Monday, January 11, 2010

Soaring Debt a Problem

In the "golly you think so?" department comes a study by some academics that shows the historical pattern of countries that have soaring debt not to be so good.  As our local rag, the Tennessean (AKA "Pravda on the Cumberland") notes in an article titled "Soaring U.S. Debt Could Limit Growth, History Suggests," a recent study of 200 years of economic data shows that "When a nation's debt exceeds 60 percent of its GDP, its growth rate slows precipitously, the study found. When that ratio exceeds 90 percent, nations' economies barely grow and can even contract."

Considering our ratio is at 84% and we are "racing towards 90%," that shouldn't be a problem right? Seems like a good time to pile on some more debt with more bailouts and yummy social programs.

I am not saying that it is inevitable for history to repeat itself, but any student of Econ 100 knows that it is the producers who fund the government.  At some point, they either a) stop producing or b) move.  It is time for this madness to end.

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