Laurie Anderson on the National Debt

September 25th, 2008 link to (permalink)

Plus Ca Change… professional New Yorker and androgynous person from the future, Laurie Anderson, talks about the problem of the national debt. Only this was nearly 20 years ago.

You would think that the problem of debt would be bigger now that: Asia is lending us money to pay the interest on the money it lent us to buy their mouse pads and umbrellas; capital markets have curled up into a nasty little tight spit-ball and the securities industry has shat the proverbial bed.

But as a percentage of GDP the numbers are far less scary according to the second graph here. So what’s the deal? Why aren’t the numbers worse, if the story is?

tags: business

2 responses so far »

Ben : Sep 28, 2008 at 11:21 am

Part of the concern today is who finances our debt, the other part is the sheer numbers involved and the long-term total liabilities of the US. Percentage of GDP is not a clear indicator of the problem - other countries have managed with higher ratios (Japan was close to twice GDP).

The big problem is that our major lenders now include Russia, China, Saudi Arabia and other Gulf States making the possibility of a politically driven forced default much more worrying than it was during the 80’s when the lenders were primarily Europe and Japan.

The second critical issue is that though the current outstanding debt is only at around 9 Trillion, it is rising and forecast to rise much higher (total promises to pay may be on the order of 50 Trillion). If the US reneges Medicare, Medicaid and most importantly Social Security, the overall problem may be much more manageable.
admin : Sep 30, 2008 at 2:41 pm

Surely when you are a reserve currency, you can avoid a forced default by printing money, although admittedly at the risk of continuing to be so?

Anyway, thanks for the answer - makes sense.