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According to this site (http://zfacts.com/p/318.html http://zfacts.com/p/318.html) our Debt is 70% of our GDP, not 320%. Not that it matters because the two are

by viggity 18y ago

According to this site (http://zfacts.com/p/318.html http://zfacts.com/p/318.html) our Debt is 70% of our GDP, not 320%. Not that it matters because the two aren't well suited to compare. Debt is found on a balance sheet. GDP is found on a cash flow statement. A much more appropriate comparison would be debt to the value of the entire nation's assets. According to this site (http://pajamasmedia.com/blog/how_bad_is_the_national_debt_r/ http://pajamasmedia.com/blog/how_bad_is_the_national_debt_r/), the per capita debt is $162k but our per capita WEALTH is $300k. We're going to be fine.

startingup 18y ago
Total US debt (public, private & consumer) is 320% of GDP. Government alone is about 70% of GDP. Consumer debt is pushing 90-100% of GDP, historic high. Rest is private sector. The 320% is a never-before-in-history number, even bigger than the great depression. Income is what is used to service debt. Conventional mortgage rules limit you to 3x mortgage debt to annual income. So debt to GDP ratio is entirely appropriate. The wealth figure you quote itself is bloated by debt - think of how houses increased in value due to all those easy loans they were handing out. Debt is a mathematical fact, unless discharged in some kind of bankruptcy, while the "wealth" is an accounting opinion, and valuations change. So as the debt comes due, more of it gets impaired, which means people who owned that debt have to write their assets down, which causes asset values to fall everywhere, ... classic debt-deflation. We are witnessing it right now. The only meaningful end is when debt gets vastly reduced. By then asset valuations would be a lot lower too.
akkartik 18y ago
Wow, debt of 50+% assets is 'fine'?! Grab the nearest person who lived in the 50s, and ask them what they think of it. That we've grown accustomed to this sort of debt is the cause of all this mess.
- HeyLaughingBoy 18y ago
  Even if you owned nothing else, and had no other debt then a standard 80/20 mortgage has been considered a good deal all around for decades and still is. That's 80% debt to 20% asset at the time you assume the mortgage. Yeah, I'd say a 50:50 debt/asset is OK. The bigger concern is cash flow as shown by Debt to Income ratio because it speaks directly to your ability to service that debt.
jmtame 18y ago
It's now estimated at 90% of GDP http://en.wikipedia.org/wiki/United_States_public_debt http://en.wikipedia.org/wiki/United_States_public_debt I'm extremely concerned not just by the responses on this forum, but also because the person who wrote this article has a legitimate concern. He's worried about how much we've grown to love debt as a nation, and I for one agree.
gills 18y ago
What matters is the ratio between GDP and the cost to service the debt. There comes a point (above about 35%, I think) where government services will have to be cut to continue servicing the debt. edit: excuse me, 35% of gov budget. Just like a household.

by viggity 18y ago

startingup 18y ago

Total US debt (public, private & consumer) is 320% of GDP. Government alone is about 70% of GDP. Consumer debt is pushing 90-100% of GDP, historic high. Rest is private sector. The 320% is a never-before-in-history number, even bigger than the great depression. Income is what is used to service debt. Conventional mortgage rules limit you to 3x mortgage debt to annual income. So debt to GDP ratio is entirely appropriate. The wealth figure you quote itself is bloated by debt - think of how houses increased in value due to all those easy loans they were handing out. Debt is a mathematical fact, unless discharged in some kind of bankruptcy, while the "wealth" is an accounting opinion, and valuations change. So as the debt comes due, more of it gets impaired, which means people who owned that debt have to write their assets down, which causes asset values to fall everywhere, ... classic debt-deflation. We are witnessing it right now. The only meaningful end is when debt gets vastly reduced. By then asset valuations would be a lot lower too.

akkartik 18y ago

Wow, debt of 50+% assets is 'fine'?! Grab the nearest person who lived in the 50s, and ask them what they think of it. That we've grown accustomed to this sort of debt is the cause of all this mess.

HeyLaughingBoy 18y ago
Even if you owned nothing else, and had no other debt then a standard 80/20 mortgage has been considered a good deal all around for decades and still is. That's 80% debt to 20% asset at the time you assume the mortgage. Yeah, I'd say a 50:50 debt/asset is OK. The bigger concern is cash flow as shown by Debt to Income ratio because it speaks directly to your ability to service that debt.

jmtame 18y ago

It's now estimated at 90% of GDP http://en.wikipedia.org/wiki/United_States_public_debt http://en.wikipedia.org/wiki/United_States_public_debt I'm extremely concerned not just by the responses on this forum, but also because the person who wrote this article has a legitimate concern. He's worried about how much we've grown to love debt as a nation, and I for one agree.

gills 18y ago

What matters is the ratio between GDP and the cost to service the debt. There comes a point (above about 35%, I think) where government services will have to be cut to continue servicing the debt. edit: excuse me, 35% of gov budget. Just like a household.