U.S. Debt to Surpass GDP

.....going....down?

On this one - you have two bills that agree.

Interest rates MUST increase.

The above puts the
Federal reserve - between a rock and a hard place.

If we don't do this we join Greece, Spain and Hungary and if we do raise rates - we stagnate a stagnant economy.

The double dip is overblown.

I leave all to their own assumptions.

"For the first time in history, U.S. government debt -- now $13 trillion -- will surpass GDP in 2012."

This is not exactly new territory, except by definition.
In 1945 the Gross NATIONAL Product of the United States was $211.9 billion while the Gross Federal Debt was $260.1 billion. At the end of 1946 GNP was $208.5 billion while the Fed Debt stood at $271 billion. In 1947 GNP was $231.3 billion while the debt was $257.1 billion. Only in 1948 did GNP once again exceed the Gross Federal Debt.

The important difference between The 1940s and today? While the Gross Federal Debt was increasing from 1930 until 1946, the total private debt was decreasing. At the end of 1929 the net private debt in the United States was $161.8 billion. By 1938 it was only $123.3 billion. The private debt did not exceed the 1929 level until 1947.

After WWII the private sector's improved balance sheet allowed it to purchase goods and services to the extent that the US economy could transition from a war economy to a peace economy without a major recession or depression. As the Fed Debt declined the private sector picked up the slack and kept the economy growing.

That situation doesn't exist today. As a nation the public and private sectors are both deeply mired in debt. There is no one left with the wherewithal to borrow our way to prosperity and, short of a major turnaround in our export-import situation, there is no other way to achieve prosperity. Unfortunately the problem isn't simply the debt of the Federal Government: It's the total debt of public and private sectors.

http://sites.google.com/site/jpetervanschaik

I tell my children...."it isn't what you make, it is how much you spend". We need the government to make spending cuts....just like private business does and households during tough times.

Since politicians are elected based upon promises to spend more....and since those who want more spending are financially irresponsible and continue to elect or re-elect politicians who share their similar philosophies.....the potential for less government spending is almost non existant. So the question remains.... if spending continues to outpace revenues and there is no political will to reduce spending ..... how does this all end up ?

Just look at Hawaii as the perfect example. Or... for that matter, look at any democrat controled state... see a trend yet?

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