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RT
August 6, 2013
The United States has accumulated over $70 trillion in unreported debt, an amount nearly six times the declared figure, according to a new study by University of California-San Diego economics Professor James Hamilton.
The unique aspect of Hamilton’s study is that he examines federal debt that has not been publicly released, specifically the government’s support for “housing, other loan guarantees, deposit insurance, actions taken by the Federal Reserve, and government trust funds.”
Since the global economy hit rock bottom in 2008, US federal debt has gone through the roof, increasing from $5 trillion to an estimated $12 trillion in 2013. Meeting the interest payments alone on that debt burden presents a formidable challenge for US taxpayers: In addition to the debt, Americans must pay back around $220 billion annually just in interest.
And with interest rates set to rise from their historic lows, Americans will be confronted with a significantly higher bill in the future. In fact, the Congressional Budget Office anticipates that net interest expense on US federal debt will exceed the entire defense budget by 2021.
This fiscal horror story playing out across America, however, is actually much worse than publicly recognized.
Much of the current debt load is a direct result of the Great Recession of 2008, which saw an unprecedented effort on the part of Washington to rescue the US economy from financial ruin.
This led to a series of controversial operations on the part of the US Federal Reserve known as “quantitative easing” or “large-scale asset purchases.” The aim of these programs was that by buying long-term securities, the Fed would be able to lower the long-term interest rate, encourage investment and get the economy rolling again.
According to Hamilton, “the net effect of the Fed’s emergency lending between 2006 and 2008 was to increase the net indebtedness of the federal government by over a trillion dollars, balanced by acquisition of corresponding assets (the emergency loans).”
