OECD) gures, that such net public debt is
about 40% of GDP (data to end of year 2010). Furthermore, many observers
highlight that debt payments, rather than debt stocks, more accurately
represent the burden of debt, since this is what has effectively to be
paid each year out of the public sector budget.
On this count, Weeks (2011) notes, again using OECD tables, that debt
payments of the US government, which were 1.6% of GDP in 2010, represent
the smallest pro- portion of GDP among the largest devel- oped
countries, except Japan which paid 1.4% of GDP. Pollin (2011) shows that
federal debt payments, which represent about 7% of total outlays in
2011Q1, are near historic lows by virtue of the very low and declining
yields on Treasury bonds.
[...]
http://www.mappingfinance.org/uploads/instability_in_us.pdf
See rest of article at cited link. (I generally avoid lobbing entire
articles at mailing lists for several reasons.)
The US Treasury mentions in its FAQ at
https://www.treasurydirect.gov/govt/resources/faq/faq_publicdebt.htm a
useful metric called Debt Held by the Public (which, to be meaningfully
assessed, likewise needs to be considered as a percentage of GDP over
time):
What is the Debt Held by the Public?
The Debt Held by the Public is all federal debt held by individuals,
corporations, state or local governments, Federal Reserve Banks, foreign
governments, and other entities outside the United States Government
less Federal Financing Bank securities. Types of securities held by the
public include, but are not limited to, Treasury Bills, Notes, Bonds,
TIPS, United States Savings Bonds, and State and Local Government Series
securities.
Here is a graph of Debt Held by the Public since 1970 in absolute dollar terms:
https://fred.stlouisfed.org/series/FYGFDPUN
Here it is since 1970 as a percentage of GDP:
https://fred.stlouisfed.org/series/FYGFGDQ188S
> Plus, there are clues now that the same guy who crashed the British
> Pound is now getting ready to do the same thing to the US dollar.
Ah, the flash crash of Oct. 6th, when the pound fell 6% in about ten
minutes? For a long moment, there, I thought you were referring to
David Cameron. ;->
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