US Debt -- Private, Public, "Sovereign" and "Federal"

I am now beginning to understand the totality of recorded US debt, also known as "Credit Market Debt" and as "public and private debt".

Several previous posts ( here.and here) have briefly discussed various components of this $52 trillion US debt.  This post focuses on the "US federal government debt" component of the $52 trillion, and its connection with "sovereign debt", and budget deficits.  It is also the first in a number of posts to begin relating, in some detail,  US debt and US borrowing, to US consumption (GDP), US GDP growth, and US federal government budgets, and to compare those entities with similar entities in other parts of the world.

Figure 1 starts the ball rolling by breaking down the $52 trillion debt into its components, and their recent history, as reported by the Federal Flow of Funds report published March 2010.

Figure 1 US Public and Private Debt (Total Debt) by Component

US Credit Market Debt Analysis -- 1

In  earlier posts I suggested that the industrial world has entered a period where consistently exceeding a real GDP CAGR of about 2% will be very difficult.

The reasons for this malaise in the industrial world, I believe, are threefold:

• The GDP growth rate has been slowing for several decades and that trend is now approaching 2% CAGR.
• A very heavy current debt burden in almost all industrial countries which hinders future GDP growth
• The increasing difficulty (costs) of acquiring the natural resources on which our industrial civilization depends

This post will focus on US debt.

Fig 1 below says that US citizens ended calendar 2009 owing about $52 trillion to each other and to foreigners.  What does that mean?

Figure 1 US Credit Market Debt by Sector
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Notes on Debt Fueled GDP Growth

I am now convinced that the level of US debt -- see my post here -- will make it impossible for us (Americans) to rapidly attain a consistent real GDP CAGR greater than about 2%,  without massive government funding, and if "everything goes right". 

This post is a quick summary, with pictures, of some the data that convinces me.   Later posts will elaborate.

  Figure 1.  Total US Debt and Real GDP Annual Growth Rates with 4 year moving averages.
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US Consumption Growth and US Debt -- Magnitudes and Relationships

In an earlier posting, I said that the main US consumption growth inhibitors would probably be American debt, and the rising price of natural resources, particularly oil.

This post is my first in a planned series in which I take a detailed look at the debt situation in America and the world.  This first post looks at total US debt and compares it with US GDP growth over long time periods.

  Figure 1.  World Real Average Compound Annual Growth Rates (CAGR) for Population, GDP/Capita and GDP.  History from deLong and US Census Bureau, Projection from ERS, USDA.  History is based on "1990 International Dollar", projection is based on Real $2005. 
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Consumption Growth Inhibitors

Chart1. Copied from US Budget (Obama Budget) FY2011 published Jan 2010

Heinberg -- Life After Growth

 Heinberg is one of the early "no growth" and "peak oil" evangelists.  I have posted his article below to give us all a sense of the thinking of one of the very influential early "no growth" thinkers.

More On US Debt and US GDP Growth

A Floyd Norris piece in the NY Times fits neatly into the recent posts on debt. 

Off the Charts - Ratio of Troubled Loans Means Banks Aren’t Out of the Woods - NYTimes.com: "February 27, 2010
By FLOYD NORRIS

" MORE than $1 in every $10 that American banks have outstanding in loans is lent to a troubled borrower, a ratio far higher than previously seen in the quarter-century that such numbers have been compiled.