The Hidden Costs of Too Much Government Debt

From Marketoracle.co.uk

You don’t need me to tell you that our public debt is enormous. As of this week, it came to $12,031,299,186,290.07. That’s more than $12 TRILLION in case you have trouble grasping a number that big. In just the past decade, it’s up more than 111 percent.

Things are only going to get worse, too, because Washington has completely abandoned any semblance of fiscal discipline! We’re running ever-larger budget deficits, including $1.42 trillion in fiscal 2009 alone.

The interest cost alone on our debt last year was $202 billion. That’s enough to send every man, woman, and child in this country a $656 check. Keep in mind that those costs were artificially low because of the lowest short-term rates in history due to the Fed’s rate cuts. Moreover, the flight-to-quality rally in government bonds helped keep longer-term rates low.

As bond prices fall, rates rise, and absolute debt levels climb ever-higher. That number is going to spiral upward. In plain English, we’re going to be dedicating a larger and larger share of the U.S. budget just to pay interest on our debt. Forget about defense, health care, Social Security or anything else.