The Debt Clock and the Generational Disaster in the USA.

Check out this amazing Debt Clock for the USA.

It's scary in several ways. Look particularly at the bottom left under "Unfunded Liabilities".

Unfunded Liability - (n) liability is a debt or obligation one party owes to other(s) some future date in time. Debt gets commonly settled by payment or performance of a service. An Unfunded Liability describes any liability, debt, mortgage, or obligation that one either does not have savings set aside for it. 

At present the US Government has unfunded liabilities of $126 trillion. Just to be clear the US government has promised to $126 trillion but has no budget for paying any of it. This is medicare, pensions, social security, government debt, and so on.

And the GDP of the USA is $19 trillion. So the unfunded liabilities are 679% of GDP.

What happens when the US government defaults on its obligations? The constraints on debts to banks and other nations mean they will get priority. A major power defaulting on debts would threaten global chaos on a scale that would make the global financial crisis look like a day in the park. So what will happen is defaulting on domestic obligations: medicare, pensions, social security.

The other thing to notice is the differential between rise in wages and the rise in health care and education. Comparing 2000 and now.

mean income:      $30,872 → $33,445 (+  8.3%)
healthcare costs:  $5,508 → $11,516 (+109.1%)
college tuition:  $11,897 → $24,568 (+106.5%)

This trend is only continuing. It goes with another fact: successive generations have saved less, and fewer have saved at all, for retirement. Saving for retirement requires that we earn enough to put some aside. In my life time the developed world has moved from the wages of one man supporting the entire family with some put aside for a pension, to the wages of both parents being insufficient for live on.

This has been great for corporate profit margins. It has been great for shareholder dividends in this generation. But in another 50 years not only will the population be aging and longer lived, but it won't have saved for retirement. Just at the time when the government's own financial crisis is forcing them to stop spending on domestic obligations.