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I am growing concerned that expressing debt as a ratio with GDP is a misleading attempt to downplay the seriousness of the debt. GDP includes a lot of cash flows that are not taxable, so it doesn’t really represent “ ability to pay” relative to the debt.
Comparing the debt to something more relevant such as tax revenue or personal taxable income or even total personal plus business taxable income is almost never done. Instead the comparison is always to GDP. I am beginning to suspect that this is a deliberate attempt to allow for a cover-up of the seriousness of the deep hole we are in by allowing the government to strategically define GDP in a way that is disconnected from money that can actually be used for interest and principal payments on the debt.
It is often argued that the risk of debt is low or zero due to the sovereignty of the currency, but that seems to me it is just a polite way of saying that the government can pay the debt by confiscating your cash and bank deposits via inflation.
So what gives? I can’t convince myself that the national debt is not reaching crisis levels because the two most common arguments -comparison to GDP and the sovereignty of the currency - both seem like an attempt to ignore the problem or sweep it under the carpet.
I think it's an attempt to not refocus the discussion on higher taxes on the wealthy and corporations. That's just me.
That would literally destroy the economy if you weren't careful about it. If you closed a few loopholes maybe, if you raised taxes a few percent, of course you could do that just fine. But if you started to enact draconian tax measures, you'd crush the economy and only grow the deficit. Anyone who understands economics understands that.
That would literally destroy the economy if you weren't careful about it. If you closed a few loopholes maybe, if you raised taxes a few percent, of course you could do that just fine. But if you started to enact draconian tax measures, you'd crush the economy and only grow the deficit. Anyone who understands economics understands that.
Well, if you look at the distribution of wealth in the US (where it's approaching 90%+ for the top 10%), anyone with common sense will see that as a non-issue given all the corporate welfare they've received for 2 decades now. Of course their agenda is to not even shine any light on tax increases, small or large. It's a deflection game.
Sure the US has been running BS Economy since about 1980.
In short, Reaganomics / Hayek / Neo-Liberal Economics is a FAIL.
They just keep piling the on-going Fail onto the kids' credit card. The National Debt.
One thing that could help is to set the Federal Debt Interest rate to Zero. Congress is wasting over $400 Billion on the Interest, alone. Projected to pass the Military at over $750 Billion by 2025.
I am growing concerned that expressing debt as a ratio with GDP is a misleading attempt to downplay the seriousness of the debt. GDP includes a lot of cash flows that are not taxable, so it doesn’t really represent “ ability to pay” relative to the debt.
Comparing the debt to something more relevant such as tax revenue or personal taxable income or even total personal plus business taxable income is almost never done. Instead the comparison is always to GDP. I am beginning to suspect that this is a deliberate attempt to allow for a cover-up of the seriousness of the deep hole we are in by allowing the government to strategically define GDP in a way that is disconnected from money that can actually be used for interest and principal payments on the debt.
It is often argued that the risk of debt is low or zero due to the sovereignty of the currency, but that seems to me it is just a polite way of saying that the government can pay the debt by confiscating your cash and bank deposits via inflation.
So what gives? I can’t convince myself that the national debt is not reaching crisis levels because the two most common arguments -comparison to GDP and the sovereignty of the currency - both seem like an attempt to ignore the problem or sweep it under the carpet.
What am I missing?
That’s because you only focus on the debts of the country. What are U.S assets worth? What are the Great Lakes worth? The national parks? What is the Ogallala aquifer worth? Additionally, those treasuries are due over many years and so it makes little sense to look purely at one year of gdp or *insert your method here” and compare that to total debt that’s due over many many years of you receiving that gdp or insert your method here.
Is the U.S insolvent? In other words, liabilities exceed assets? Nope. Not a chance.
You also assume that national debts will actually ever be paid. The USD is king. 66% of reserves. The most powerful brand on earth with zero legitimate contenders to the throne. Our greatest allies in Europe and Japan hold the majority of the other reserve balances, and they are in the same debt positions or worse and we all move in proportion.
Would I look at my after tax salary, after fixed expenses, ect and take that income and compare it to my total debt burden that comes due across varying years? No, because it doesn’t make any sense.
My debt to my money actually available to service that debt would be enormously high if you took 1 year of income and compared it to my total debt package. Am I actually in that kind of scenario or trouble? No.
Perhaps you could consider looking at current debt (due in less than a year) compared to 1 year of income to actually access ability to continue to service debt.
Last edited by Thatsright19; 04-24-2020 at 12:10 PM..
Sure the US has been running BS Economy since about 1980.
In short, Reaganomics / Hayek / Neo-Liberal Economics is a FAIL.
They just keep piling the on-going Fail onto the kids' credit card. The National Debt.
One thing that could help is to set the Federal Debt Interest rate to Zero. Congress is wasting over $400 Billion on the Interest, alone. Projected to pass the Military at over $750 Billion by 2025.
Why 1980? The debt was far higher after Ww2, you just don’t understand national debt since you naively compare it to a credit card.
Both Republicans and Democrats have failed miserably. They are only looking toward the next election. The debt was manageable until the rounds of tax cuts, bailouts and stimulus in the last 20 years.
Everyone get roiled up about illegal immigration and it isn't even in the top 3 problems facing this country. Our biggest problems are government overspending, exploding healthcare cost, and falling education standard.
I received $3,900 stimulus money but not happy about it. Why give money to people who are still working? Many of my cousins are receiving more unemployment money than their previous salaries. I think unemployment payments should be capped at 80% of previous salary. No, I am not giving back the money because I will have to pay this back later in various ways.
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