Originally Posted by 1fastdem
Hey, no fair. I've been waiting 1 week for your reasoning that the debt isn't as bad as I fear. Since before you hurt you arm. Oh, and how is that?
You are right. Wrist feels much better and I've been able to open some room on the cast (actually the doctor put another cast on.)
For you and the bullet.
Most of the alarmists will talk about how we are handing out debt off to our grandkids. Well, my grandparents shoveled a debt of 120% of GDP to me. We're sitting somewhere in the 60% range of GDP now. Debt hasn't eaten me alive.
We didn't go from 120% of GDP to 60% of GDP by paying down the debt we did it by expanding the economy. Even Clinton added to the national debt.
As Clinton says, it's the economy stupid. Take something that I'm sure everyone can relate to... mortgage debt and lets talk generations. Only skipping back one generation (my parents) their mortgage debt was in 1963 was 18,000 (20% down, conventional loan) and they traded up in 1975 to 70,000 (20% down, conventional loan). There three children have a combined 1,000,000 in mortgages (assuming here that both my brothers used 20% down conventionals which, they are smart, I'm sure they did). My parents house is now free.
So, our familiy, who in the mid 70s, had 70,000 in mortgages now have around 1,000,000 in mortgages between them. Does it matter? Or we scared? No. The family grew, the incomes grew, and mortgage debt is the exact same percentage of family GDP.
Families, across generations, do not pay off mortgages. Most families (smart families) has grown aggregate incomes, assets and debts.
Like your government.
Ok, back to the government.
Debt-To-GDP ratio is a much more important indicator than aggregate debt numbers.
I'd start freaking out at 80% Debt-To-GDP because it means the economy isn't expanding fast enough or we're in a period of contraction.
I'd start freaking out at 40% Debt-To-GDP because I think strong economic growth is stronger with federal spending. If it is too low I think we're slowing growth.
Sort of like big corporations. None will finance with 100% equity financing nor will they finance with 100% debt financing.