US Debt Crisis - Will it shrink US into depression???

Depression is defined as a as a cumulative decline in GDP of more than 10.0% over four consecutive quarters. This data will refer to the official quarterly GDP figures as reported by the U.S. Department of Commerce.

The Debt Crisis, the Primary Catalyst of the Economy’s Decline, Is Far Too Big
for the U.S. Government to Control

1. Based on the Federal Reserve’s Flow of Funds report, there are now $52 trillion in interest-bearing debts in the U.S.

2. Based on estimates provided by the U.S. Government Accountability Office and other sources, it’s safe to assume that there are also at least $60 trillion in contingency debts and obligations now starting to kick in — for Social Security, Medicare and other pensions.

3. Separately, the Bank of International Settlements reports that the total value of debts and bets placed worldwide (derivatives) is $596 trillion, or more than a half quadrillion!

“If only Washington can avoid the mistakes it made in the 1930s … if only Washington can preemptively nip this crisis in the bud … if only Washington can be our lender and spender of last resort … Great Depression II will never come to pass.”

What they don’t see is the fact that the debt build-up in the U.S. today is far greater than it was on the eve of Great Depression I. Indeed, in the chart below,


Prior to the 1930s, the total debt in the U.S. was between 150% and 160% of GDP. Now it’s close to 350% of GDP.


Price for US Economy in Depression at intrade.com