A-equals-A.com

Below are charts of the Gross Federal Debt, and the Annual Federal Surplus/Deficit. It is interesting to note that the US formally broke ties to the gold standard in 1971; essentially declaring bankruptcy and removing the last thread of accountability.  According to Murray Rothbard, "Since the United States went completely off gold in August 1971 and established the Friedmanite fluctuating fiat system in March 1973, the United States and the world have suffered the most intense and most sustained bout of peacetime inflation in the history of the world."

According to a notable 'economics' professor from Texas, the size of our current debt shouldn't be a cause for concern.  He claims that unlike Greece, who was hampered by constraints of being tied to the Euro, we can print our own money, so we should be fine.  Now doesn't that sound reassuring.  In this news clip, Peter Schiff takes on the 'economics' professor from Texas and uses sound economic theory to combat this professors flawed Keynesian logic. See our page on inflation for more information.       

The Congressional Budget Office (CBO) projects that the federal budget deficit in fiscal year 2010 (which ends on Sept. 30) will be approximately $1.5 trillion. In 2011 the deficit is projected to only fall slightly to $1.3 trillion.

According to economist Robert Murphy, "By the end of 2020, the total debt [according to the CBO estimates] would be more than $20 trillion, or 90 percent of the country’s GDP. Indeed, in that year alone, just the interest payment to service the debt would cost taxpayers $925 billion."

Murphy goes on to explain that this dismal projection is actually naively optimistic.  The CBO projection assumes America is climbing out of recession and that tax revenues will recover accordingly. Perhaps more importantly, these estimate assume that the interest rates are held artificially low. In reality, the cost of borrowing for a debtor nation tends to rise as their debt burden increase.

High unemployment and decreasing inventories doesn't indicate we are experiencing any type of real sustainable economic recovery.

In an article from the Federal Reserve Bank of St. Louis Review, November/December 2007, 89(6), pp. 491-514, the authors examined several possible explanations for the trend of decreased personal savings advanced in the recent [mainstream economic] literature.  The authors concluded, "that none of them provides a compelling explanation for the steep decline and negative levels of the U.S. personal saving rate...the U.S. personal saving rate remains a puzzle."

Savings, contrary to the mainstream view, is not a puzzle. The only thing that is a puzzle is why the Keynesian explanations of spending and saving is still treated as viable economic theory (see Economic Myths and Fallacies).  

Here are two excerpts from a great article titled What is the Condition of U.S. Savings? by Austrian Economist, Frank Shostak:

• "We can conclude that, given prolonged reckless fiscal and monetary policies, there is a growing likelihood that the pool of real savings is in trouble.... Since early 1980s, the ever-rising money supply and government outlays have severely undermined the process of real savings formation. As a result, it will not surprise us if the US pool of real savings is in serious trouble. If what we are saying is valid then it will be very hard for the US economy to grow, for it is a growing pool of real savings that makes economic growth possible."
• "Furthermore, the growing pool of real savings is the reason that loose monetary and fiscal policies appear to be working. In reality, however, all that these loose policies achieve is a further depletion of the pool of real savings — thus reducing prospects for a genuine economic recovery."

Read more: What is the Condition of U.S. Savings? - Frank Shostak - Mises Daily http://mises.org/daily/3640#ixzz0oDwAOhrr