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Is The National Debt Really Too Big?

Thursday, February 28, 2013 - 7:13 PM
From Yahoo! Finance:
Nobody is arguing that the national debt isn’t big. Sixteen-plus trillion dollars is a lot of money – roughly 102 percent of GDP. But does that mean it’s too big? If we only compare the size of today’s debt with what was owed in the past, $16 trillion seems like a lot. But is that the right way to determine if we should bring the government, and perhaps the country, to a halt by imposing sequestration? I don’t think so.

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I thought this comment in the article explains the problem with not worrying about the debt:
The reason the interest expense is so small is because of record low interest rates. If the Fed ever needs to have contractionary monetary policy, interest expenses will explode. We have not been able to replicate those 1990s growth rates, and it doesn't look like we will anytime soon.

Let's hope we don't see a sharp and sustained rise in inflation that would force the Fed to decide to either control inflation or prevent the economy from crashing.
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Ken TuminKen Tumin5,441 posts since
Nov 29, 2009
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