Yep, we're still digging. I know, all you here about is how the consumer is now saving and corporations are rapidly deleveraging. But the truth can once again be found in the Flow of Funds Report [1] released yesterday.

We see that Total Non-financial debt of the United States increased to a record $34.7 trillion in Q4 of 2009 from a previously reported $34.5 trillion in Q3. And that the rate of debt accrual is increasing at a 1.6% annual rate. Therefore, after years of digging our financial black hole with a gargantuan sized backhoe, we are now just using a really big shovel. It is true that the consumer and corporate sectors are shedding debt. But the state and local governments are piling on debt at a 4.7% annual rate and the Federal government is piling on the red ink at a 12.6% annual rate!

We are not saving at all yet as a nation. The sad truth is that we continue to add to our level of debt, albeit at a slower pace. Of course, every dollar of debt is a promise to tax that same dollar sometime in the future. So Public debt is no better than private debt. And therefore, our over-leveraged condition has not even begun to heal.