6. Out of the $14 trillion, $10 trillion of US GDP is used for personal consumption
7. USA is the World’s largest economy followed by China at $1.337 trillion, to Japan's $1.288 trillion Composition of GDP from different sectors of the economy
16. Reflect American values in trade policyHighlights Policy Agenda include key commitments to 7
17. Fiscal Policy 8 INFLATION TRADE POLICY FISCAL POLICY MONETARY POLICY GDP Fiscal Policy determines the appropriate level of taxes and spending in a country. The president and Congress adjust federal spending and taxes in the US. The US Debt is $13 trillion, largest in the world The U.S. Government's total revenue is estimated at $2.6 trillion for year 2011. For the year 2011, Federal spending is budgeted at $3.8 trillion. In FY 2011 the deficit is projected to be $1.26 trillion, the difference between $3.83 trillion in spending and $2.57 trillion in revenue. Although this deficit is huge, it is less than the $1.6 trillion deficit in FY 2010.
18. Monetary Policy 9 INFLATION TRADE POLICY FISCAL POLICY MONETARY POLICY GDP The Federal Reserve manages the monetary policy i.e. the money supply and use of credit. The use of national currency as the global reserve currency leads to tension between the national monetary policy and the global monetary policy. Measure of monetary policy: Money supply Growth and Interest Rate True Money Supply (1959 – 2008) United States Interest Rates
19. 10 Index TRADE DEFICIT 1 Overview of the US economy 1 2 Trade Deficit 3 Budget Deficit 4 Conclusion 5
51. Goods Trade Balance of USA Vs Other Countries Trade Balance : Export of Goods minus Import of Goods CHN JPN BRA IND UK US
52. 19 Index FISCAL DEFICIT 1 Overview of the US economy 1 2 Trade Deficit 3 Budget Deficit 4 Conclusion 5
53. 20 Fiscal Policy PRIMARY DEFICIT Current Government spending Total current revenues from all taxes Government Spending TOTAL DEFICIT Total tax revenues Interest payments on debts GOVERNMENT DEBTS Budgetary deficits when accrued for a very long
54.
55. Tax collection was 15% of GDP which was the lowest level in the past 50 years.
65. Fiscal Deficit and Government Debt 27 BUDGET DEFICIT Occurs when an entity spends more money than it takes in. GOVERMENT DEBT Accumulated Governmental Deficit over several years is referred to as the Government Debt. NATIONAL DEBT GOVERMENT DEBT PUBLIC DEBT Money owed to those holding government securities + Intra-governmental debt OR GOVERMENT DEBT Considers all government liabilities, including future pension payments and payments for goods and services the government has contracted but not yet paid
66.
67. Paying back debt with cheaper currency could cause investors to demand higher interest rates if they anticipated further dollar depreciation.
76. 34 280 process and 170 technology professionals Diverse skill Sets – CA/ MBA/ Engineers/ CISA Industry / subject matter knowledge Team led by 16 Partners/ Directors Resources extensively trained in proprietary methodologies Integrated Advisory Practice with Over 600 professionals Thank you
Notes de l'éditeur
USA Datamonitor report (Graph and Pie chart)GDP Figures – Economic Times reportGDP Definition -
USA Datamonitor report (Graph and Pie chart)GDP Figures – Economic Times reporthttp://www.economist.com/blogs/freeexchange/2010/08/china_0GDP Definition -
During FY 2009, the federal government collected approximately $2.1 trillion in tax revenue. Primary receipt categories included individual income taxes (43%), Social Security/Social Insurance taxes (42%), and corporate taxes (7%).[6] Other types included excise, estate and gift taxes. Tax revenues have averaged approximately 18.3% of gross domestic product(GDP) over the past 40 years, generally ranging plus or minus 2% from that level.[7]Tax revenues are significantly affected by the economy. Recessions typically reduce government tax collections as economic activity slows. For example, during FY2009, the U.S. government collected about $400 billion less than FY2008. Individual income taxes declined 20%, while corporate taxes declined 50%. At 15% of GDP, the 2009 collections were the lowest level of the past 50 years.[8]http://en.wikipedia.org/wiki/United_States_federal_budget#Major_receipt_categories
During FY 2009, the federal government spent nearly $3.52 trillion on a budget or cash basis, up 18% versus FY2008 spend of $2.97 trillion. Primary expenditure categories (shown in the pie chart in the introduction above) include: Defense and Homeland Security ($782B or 23%), Social Security ($678B or 20%), and Medicare & Medicaid ($676B or 19%). Expenditures are classified as mandatory, with payments required by specific laws, or discretionary, with payment amounts renewed annually as part of the budget process.[6]Over the past 40 years, mandatory spending for programs such as Medicare and Social Security has grown as a share of the budget, while defense grew around 9% per year excluding war costs and other discretionary categories have declined. Between 1966 and 2006, Medicare and Social Security grew from 16% of the budget to 40%. Discretionary outlays, which rely on annual appropriations for funding, accounted for 38.0% of total federal outlays in FY2008.http://en.wikipedia.org/wiki/United_States_federal_budget#Major_receipt_categories
http://en.wikipedia.org/wiki/Government_debthttp://en.wikipedia.org/wiki/DeficitGross debt includes not only bonds and liabilities tobanks, but also liabilities to non-banks from promissorynotes, lease liabilities, liabilities arising from ABStransactions (capital marketliabilities), liabilitiesfromderivatives and cash collateral received for positive fairvalues of derivatives, as well as other interest-bearing(Social Security Trust Funds ) financial liabilities.
GDP is a measure of the total size and output of the economy. One measure of the debt burden is its size relative to GDP. In fiscal 2007, U.S. public debt was approximately $5 trillion (36.8 percent of GDP) and total debt was $9 trillion (65.5 percent of GDP.)[61] Public debt represents money owed to those holding government securities such as Treasury bills and bonds. Total debt includes intra-governmental debt, which includes amounts owed to the Social Security Trust Funds (about $2.2 trillion in FY 2007)[62] and Civil Service Retirement Funds. By August 2008, the total debt was $9.6 trillion.[63]Based on the 2010 U.S. budget, total national debt will nearly double in dollar terms between 2008 and 2015 and will grow to nearly 100% of GDP, versus a level of approximately 80% in early 2009.[64] Multiple government sources including the current and previous presidents, the GAO, Treasury Department, and CBO have said the U.S. is on an unsustainable fiscal path.[65] As the debt ratio increases, the exchange value of the dollar may fall. Paying back debt with cheaper currency could cause investors (including other governments) to demand higher interest rates if they anticipated further dollar depreciation. Paying higher interest rates could slow domestic U.S. growth.Higher debt increases interest payments on the debt, which already exceed $430 billion annually as discussed below, or about 15 cents of every tax dollar for 2008.[66] According to the CIA Factbook, only six other countries have debt to GDP ratios over 100% for 2008, the largest of which is Japan at 170%.[67]Further, a high public debt to GDP ratio may also slow economic growth. Economists Carmen Reinhart and Kenneth Rogoffcalculated that countries with public debt above 90 percent of GDP grow by an average of 1.3 percentage points per year slower than less debt-ridden countries. The public debt-to-GDP ratio in March 2010 is about 60 percent of GDP; CBO projects it will reach 90 percent around 2020 under policies in place in 2010. If growth slows, all of the economic challenges the U.S. faces will worsen.[68]Historical analysis of government spending or debt relative to GDP can be misleading, according to the GAO, CBO and Treasury Department. This is because demographic shifts and per-capita spending are causing Social Security and Medicare/Medicaid expenditures to grow significantly faster than GDP. If this trend continues, government simulations under various assumptions project mandatory spending for these programs will exceed taxes dedicated to these programs by more than $40 trillion over the next 75 years on a present value basis.[69]According to the GAO, this will double debt-to-GDP ratios by 2040 and double them again by 2060, reaching 600 percent by 2080.[70] A GAO simulation indicates that Social Security, Medicare, and Medicaid expenditures alone will exceed 20% of GDP by 2080, which is approximately the historical ratio of taxes collected by the federal government. In other words, these mandatory programs alone will take up all government revenues under this simulation.[69]
http://www.chinadaily.com.cn/bizchina/2010-03/01/content_9518437.htmIssue of Treasury BillsRaise taxes – to pay their billsPrint the money – as in the Weimar Republic in Germany after the World War IITo borrow money, govermentsSell off (Privatize) National assets such as telecommunications, water systems, rail or transportation systems or real estate.Raise taxes - The Govt should cut some spending and raise some revenue while avoiding extremes in either direction,Printing excess money – this leads to excess money chasing less goods which will ultimately leads to inflation.Repudiate the debt Reduce the spending on Medicare and Social Security.AsGovt.fundshigherandhigherdeficitsInterestratesstarttoriseIncasethisissubscribedbydomesPcpublicandinsuranceco’s/PensionFundssPllnotaproblemSell off (Privatize) National assets such as telecommunications, water systems, rail or transportation systems or real estateRepudiate the debt – as Russia did with $110 billion in 1917Resort the Plunder – by launching wars to acquire wealth to pay off their debts
http://www.chinadaily.com.cn/bizchina/2010-03/01/content_9518437.htmIssue of Treasury BillsRaise taxes – to pay their billsPrint the money – as in the Weimar Republic in Germany after the World War IIAsGovt.fundshigherandhigherdeficitsInterestratesstarttoriseIncasethisissubscribedbydomesPcpublicandinsuranceco’s/PensionFundssPllnotaproblemSell off (Privatize) National assets such as telecommunications, water systems, rail or transportation systems or real estateRepudiate the debt – as Russia did with $110 billion in 1917Resort the Plunder – by launching wars to acquire wealth to pay off their debts
With respect to entitlement spending, the nation must change course before the deficit and debt reachunprecedented heights. The Government must act to bring social insurance expenses and resources in balance.Delays will increase the magnitude of the reforms needed and will place more of the burden on future generations.There is no simple fix to the projected imbalance between social insurance expenditures and revenues. The preciseamount of the Government’s future financial responsibilities is far from certain, as they are based on many complexcalculations and assumptions. Nevertheless, the magnitude of these responsibilities and the pressing need to controltheir continued growth are evident.The Government has made and is expected to continue to make a vast commitment of financial resources toestablish and maintain stability in the credit markets. The Government expects that at least some of the financialassets acquired by the Government in its market stabilization efforts may eventually return full value to the taxpayerand possibly even earn a positive return on amounts spent as economic conditions improve. The Governmenthas been able to take these stabilization actions because of the deep, liquid market for Treasury securities. Theunsustainable growth in Social Security, Medicare, and Medicaid remains a long-term fiscal challenge to beaddressed once the current credit crisis has passed and overall economic conditions have improved.
http://www.chinadaily.com.cn/bizchina/2010-03/01/content_9518437.htmIssue of Treasury BillsRaise taxes – to pay their billsPrint the money – as in the Weimar Republic in Germany after the World War IIAsGovt.fundshigherandhigherdeficitsInterestratesstarttoriseIncasethisissubscribedbydomesPcpublicandinsuranceco’s/PensionFundssPllnotaproblemSell off (Privatize) National assets such as telecommunications, water systems, rail or transportation systems or real estateRepudiate the debt – as Russia did with $110 billion in 1917Resort the Plunder – by launching wars to acquire wealth to pay off their debts
http://marcfaberchannel.blogspot.com/2010/06/marc-faber-us-national-debt-is-already.html investment analyst and fund manger
