What Is the U.S. National Debt Clock?:
The clock is physically located on West 44th Street and Avenue of the Americas in New York. It was conceived by Seymour Durst, who put the first national debt clock up at Sixth Avenue and 42nd Street on February 20, 1989, when the national debt was nearing $2.7 trillion and 50% of GDP. Durst said, “If it bothers people, then it's working.”
The debt clock faithfully recorded the increasing U.S. debt until 2000, when the prosperity of the 1990s created enough revenue to reduce the federal budget deficit and debt. It seemed as if the debt clock had done its job.
The Debt Clock Tracks the Growing U.S. Debt:
It took 13 years for the debt to double. By 2002, it had grown to $6 trillion, but only 46% of GDP, around $45,000 per household. It only took eight years to double again. The $700 billion bailout and raised it to $12 trillion in 2010, which was 85% of GDP and $86,000 per household.
The debt reached a new record on August 31, 2012. That's when it reached $16 trillion. This made the debt bigger than annual economic output, as measured by Gross Domestic Product, which was $15.6 trillion as of the second quarter of 2012.
In addition to installing the clock, Durst bought ads on the front page of the New York Times. His May 26, 1991 message was prophetic: "Federal debt soaring, national economy shrinking, soon the twain shall meet." (Source: Times Magazine, How much is the debt now? You don't need to fly to New York and see the debt clock to find out. Simply go to the U.S. Treasury web site: Debt to the Penny.
How much is the debt now? You don't need to fly to New York and see the debt clock to find out. Simply go to the U.S. Treasury web site: Debt to the Penny.
Why Is the U.S Debt Clock Important?:
Second, increasing debt means the government is becoming more involved in your life through the programs the debt is paying for. Third, since much of the debt is financed by loans from foreign governments, they now have a voice in what happens in the U.S. Fourth, as the debt approaches the debt ceiling, politicians must vote to raise the ceiling. If the vote fails, as the Greek government did in early 2010, the U.S. could be plunged into crisis. In short, the higher the debt, the greater the risk of fiscal crisis. By watching the national debt clock, you will be aware of this risk, and how much you ultimately owe.
Why the Debt Keeps Growing:
The debt is an accumulation of budget deficits. Year after year, the government cut taxes and increased spending. In the short run, the economy and voters benefited from deficit spending. Furthermore, foreign debt holders like China and Japan, allow the U.S. to run a large tab because it's such a good customer. They haven't demanded the higher interest payments that usually keeps government debt in check.
How Is the Debt Financed?:
The rest is owed by the government to itself. Most of this is owed to Social Security and other trust funds, which were running surpluses. These securities are a promise to repay these funds when Baby Boomers retire over the next 20 years. (Source: U.S. Treasury, Debt FAQ)
The Debt Clock Warning:
Second, many of the foreign holders of U.S. debt are investing more in their own economies. Over time, diminished demand for U.S. Treasuries could increase interest rates, thus slowing the economy. Furthermore, this lessening of demand is putting downward pressure on the dollar. That's because dollars, and dollar denominated Treasury Securities, are becoming less desirable, so their value declines. As the dollar declines, foreign holders get paid back in currency that is worth less, which further decreases demand. Article updated October 22, 2013