This is a stunning chart.
Like everyone else who pays attention to such things, I was shocked by last year’s deficit of over $400 billion. But amazingly, this year’s deficit makes that one pale in comparison. By historical standards, the 2009 deficit — at 13% or more of the country’s gross domestic product — would be the U.S.’s biggest since the end of World War II in 1945, when it reached 21.5%. Of course, we’re not coming out of four years of world war. In fact, we’re coming out of a period of apparent prosperity. We haven’t bankrupted our country out of necessity, but rather out of pure overconsumption.
The government will not be able to pedal off this debt at ridiculously low interest rates much longer. When rates begin to rise, so will the already crushingly high interest payments we’re being taxed to make.
All of this is, of course, unsustainable. Yet instead of reducing our borrowing and spending, our government is careening recklessly in the opposite direction.
Ultimately there will be a deep impact to this fiscal insanity, which will make this recession look mild.
It is unconcionable that the wealthiest country in the world; indeed the wealthiest country in the history of the world, has so completely failed to live within its means. And of course in their personal financial affairs, Americans have mirrored the recklessness of their government. The government has ruined itself with debt and overspending, and so have the citizens.
Through many years of thrift and belt-tightening, we might possibly be able to unwind this disaster. But Americans have no patience for that, and politicians won’t even consider it. So instead they’ll try to cure the problems caused by excessive debt and frivolous spending, with more debt and more frivolous spending. Sadly, that will only accelerate our demise.