You should apply some actual math to your view there, Mets.
It took from Dec 31, 1979 until March 31, 2013 for the US GDP to double to $13.75 trillion in real GDP.
The national debt in 1979 was just a little over $2 trillion. Today it's a little over $16 trillion. So, in the time it took for the US GDP to double, the debt increased 8X.
No, this is unfeasible-
Mets wrote:If we double our debt but also double our GDP in the same time period, then we are basically in the same situation that we were before
The argument that we can "grow our way out of debt" is proven false, has been for a long time now. We know we can't grow our way out of debt.
But you do actually ask a question that can be answered-
Mets wrote:What the actual appropriate level of that ratio is, or whether it is wise to continue this policy in perpetuity, are matters on which reasonable people can disagree.
The threshold where the debt to GDP ratio becomes a drag on a society's economy is well documented and example after example is available throughout history to back up this line. It's around 110% or so, once that level is crossed, there is no coming back. At least no one has yet without a complete collapse of the currency and monetary system that has to be replaced.*
Any debt that one does not have the ability to pay back is bad debt. Pretty much period. If you can't pay it back nor have a reasonable plan on how to pay back a debt, then it's best not to take on that debt in the first place, no matter how you try to justify it.
It's a nice notion, to increase one's tax revenues by taking on debt, but that only works if the increased tax revenues are earmarked specifically to repay the debt. You know as well as anyone else, that doesn't happen. Any increased tax revenue is simply spent on other things.
The only one who truly benefits from this debt are those who issue the debt. They collect month after month of interest and so long as the one paying the debt keeps paying the minimum interest, then that debt will be paid for over and over and over again and the principle never paid off.
It doesn't matter if the principle is paid in that scenario. The lender collects his principle and more through the interest.
You think that if the GDP increases enough then we can manage our debt. You can look for yourself, historically no matter what the tax rates are, the US collects around 18-20% of the GDP. You can make the tax rate 90% and the revenues collected will still only amount to around 20% of GDP.
So to pay $16 trillion in debt, assuming that 100% of revenues go to paying the debt (which can't happen for many reasons, the most important being that in our current monetary system, to pay off the debt means there is zero currency left in circulation, and the interest would still be owed), do the math and tell me what our GDP would have to be. What's that, a GDP of around $80 trillion? And that's if we don't add another penny in debt!
When do you foresee our GDP that high, Mets?
Don't answer that, hell it could be that high tomorrow if we inflate like a bat out of hell. GDP $80 trillion, DOW at 150 trillion points, NASDAQ at 20 trillion and a loaf of bread at the bargain price of a mere $700 billion.
No, Mets, it's getting to the point where any debt is bad for the US.
I'm certainly not happy about some of the latest cost cutting measures being moved on now, something I'm surprised no one has mentioned anywhere in CC.
Did you know that the USG just slashed the budget for food stamps? I should probably go ahead and get the links to inform everyone, but meh, people can look it up themselves.
The deal is, currently some $78 billion is the budget for food stamps. Interesting to note is that 85% of food stamp recipients are children, old people and the disabled. Something to keep in mind for these next parts.
That $78 billion yearly budget is going to be slashed by as much as half. Now I'm all for cutting money, don't get me wrong, but taking the food from old people, children and the disabled is pretty craven. Especially considering that The Fed is pumping $85 billion
a month into the stock market.
Yeah, The Fed pumps in a single month into the stock market more than the entire yearly budget of the food stamp program, which helps mostly children, old people and the disabled.
This is what debt does, so, what's this about some debt being good, Mets? Taking on debt that can't be paid back, no matter what the reasons, causes harm and has no benefit. The US is at that point now. But as you noted correctly, there are solutions, except you have zero clue as to what those solutions are to be. I have a few ideas**.
*Japan has been limping along at the most insane levels of debt to GDP ratios ever. Some 225% or more! But Japan is dying as a nation, a society and a people. And this was happening before Fukashima. Japan for decades has been shrinking in population, their economy coughing death rattles. The future looks grim for Japan, and I have nothing but respect for the Japanese as a people. But they are in deep trouble and have been for a while now. But they somehow keep kicking along, this little bit of life left in them won't last forever, sad to say. I wish them the best of luck anyway.
**My ideas wouldn't float though, as my first concern would be sticking it to the lenders. Yeah, that's right, The Fed being the primary recipient of my debt cutting wrath. There is no reason why we should have to pay interest on money the Fed creates out of thin air on the credit that Uncle Sam so generously extended to The Fed in the first place. The problem is a debt based currency system. That, above all else has to be dealt with first. After that, the debt problems will be much easier to deal with.
But ending the debt based monetary system is not even on the table, and thus, there is no way out of this debt spiral that the ill effects will always strike first those who can least afford it.