|
|
March 2, 2012 · By Robert Romano · 1 Comments
The national debt to GDP ratio is now over 100 percent. It’s official now.
Well, almost. We’ll know more when the first quarter Gross Domestic Product (GDP) numbers are published by the Bureau of Economic Analysis on April 27.
But, based on a preliminary analysis of data on the GDP and national debt figures from the Bureau and the U.S. Treasury, barring greater than expected GDP growth in the first quarter, the national debt probably eclipsed the economy in sheer size, perhaps never to return, on or about Feb. 23, 2012.
Since the beginning of the year, the national debt has grown by $265.58 billion, or about $4.42 billion every day, to $15.488 trillion. That compares with an economy that is probably only growing by about $1.66 billion a day to a current level of about $15.420 trillion.
Therefore, the current debt to GDP ratio is already 100.4 percent — and climbing.
When Barack Obama took office it was a little over 74 percent when the debt was about $10.4 trillion. The reason the ratio has skyrocketed is because the debt has been growing much faster than the economy. While the economy grew at 1.8 percent in 2011, the debt grew by over 10 percent, an astounding figure.
In 2012, this process will continue, when the debt will grow at over 7 percent for the year, much faster than the economy, which is only expected to grow at 3 percent.
Meanwhile, some economists, calling themselves Modern Monetary Theorists, still maintain remarkably that debt really does not matter at all. That as long as the nation’s central bank prints more money to perpetually refinance the debt, all is well.
Except, the larger the debt becomes the more it is a drag on the economy. Economists Carmen Reinhart and Kenneth Rogoff have found that gross debt levels above 90 percent tend to have a draining effect on economic output — even with central bank intervention.
To be certain, as the national debt has climbed astronomically in the past three years, the economy has been sluggish at best.
Moreover, the sovereign debt crisis in Europe — brought on by too much government spending and an inability to refinance every larger sums of debt — has wrecked havoc on markets since 2010, harming growth.
No nation can long endure where, just to keep our heads above water, greater and greater portions of the national wealth must be dedicated to a useless paper trade — i.e. refinancing an ever-larger debt. The more money that is invested in government debt, the less money there is simply to invest in assets like equities.
The only way out of this vicious cycle is to reverse the relationship of debt and economic growth to one where the growth of debt is predicated on economic expansion, and not the other way around — because debt does matter.
Note: Reader comments are reviewed before publishing, and only salient comments that add to the topic will be published. Profanity is absolutely not allowed and will be summarily deleted. Spam, copied statements and other material not comprised of the reader’s own opinion will also be deleted.
In an ironic twist, during former IRS Commissioner Douglas Shulman's appearance before the House Government Oversight and Reform Committee, he recoiled when asked about his political activities in the past. Imagine the rudeness of a member of Congress asking a witness who is embroiled in a scandal involving the targeting of the Administration’s political enemies, about his own political allegiances.
In 2010 Rubio said we can't give amnesty to the people who violated our borders and broke our laws because it wouldn't be fair to those immigrants who have gone by the rules and done things lawfully. Rubio even went to the point of stating, "Earned path to citizenship is basically code for 'amnesty." Why does Rubio now disagree with himself?
In Great Britain, two Muslims hacked a British soldier to death just 200 yards from an army barracks. According to the Daily Mail, a video has emerged showing a man with bloody hands, carrying knives and ranting 'We swear by almighty Allah we will never stop fighting you', after a serving soldier was hacked to death by two men just 200 yards from an Army barracks.
Looks like I'm not alone in my distrust of "Republicans" to do the right thing. An elected Republican in the U.S. Senate says he doesn't trust "Republicans" any more than he trusts Democrats to do the right thing.
Newscenter1 held a Mayoral Debate between Incumbent Mayor Sam Kooiker and Challenger State Senator Mark Kirkeby on Tuesday, May 21st. The live, half hour debate was moderated by NewsCenter1's Shad Olson. The candidates had 60 seconds to answer questions, some from NewsCenter1's Social Media sites. Rapid City Mayoral Elections will be held June 4th 2013.
|
"We don't intend to turn the Republican Party over to the traitors in the battle just ended. We will have no more of those candidates who are pledged to the same goals as our opposition and who seek our support. Turning the party over to the so-called moderates wouldn't make any sense at all." - Ronald Reagan, Nov. 10, 1964 |
Pingback: Obama Sets Debt Record: $4,247,000,000,000 Trillion + $12,800,000,000,000 Trillion On Banker’s Gambling Bailout Alone ~ In Just 945 Days… | Political Vel Craft