Money Facts Archive Get the real facts that will shape your future by having them delivered to your Inbox!

In a Charles Schwab Market Commentary On Strategy entitled "Debt: What Is and What Should Never Be," Liz Ann Sonders, Senior Vice President & Chief Investment Strategist included the following data about unsustainable debt growth:

http://www.schwab.com/public/schwab/
research_strategies/market_insight/todays_market/
sonders/sonders_020110.html?edition=T005

Date range Decade change in debt ($, billions)
Decade change in GDP ($, billions)
Debt/GDP

12/31/49-12/31/59
Date range Decade change in debt ($, billions) 337.6
Decade change in GDP ($, billions) 248.0
Debt/GDP 1.36

12/31/59-12/31/69
Date range Decade change in debt ($, billions) 752.1
Decade change in GDP ($, billions) 491.3
Debt/GDP 1.53

12/31/69-12/31/79 Date range Decade change in debt ($, billions) 2,785.2
Decade change in GDP ($, billions) 1,654.9
Debt/GDP 1.68

12/31/79-12/31/89 Date range Decade change in debt ($, billions) 8,562.8
Decade change in GDP ($, billions) 2,922.2
Debt/GDP 2.93

12/31/89-12/31/99 Date range Decade change in debt ($, billions) 12,550.0
Decade change in GDP ($, billions) 4,026.0
Debt/GDP 3.12

12/31/99-9/30/09 Date range Decade change in debt ($, billions) 27,228.0
Decade change in GDP ($, billions) 4,658.6
Debt/GDP 5.84

Source: Ned Davis Research, Inc., as of September 30, 2009.

Liz Ann Sonders also notes:

"Public debt high . total debt stratospheric - The United States' public debt-to-GDP number is high (84%) and rising (set to jump to more than 90% this year). We're not the worst though; there are a couple of countries with even higher figures: Japan (182%) and Greece (119%). If you look at total credit-market debt (not just government), the numbers are really glaring. According to a recent McKinsey Global Institute report, US total debt doubled from 2000 to 2008, from $26 trillion to $53 trillion, and rose again in 2009. This represents more than 370% of US GDP-the highest since the Great Depression, when it reached 260%. "

Simply put, Uncle Sam may have dug us all in a hole we can never get out of.

- Ed Smith, Publisher
The EHS Letter Manual