Tag Archive: Debt-to-GDP ratio


They Screwed Up The Shutdown, But Republicans Are Right To Insist That Any Increased Borrowing Today Should Require Spending less In The Future

 

 

 

 

 

” Can anyone other than doctrinaire Democrats and members of his immediate family keep a straight face when President Barack Obama insists that he is “prepared to negotiate on anything” while simultaneously saying that “until we make sure that Congress allows Treasury to pay for things that Congress itself already authorized, we are not going to engage in a series of negotiations”?

Reining in the national debt is not an accounting fetish, especially when we’re talking about being in the hole to the tune of 100 percent of GDP when it comes both to debt held by the public and intra-governmental IOUs. Sustained and massive levels of debt foist obligations on future generations via future taxes and inflated currency; they also correlate with slower average economic growth. Indeed, even critics of the influential “debt overhang” thesis propounded by Carmen Reinhart, Kenneth Rogoff, and Vincent Reinhart grant that “the average real GDP growth rate for countries carrying a public-debt-to-GDP ratio of over 90 percent is…2.2 percent,” an amount actually below what Reinhart, Rogoff, and Reinhart found in a 2012 paper detailing debt’s correlation with reduced growth. Debt has a habit of spiraling out of control and thus “fragilizing systems,” as Nassim Taleb puts it. When an increasing amount of your income is going to pay down loans taken out by your dead grandparents for stuff that was gone before you were born, you’ve got less cash for your own future.

 

 

 

 

 

 

 

 

 

Coming Economic Collapse

 

National Debt As A Percentage Of GDP

 

” The largest mountain of debt in the history of the world just continues to grow even larger, and everyone knows that this colossal debt spiral is not going to end well.  But we all keep playing along because nobody wants the party to end.  Right now, there is an unprecedented ocean of red ink covering the planet.  Globally, governments have never been in so much debt, corporations have never been in so much debt and consumers have never been in so much debt.  But every time someone suggests that this is a problem and that we should at least try to get debt levels to settle down a bit, people start screaming that “austerity” will hurt the global economy.  And of course it will.  But we can’t continue to live way, way above our means indefinitely.  Well, we can try, but at some point this entire house of cards is going to come crashing down and we are going to be facing the greatest economic crisis the world has ever seen.

As the Telegraph recently noted, even the Bank for International Settlements is warning that debt levels are way too high.  According to the BIS, total public and private debt levels are now 30 percent higher than they were in 2008…

“This looks like to me like 2007 all over again, but even worse,” said William White, the BIS’s former chief economist, famous for flagging the wild behavior in the debt markets before the global storm hit in 2008.

“All the previous imbalances are still there. Total public and private debt levels are 30pc higher as a share of GDP in the advanced economies than they were then, and we have added a whole new problem with bubbles in emerging markets that are ending in a boom-bust cycle,” said Mr White, now chairman of the OECD’s Economic Development and Review Committee.

 

The biggest mountain of debt of all can be found in the United States.

30 years ago, the national debt was a little bit above a trillion dollars.

Today, it is rapidly approaching 17 trillion dollars.

At this point, the U.S. already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.  And since Barack Obama entered the White House, the debt to GDP level has soared to unprecedented heights…”