- Sep 29, 2000
- 70,150
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As I see it, substantial US debt generally involves a deficit, meaning that each year further spending vs income vs additional borrowing (in part simply to cover interest payments) sees the total debt figure higher.
The simplest way to see how this debt is growing is based on debt vs GDP. Current government projections have debt at about 96% of GDP by 2010 (best case), and continuing to grow.
As debt grows, this is all I can think of that's a problem:
1) US jeopardizes AAA credit rating, which means borrowing costs more, so for the same amount borrowed, debt grows even quicker than before.
2) Less leeway in times of true need (like economic slow down or war), but really this just ties into 1).
Given that nobody really expects the US to default or its dollar to totally collapse (at least compared to other currencies), it appears to have the unique position of debt actually not having the same kind of meaning as smaller countries.
In clear, practical terms, what does it mean to the US to have a debt:GDP ratio of 80% vs 120?
The simplest way to see how this debt is growing is based on debt vs GDP. Current government projections have debt at about 96% of GDP by 2010 (best case), and continuing to grow.
As debt grows, this is all I can think of that's a problem:
1) US jeopardizes AAA credit rating, which means borrowing costs more, so for the same amount borrowed, debt grows even quicker than before.
2) Less leeway in times of true need (like economic slow down or war), but really this just ties into 1).
Given that nobody really expects the US to default or its dollar to totally collapse (at least compared to other currencies), it appears to have the unique position of debt actually not having the same kind of meaning as smaller countries.
In clear, practical terms, what does it mean to the US to have a debt:GDP ratio of 80% vs 120?