Bernanke delivers blunt warning on U.S. debt

With uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt.

"It's not something that is 10 years away. It affects the markets currently," he told the House Financial Services Committee.

Mr. Bernanke for the first time addressed concerns that the impasse in Congress over tough spending cuts and tax increases needed to bring down deficits will eventually force the Fed to accommodate deficits by printing money and buying Treasury bonds — effectively financing the deficit on behalf of Congress and spurring inflation in the process.

Some economists at the International Monetary Fund and elsewhere have advocated this approach, suggesting running moderate inflation rates of 4 percent to 6 percent as a partial solution to the U.S. debt problem. But the move runs the risk of damaging the dollar's reputation and spawning much higher inflation that would be debilitating to the U.S. economy and living standards.

[The Washington Times]

National Debt to increase over 6 Trillion Dollars in next 10 years

In its report released last week, the Congressional Budget Office (CBO) projected there will be $6.074 trillion in new national debt over the next 10 years if current laws governing taxing and spending are maintained.

In other words, the U.S. Treasury will need to borrow an additional $6 trillion between 2011 and 2020 to cover expected federal spending.

The CBO report adds: “With such a large increase in debt, plus an expected increase in interest rates as the economic recovery strengthens, interest payments on the debt are poised to skyrocket.”

“The government’s annual spending on net interest will more than triple between 2010 and 2020 in nominal terms, from $207 billion to $723 billion, and will more than double as a share of GDP, from 1.4 percent to 3.2 percent.”

For a refresher on how much a Trillion dollars is:

A trillion is a thousand billion dollars!

If you spent $1,000 per second, it would take almost 30 years to spend 1 trillion dollars!

Or if you spent a million dollars every day since Jesus was born, you still wouldn't have spent a Trillion!

One trillion $1 bills stacked one on top of the other would reach nearly 68,000 miles (about 109,400 kilometers) into the sky, or about a third of the way from the Earth to the moon.