PrintJanuary 1, 2010
2010 Will Be Worse
The year 2010 is likely to be the pivotal year where pundits stop referring to the recession and begin openly talking about a depression. Our economic problem is rather simple to describe: There is too much debt relative to income and/or wealth. Below is a single graph that depicts the condition of our economy. It shows total debt of the U.S. as a percentage of GDP from 1870 forward. The debt figure includes all private and public debt. It does not include liabilities associated with unfunded government mandates like Social Security and Medicare. (Note: according to the U.S. trustees of these funds, the present value of the liabilities is about $106 trillion. Including them would boost the ratio below to nearly 1,000%.)The amount of debt relative to GDP is staggering from a historical perspective. Several points are worth making about the graph:The long-term "norm" for the ratio appears to be around 150%. The red lines band the "norm" at 130% and...(Read Full Article)
