Take a look at the graph below.
Up until the year 2000, the total public debt was less than $6Trillion (yes that's TRILLION!!!).
Look at the rate at which it accelerates from the year 2000. The year 2005 onwards and subsequently post the Lehman crisis, the graph just spiked upwards.
In 10 years time, the total public debt has doubled to just over $12 Trillion.
As the world rushes into the safety of the USD, and everyone is busy criticizing the 'PIIGS' nations and the EURO as a flawed currency, it's time that we take a closer look at the debt situation in the US.
With interest rates at record lows, the U.S. continues to add onto its debt burden.
The GSEs are still bleeding, and the FED continues to add more MBS to its Balance Sheet.
Accumulating and refinancing debt may not be an issue in the short run, but over the longer run debt servicing issues are going to resurface and the market will demand a higher rate of interest on US Government debt.
Watch this space!