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Paying back the debt taken on to be able to do #1 when organic growth is self-sustaining again. This happens automatically when growth is strong. Even if the n
by lkrubner 9y ago
Paying back the debt taken on to be able to do #1 when organic growth is self-sustaining again.
This happens automatically when growth is strong. Even if the nominal debt keeps growing, it shrinks as a percentage of the GDP, so long as the growth of the GDP is faster than that the growth of the nominal debt. So for instance, in the USA, between 1945 to 1980, the national debt shrank from 98% of GDP to 33% of GDP. The USA ran budget deficits in many of those years, but it didn't matter, because the nominal growth of the GDP was much faster that the growth of the debt.
- BjoernKW 9y agoIt doesn't happen automatically if the government in question acts irresponsibly, which more often than not unfortunately is the case and also the reason why structures like the Euro convergence criteria are in place to keep governments in check (which in recent years often hasn't exactly worked out).
- Consultant32452 9y agohttp://www.macrotrends.net/1381/debt-to-gdp-ratio-historical-chart http://www.macrotrends.net/1381/debt-to-gdp-ratio-historical... The last 37 years aren't looking so hot. :(