Regarding the “ratio of debt to GDP” and other data.
By Daniel at 7 January, 2009, 5:49 pm
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Real GDP hasn’t even been positive for 8 years (except for one quarter). Thus, the GDP number used to provide the ratio is bogus. It is much lower in reality. We have been consuming more than we produce and that makes GDP an illusion for all that is above what we produce.
We started borrowing $1 for each $1 growth in GDP as far back as 1968 and now, even using Government manipulated numbers, borrow $5 for each $1 of growth. This is the “Madoff” method of growth.
The Government Accounting Office had this to say in their report to Congress when David Walker was the Comptroller General.
quote:
the federal government’s current fiscal policy is unsustainable. Continuing on this imprudent and unsustainable path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our domestic tranquility and national security.
http://www.gao.gov/new.items/d07362sp.pdf
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That is the bad news but, there is only worse news. That report was issued before this crisis hit. That report was based on our entitlement crisis that we still face and that this crisis is likely to morph with in a couple of years.
The more unemployment rises, the less tax revenue coming in for social security and Medicare and Medicaid and unemployment insurance and other government spending.
Take a look at this chart on what interest on debt will look like in the coming decades.
http://www.stlouisfed.org/publications/re/2009/a/images/Fig2a.gif
That came from this article
http://www.stlouisfed.org/publications/re/2009/a/pages/debts.html
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