The Federal Reserve released data on U.S. credit market debt for 2020 last week, and after putting it into charts what I found was shocking. In just one year, total U.S. credit market debt increased by 42.7% of GDP, total non-financial credit market debt increased by 38.4% of GDP, federal government debt increased by fully 23.9% of GDP. The amount borrowed by the federal government last year was equivalent to nearly a quarter of all the money earned in the U.S. economy. During the Great Depression and World War II, the national debt never increased by more than 7.5% of GDP in a single year. The federal debt alone is now approaching its level at the end of World War II, even as old age benefit programs such as Medicare and Social Security are expected to run out of money and face huge automatic cutbacks in a decade. And total credit market debt now exceeds the level of 2008 and 2009, when high debt levels led to a devastating financial crisis.
For all this debt, public and private, to be paid back, taxes would have to rise so high, and consumer spending and public services and benefits be cut so much, that the economy would collapse. The American standard of living, which has been falling gradually generation-by-generation, is set to fall much further, and perhaps much faster. And yet that isn’t the worst news. Things have now gone so far that the economy may collapse even if total debts don’t continue to increase at a rapid pace, let along being repaid.
Saying the Unsaid in New York 