America’s debt burden starts to shrink*
Last week, when I published data showing that U.S. households were beginning to reduce their debt burden, I commented that the government is more than offsetting this with increased federal and state borrowing. I was wrong.
The Flow of Funds report often revises historical data. The latest revisions show a slightly improving picture.*
Here’s the chart:
Economist Steve Keen, who helped me process the data, characterizes it as…
…a dramatic increase in government debt–just as in the Great Depression–but even so the deleveraging by the finance sector in particular, and the private sector in general, more than outweighs the increase in public debt to compensate.
*But this data comes with a BIG asterisk. Government debt as counted in the flow of funds report only counts “publicly-held” Treasury debt, which currently stands at $7.7 trillion.
The figure does NOT include money the government owes itself (i.e. the social security “trust fund”), nor does it include unfunded obligations for Medicare. Our total unfunded obligations equal a whopping $63 trillion as of 2009, up another $5 trillion since just last year.
The bottom line is that we still have a massive — and growing — debt problem. But at least consumers are starting to make a dent in it.