Wednesday, September 7, 2016

Total USA Debt

It is interesting to examine what has happened to debt in the US since the collapse of the Debt Bubble in 2007-08.  

The following chart makes things pretty clear: Households deleveraged sharply, going from owing 95% of GDP in 2008 to 78% today, while the government ramped up its borrowing from 65% to 105%.

Household Debt (left scale) - Government Debt (right scale)
Basically, the government stepped in and assumed household debt by bailing out banks and other major financial institutions (AIG, for example).But total debt just kept on increasing... total debt now stands at 183% of GDP versus 160% in 2008.

In the next post I'll also look at debt comparisons for the financial and corporate sectors.


TV said...

Glad to see your blog back again!

Olivier Houdas said...

What would happen to the debt(s) if the world were to switch to a world-wide, non-inflationist money (for example bitcoin, to make it sound imaginable, if not realistic)?
Would it kill investment? Would it clean up the mess (with a huge collapse of the wealth of "old-money"-dependent people)?