Barron’s takes the view that our ever increasing federal debt level is unsustainable and that drastic measures are needed. They favor huge spending cuts and sequestration. But that almost certainly would tank an already wobbly economy. So, eventually, they will monetize the debt by printing more money and letting inflation help them pay for it. However that could be a disastrous as sequestration. There are no easy answers here.
In his State of the Union speech last Tuesday, President Obama concluded that “the State of our Union is stronger.” The big question is: stronger than what?
Federal debt is a record $12.2 trillion, or 76% of the nation’s annual output of goods and services. While that’s still well below Greece’s 153%, we’re headed steadily in the wrong direction.
According to estimates by the Congressional Budget Office, adjusted by Barron’s to account for recent tax increases and other factors, if the U.S. doesn’t raise taxes further and cut spending dramatically, the national debt could easily reach 153% of economic output by 2035.
They are already looking at ways to reduce the world’s massive debt. This quote from
http://radicalglasgowblog.blogspot.co.uk/2013/02/spread-debt-across-people.html
The sage view is Europe has only two options, neither good: a huge
destruction of wealth, the like of which has not been seen for 70 years;
or spreading the burden of the debt workout across the people of
Europe, flattening growth for a decade, at least. Everybody knows Europe
needs growth to get out of its financial pickle. Yet EU action to date
shows the priority is to improve the bureaucratic structure that got it
into this mess – an unworkable monetary system – not action to restore
growth.
Though the above quote refers to Europe, the same formula is in operation across the globe, spread the debt across the people save a big mark down for the financial mafia.
Out of curiosity, who does the world owe that debt to?
China is the biggest holder of US debt and our banks hold a substantial amount too.
The world’s debt is $51+trillion and rising at more than $200,000 a second, that seems a little bit beyond the sustainable to my simple mind. and to who does the world owe $51+ trillion, and why?
ann arky: http://www.radicalglasgow.me.uk