One of the most tired things I hear, repeatedly and wrongly, is that the US debt is over $15 trln and that our debt to GDP ratio is over 100%. That’s untrue. It is the function of accounting gimmicks regarding Social Security receipts.

When the government takes in more Social Securitys revenues than it pays out, the cash goes into the general operating budget while the government issues non-marketable Treasury debt to the Social Security trust fund.

Those non-marketable securities are the difference between the “total” US government debt touted by doomsday types and the “public debt”, followed by those with an ounce of sense.

The US’s public debt, the amount of debt held by investors, is $10.9 trln, an astounding figure. But it is no where close to the $16 trln figure that is now fashionable.The US government essentially owes the US government $5 trln.

The way I look at is simple. If you borrow money from yourself (say, from your savings account), you ain’t borrowing money. The US will need to borrow trillions to fund social security payments in the years ahead, but it has not yet borrowed that amount…It is basically a future liability.

So let’s get real. The US’s debt to GDP ratio is 72% and rising like a balloon. Deficits must urgently be addressed or the debt will quickly become unsustainable, but it’s not there yet, as bond yields make evident.

The US’s debt to GDP ratio is much lower than Germany at 94%, Japan at 197% and even Canada at 82%.

Don’t believe the hype…