Quote:
Originally Posted By: tanstaafl.
$12 x 10^12 indebtedness for a start. ... How will the government pay that off?

What makes you think that they have to? Yeah, the public debt is high right now, but as a percentage of GDP, it's less than it was when Eisenhower took office, and it was high then because of a financial recession and a war, too.

The public debt as an absolute number has seldom gone down in recent history. But the absolute number isn't that big a deal. The debt as expressed as a percentage of GDP is much more revealing.

And, actually, paying off the debt results in deflation, not inflation, due to removal of money from the economy. Either one can be bad, of course, but neither is as a matter of course.

Don't get me wrong, our economy isn't in a good state; but the sky isn't falling, either.


Bitt, I was going to let this go, but in light of recent events I have to keep beating this horse.

For more than three years (look at the 5th paragraph) I have felt like Cassandra, preaching to a world that didn't want to listen. I don't know if I am really, really smart (unlikely) or whether I am in the classical position of "...a little knowledge is a dangerous thing" and simply don't grasp the large picture, but to me this economic collapse has been so obvious and unavoidable in its avalanche-like onrush that (to my eyes, at least) it might as well have been written on the walls in bright neon letters. How could anybody not have seen this coming?

I saw it clearly enough that I have moved my assets out of the country and made arrangements to retire to a small, safe agricultural community that might (only might) escape the worst of the coming bad times.

As for not worrying about debt because it is a small percentage of GDP (70% is a small percentage?!) that is a non-sequiter as far as I can see. What does it matter that Ford Motor Company (as an example) had gross revenues well in excess of $100 billion in the first three quarters of this year when they ran at a net loss of nearly $9 billion in just the second quarter alone? If GDP were "NDP" the comparison might be meaningful. But when you lose a little bit ($9B) on every transaction, it's hard to make up for it with volume.

Only the first two dominoes have fallen. There are more (and much larger ones) to follow.

tanstaafl.


Edited by tanstaafl. (07/10/2008 15:48)
Edit Reason: Add paragraph about GDP
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