The United States is Caught in a Debt Trap It Can't Get Out

in #leofinance8 months ago

It has been some time that I've worried about the pace of debt the U.S. government continues to create.

Recently I read an article that really broke down the diminishing returns that debt issuance has had as it ever increases.

Will Debt Break the U.S' Back?

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You can read the full article I am referencing here: https://www.mauldineconomics.com/frontlinethoughts/caught-in-a-debt-trap

Diminishing Returns of Debt

So in 1980 public and private debt was 167% of GDP and in 2019 it clocked in at 364%. Meanwhile government debt went from 32.6% of GDP in 1980 to 106.9% in 2019.

Can we say are gov't is print print print happy?

Apparently each dollar of debt created in 1980 produced 60 cents of GDP. In 2019 that number has dropped to 27 cents.

Clearly there is a trend here, and if that number keeps diminishing to we hit a point at which the issuance of debt has little to no impact on GPD growth?

I can tell you one thing, we are likely to find out as I don't see a politician on either side of the aisle that is looking to reduce debt for the country.

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Don't worry MMT is coming to save the day. Debt and Deficits do not matter if you control the printing press. /s

Today's economist really should take a history lesson and look throughout time why printing your way out of debt always ends in currency failure.

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As they used to say our debt your problem until it becomes our problem. Reset is inevitable.

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The traditional economics and countries financial systems might be falling in the next period contextual also to the pandemic. Printing money has hidden bad effects and once those will surface, the world will face its downfall. Some countries started to focus on cryptocurrencies and facilitate the use of them and if the supply is kept in place we might see for many years to come financial stability.

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