IMF Report Shows G7 Debt Building Toward Calamity

As per the August 31 DTS statement, the US ended the month with a new all time record of $13.45 trillion in debt, and increase of $210 billion from the beginning of the month (or $225 billion in public debt, net of intragovernmental holdings). With just 30 days left in fiscal year 2010, the US has added $1.54 trillion in the eleven months ended August 31, a monthly average increase of $140 billion. As a point of reference, the US has received $1.53 trillion in withheld income tax over the same period, confirming that the US continues to issue more than one dollar in debt for every dollar it receives via income tax revenue. This balance will likely be tipped soon courtesy of changes to the tax law, which will adversely impact the withheld tax line, implying even more funding has to come in the form of debt.

Additionally, the US rolled another $513 billion in short-term debt: a number which continues to be persistently high, even as the total amount of short term debt as a percentage of total has declined steadily from 30%+ of total to around 20% as we have written elsewhere. Another $106 billion in Notes was rolled as well, with the intramonth cash balance dropping to a dangerous sub-$5 billion.

For the 11 months ending August 30, the US has paid $180 billion in interest expense in a time of record low interest rates.
At the current rate, we expect that the statutory, and completely irrelevant, debt limit of $14.3 trillion will be breached in the first two months of 2011. At that point total federal debt as a % of US GDP will be roughly 100% in its purest definition, and the inevitable greenlighting by Congress to raise the ceiling then will means that America is fully sliding into a debt-to-GDP ratio of >1.