Kicking the can down the road really does work.

Until you run out of road

1) 2.2 percent is the average interest rate on the U.S. Treasury’s marketable and non-marketable debt (February data).

2) 62.8 months is the average maturity of the Treasury’s marketable debt (fourth quarter 2011).

3) $454 billion is the interest expense on publicly held debt in fiscal 2011, which ended Sept. 30.

4) $5.9 trillion is the amount of debt coming due in the next five years.

For the moment, Nos. 1 and 2 are helping No. 3 and creating a big problem for No. 4. Unless Treasury does something about No. 2, Nos. 1 and 3 will become liabilities while No. 4 has the potential to provoke a crisis.

In plain English, the Treasury’s reliance on short-term financing serves a dual purpose, neither of which is beneficial in the long run. First, it helps conceal the depth of the nation’s structural imbalances: the difference between what it spends and what it collects in taxes. Second, it puts the U.S. in the precarious position of having to roll over 71 percent of its privately held marketable debt in the next five years — probably at higher interest rates.

And remember this is just the current debt; it doesn’t take into account the amount that the Greatest Economic Savior Evuh is piling on.

While he lives within our means, of course.

2 Responses to “Numerology”

  1. Syd B. says:

    If you threw $16 Trillion in the air (really high) this is where it would go.

  2. aelfheld says:

    Wasn’t it under the last Democrat president that the majority of U.S. debt was moved to short-term from long-term financing?

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