But where did the money go? Fume and gnash your teeth.
The US gross national debt – after having been successfully disappeared from public discussion – has jumped by $1.38 trillion in fiscal 2016, which ended Friday. Ironically, this is not one of my infamous typos.
So OK, there were some timing issues with the debt ceiling and so forth a year ago, after which the debt jumped $340 billion in one day.
To smoothen out those factors, we look at fiscal 2016 and 2015 combined: the gross national debt ballooned by $1.71 trillion over those two years, $850 billion on average each year. There were only four years in the history of the US, when deficits exceeded this average: 2009-2012.
Not too shabby, for a booming economy. But follow me. This is just to lay down some basic numbers, as we’re drilling into the mystery of how the government borrowed $4 trillion more than it said it spent since 2003. Those $4 trillion in borrowed money – the bonds are still out there – went up in smoke, according to government numbers. But money doesn’t go up in smoke. It flows somewhere. So follow me.
This is how the US gross national debt has ballooned since 1980, from less than $1 trillion to nearly $20 trillion ($19.53 trillion).
This scary chart says two things:
- Deficit spending has become a huge stimulus package that does not stimulate the bogged-down economy.
- Inflation, oh boy, it does exist! It chewed up the value of the dollar over those years. The government had to borrow many more, increasingly worthless dollars to accomplish the same thing, plus some to grow real spending. Adjusted for inflation, this chart would look less scary but would still give you the willies – particularly about inflation.
Debt rises because government spending exceeds revenues. Over time, the amount by which debt rises and the amount of the cumulative deficits should be roughly the same. If you run $5 trillion in deficits over 10 years, you have to borrow those $5 trillion, which are added to existing debts, which should therefore rise by $5 trillion.
But not with the US government.