Rocky Vega

US debt continues surging higher and the chart below shows a likely outcome: debt will exceed GDP in as early as 2012. Yep, that’s fewer than two years from now.

From Bloomberg:

“…the government’s total debt […] rose past $13 trillion for the first time this month. The amount owed will surpass GDP in 2012, based on forecasts by the International Monetary Fund. The lower panel shows U.S. annual GDP growth as tracked by the IMF, which projects the world’s largest economy to expand at a slower pace than the 3.2 percent average during the past five decades.”

One concern about the rising debt is what PIMCO’s Bill Gross refers to as “the debt super cycle trend.” It’s a situation where the US eventually increases interest rates but, without improved economic growth, it gets much harder to pay debt-related bills. The US may have lot more difficulty selling its debt, or servicing it, when the lines below cross.

You can click the chart below or follow this link to see a bigger version and read Bloomberg’s accompanying article. (Note that there are two tabs, “story” and “graphic.”)

Rocky Vega

Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let?s Go Publications, Harvard Student Agencies, and The Harvard Advocate.

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