Skip to comments.Editorial: An Unwelcome Debt Milestone
Posted on 08/04/2011 6:58:48 PM PDT by Kaslin
Debt: Quietly, with the debt-ceiling imbroglio behind us, we've entered a new era. And, no, that's not a good thing. Our debt now exceeds the size of our entire economy. Our economy won't be the same.
With this correction, the markets have issued a stinging rebuke to those who believed that with the debt-ceiling impasse resolved we can return to business as usual. We can't.
Those who carefully watch what the government does are no doubt alarmed it took just one day to raise the debt an additional $238 billion or nearly 60% of that authorized by the debt-ceiling deal. Next week, we're expected to add yet $72 billion more.
With all this, we have passed a frightful milestone: Total debt of $14.58 trillion now exceeds gross domestic product, putting us on a near par with such overly indebted basket cases as Greece, Italy, Portugal, Ireland and Spain.
But that 100% of GDP is more than just a number.
As we've noted before, the most comprehensive study of government debt and what it does to an economy was published in 2010 by economists Carmen Reinhart and Ken Rogoff. They looked at 44 countries over 200 years, the most ambitious study of its kind ever.
What they found should be as alarming to average Americans as it is plain to those on Wall Street.
"Over the past two centuries," Reinhart and Rogoff wrote in "Growth in a Time of Debt," "debt in excess of 90% (of GDP) has typically been associated with mean growth of 1.7% vs. 3.7% when debt is low."
(Excerpt) Read more at investors.com ...
My lib friends are convinced that government spending is still the answer.
Milestone or millstone?
That National debt will be paid in only 50 light years
Your lib friends are morons and you can tell them I said so. ;-)
When he says the national debt is larger than the economy, I think he’s speaking of GDP. That’s sobering, but the real trauma hits when revenue (no matter what the tax rate, revenue hovers around 20% of GDP) can’t pay for the bureaucracy plus the interest on the debt. There has to be a plan to back off from this precipice, unless the powers that be have simply ceased to care about that.
I’m hoping they see the light soon. I was a lib once, too (20 years ago).
Hope and Change? How about Choke and Cringe?
Is that a typo? 50 tight years? 50 fright years? 50 fight years? Never mind, I'll be long dead before it's paid.