BERNANKE’S ‘NEW-STYLE’ QE – Why it won’t produce an alternative future [TheSlog]
The US public debt climbed to $14.58 trillion at the end of August 2012. This made it slightly bigger than the $14.53 trillion size of America’s GDP in 2010.
I typed that fact in bold because I’m beginning to wonder what it takes to make global citizens wake up to the fact of America’s depth of indebtedness. The planet’s pivotal economy will, from here on in, be required to make an extra 10cents on the Dollar export profit each year – at the rate of the total deficit in turnover – to start paying off any of the debt. (And that assumes interest rates and import tariffs stay exactly as they are).
Here’s another fab factoid:
The deficit – that’s the annually accruing debt – is now perilously close to being 10% of GDP. This means that, even if earnings stay as they are, the USA will be treading water before it earns a single cent by the end of 2023.
The only way in which that extrapolation is simplistic involves the assumption that things will remain as now. That is highly unlikely: America faces the same global depression as the rest of us, and is losing share of global trade every year. The United States is piling up foreign debt and losing export capacity, and the growing trade deficit with China has been a prime contributor to the crisis
in U.S. manufacturing employment. Between 2001 and 2011, the trade deficit with China eliminated or displaced more than 2.7 million U.S. jobs, over 2.1 million of which (76.9%) were in manufacturing.
A total of 453,100 jobs were lost or displaced from 2008 to 2010 alone
— even though imports from China and the rest of world collapsed in 2009 during the height of the global financial crisis.