Uncle Sam’s $8 Trillion Annual Debt Churn

 Why Washington Is Petrified Of Honest Interest Rates

By Michael Snyder

I know that headline sounds completely outrageous.  But it is actually true.  The U.S. government is borrowing about 8 trillion dollars a year, and you are about to see the hard numbers that prove this.  When discussing the national debt, most people tend to only focus on the amount that it increases each 12 months.  And as I wrote about recently, the U.S. national debt has increased by more than a trillion dollars in fiscal year 2014.

But that does not count the huge amounts of U.S. Treasury securities that the federal government must redeem each year.  When these debt instruments hit their maturity date, the U.S. government must pay them off.  This is done by borrowing more money to pay off the previous debts.  In fiscal year 2013, redemptions of U.S. Treasury securities totaled $7,546,726,000,000 and new debt totaling $8,323,949,000,000 was issued.  The final numbers for fiscal year 2014 are likely to be significantly higher than that.

So why does so much government debt come due each year?

Well, in recent years government officials figured out that they could save a lot of money on interest payments by borrowing over shorter time frames.  For example, it costs the government far more to borrow money for 10 years than it does for 1 year.  So a strategy was hatched to borrow money for very short periods of time and to keep “rolling it over” again and again and again.

This strategy has indeed saved the federal government hundreds of billions of dollars in interest payments, but it has also created a situation where the federal government must borrow about 8 trillion dollars a year just to keep up with the game.

So what happens when the rest of the world decides that it does not want to loan us 8 trillion dollars a year at ultra-low interest rates?

Well, the game will be over and we will be in a massive amount of trouble.

I am about to share with you some numbers that were originally reported by CNS News.  As you can see, far more debt is being redeemed and issued today than back during the middle part of the last decade…


Redeemed: $7,546,726,000,000

Issued: $8,323,949,000,000

Increase: $777,223,000,000


Redeemed: $6,804,956,000,000

Issued: $7,924,651,000,000

Increase: $1,119,695,000,000


Redeemed: $7,026,617,000,000

Issued: $8,078,266,000,000

Increase: $1,051,649,000,000


Redeemed: $7,206,965,000,000

Issued: $8,649,171,000,000

Increase: $1,442,206,000,000


Redeemed: $7,306,512,000,000

Issued: $9,027,399,000,000

Increase: $1,720,887,000,000


Redeemed: $4,898,607,000,000

Issued: $5,580,644,000,000

Increase: $682,037,000,000


Redeemed: $4,402,395,000,000

Issued: $4,532,698,000,000

Increase: $130,303,000,000


Redeemed: $4,297,869,000,000

Issued: $4,459,341,000,000

Increase: $161,472,000,000

The only way that this game can continue is if the U.S. government can continue to borrow gigantic piles of money at ridiculously low interest rates.

And our current standard of living greatly depends on the continuation of this game.

If something comes along and rattles this Ponzi scheme, life in America could change radically almost overnight.

In the United States today, we have a heavily socialized system that hands out checks to nearly half the population.  In fact, 49 percent of all Americans live in a home that gets direct monetary benefits from the federal government each month according to the U.S. Census Bureau.  And it is hard to believe, but Americans received more than 2 trillion dollars in benefits from the federal government last year alone.  At this point, the primary function of the federal government is taking money from some people and giving it to others.  In fact, more than 70 percent of all federal spending goes to “dependence-creating programs”, and the government runs approximately 80 different “means-tested welfare programs” right now.  But the big problem is that the government is giving out far more money than it is taking in, so it has to borrow the difference.  As long as we can continue to borrow at super low interest rates, the status quo can continue.

But a Ponzi scheme like this can only last for so long.

It has been said that when the checks stop coming in, chaos will begin in the streets of America.

The looting that took place when a technical glitch caused the EBT system to go down for a short time in some areas last year and the rioting in the streets of Ferguson, Missouri this year were both small previews of what we will see in the future.

And there is no way that we will be able to “grow” our way out of this problem.

As the Baby Boomers continue to retire, the amount of money that the federal government is handing out each year is projected to absolutely skyrocket.  Just consider the following numbers…

Back in 1965, only one out of every 50 Americans was on Medicaid.  Today, more than 70 million Americans are on Medicaid, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.

When Medicare was first established, we were told that it would cost about $12 billion a year by the time 1990 rolled around.  Instead, the federal government ended up spending $110 billion on the program in 1990, and the federal government spent approximately $600 billion on the program in 2013.

It is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.

At this point, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years.  That comes to approximately $328,404 for every single household in the United States.

In 1945, there were 42 workers for every retiree receiving Social Security benefits.  Today, that number has fallen to 2.5 workers, and if you eliminate all government workers, that leaves only 1.6 private sector workers for every retiree receiving Social Security benefits.

Right now, there are approximately 63 million Americans collecting Social Security benefits.  By 2035, that number is projected to soar to an astounding 91 million.

Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.

The U.S. government is facing a total of 222 trillion dollars in unfunded liabilities during the years ahead.  Social Security and Medicare make up the bulk of that.

Yes, things seem somewhat stable for the moment in America today.

But the same thing could have been said about 2007.  The stock market was soaring, the economy seemed like it was rolling right along and people were generally optimistic about the future.

Then the financial crisis of 2008 erupted and it seemed like the world was going to end.

Well, the truth is that another great crisis is rapidly approaching, and we are in far worse shape financially than we were back in 2008.

Don’t get blindsided by what is ahead.  Evidence of the coming catastrophe is all around you.



About arnash

“When you find yourself on the side of the majority, it’s time to pause and reflect.” - Mark Twain - Politicians and diapers - change 'em often, for the same reason. "Government is like a baby. An alimentary canal with a big appetite at one end and no sense of responsibility at the other." Ronald Reagan "Liberals claim to want to give a hearing to other views, but then are shocked and offended to discover that there are other views." William F. Buckley, Jr. “The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt.” - Bertrand Russell The people are the masters of both Congress and the courts, not to overthrow the Constitution, but to overthrow the men who pervert it. Abraham Lincoln “Good people sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf.” - George Orwell “Satan will use a lake of truth to hide a pint of poison”.
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2 Responses to Uncle Sam’s $8 Trillion Annual Debt Churn

  1. arnash says:

    clovisdad says:

    I am concerned that people still believe that either the “Republicans” or the “Democrats” are above criticism. History has shown that both parties misrepresent the truth, expand deficits and government functions and feather the nests of their supporters. Government has always been a necessary evil, but con only be contained when we fairly understand that the two parties have, as their principal goal, the continuation of power.

    The Tea Party, for all of its ambiguity, seems to recognize that the current dominant parties both represent an expansion of government beyond its value.

    The more serious support for this expanding cancer is the Fed, which enables the use of the currency itself, and interfering with the free market for capital, to avoid market disciplines on the excess of government.

    Look at current sovereign bond rates around the world. Were it not for central banks, most governments, including our own, would have to go on a strict diet, decreasing their bloated bureaucracies and regulatory burdens and decreasing the payoffs made to trade unions and their buddies in business. The central banks have been co opted by governments to create a cheap credit market for their sovereign debt, enthusiastically supported by the investment banks who arbitrage that cheap debt to participate in bond markets.

    If tomorrow all central banks closed their doors, most governments would be thrown out of office, equity markets would quickly contract, housing would fall in price to become available to more citizens, agencies would quickly contract, and the financial industry would go back to representing less than 8% of the economy.

    It would be tough going and there would be many painful losses, but it is the only way to get the economy back to reality. I believe the proper term is “austerity.”

  2. arnash says:


    The term “borrow” implies the intention to pay back. With the Federal Government, no such intention is possible. Let us just call it what it really is, a massive devaluation of the currency that is little more than a hidden tax on the nation.

    Even if issued 30 year bonds at 3% to “refinance” all of the US Treasury Debt (assume 18T) we would be paying $910 billion a year. … with some severe austerity we MIGHT be able to balance the budget and cover that … but it is quite likely the austerity measures would hit tax revenues in subsequent years which would necessitate deficit spending.

    No matter how you slice it, the US is now dependent on debt … and growing more dependent each day … the longer this takes to blow up in our face the more painful it will be.

    “…but we’re the world’s reserve currency” … over the last 5 years efforts to increase direct exchanges between all sorts of countries have reduced their dependence on the dollar … countries are not doing this as show of confidence in the US Dollar. … the world is growing less dependent on the stability of the US Dollar every day … and we are growing more dependent on the rest of the world buying our debt …

    … many comfort themselves with the belief that we are too big to fail … but the truth is, we are too big to be bailed out.
    Close enough to Halloween to read a Horror Story… http://t.co/9YmfAAgECK @PatandStu @thesamsorboshow

    “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.” CS Lewis

    You really think corporations are the problem? At the end of the day, who wins with an argument between a Senator and CEO? Walmart fired it’s CEO for a faulty resume. With all the failures and lies of this administration and the Dumbocratic party in general…..when is the last time a senior govt employee got fired…..it happens but it’s rare. I suggest you look at people like Soros , the countless govt and non govt unions, academia, and other idiotic govt lovers. THEY ARE THE PROBLEM.

    Govts are THE single largest killer of man. Great communists and socialists like Mao, Lenin, Stalin, Sung, Zedong, and so many more have done much more harm than anything the executives at Exxon, Walmart or Wall St could do. Capitalism and our Constitution engineered one of the greatest shifts in wealth to the common man EVER and raised the entire poverty level of the free WORLD.

    Centuries of feudal claims of blood line and divinity weren’t enough to fool us peasants. Nothing in all of history is even remotely close to helping man and their plight get out from under control of the ruling elite. What has communism or even the so called progressive movement done? Detroit is learning first hand what Churchill meant by this quote.

    “Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery”.

    History is littered with leaders who promised security for their citizens to only giving them death and despair. I wish thievery is where it ended, but history has shown these elitists will kill millions of us to hold and consolidate power…..you think a lie like global warming means anything to people like Gore?

    . The Elitists first excuse to hold power was God and Blood Lines…now they engineer depressions and recessions or make up lies like Global Warming and healthcare to steal yet more freedom and gain control over us…which is why they so firmly believe in gun control and the more left they are the more they believe in population problems and solutions.

    They will say anything to keep the masses down and it usually works due to the sheer ignorance of the masses. A wise man once said people who value security over freedom, usually end up with none of both. Which is why the destruction of our constitution is goal number one by European socialists like Soros that fund and run the Dumbocrat part.

    THIS is the reason they attack Tea Party people and sick the IRS on them. This current liar in thief is in bed with the Muslim Brotherhood and 99% of the media just looks the other way. I smell something very rotten and it smells like Washington DC.

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