Calculating total government debt

Discussion in 'Politics, Religion, Social Issues' started by mkrishnan, Jan 3, 2012.

  1. mkrishnan Moderator emeritus

    mkrishnan

    Joined:
    Jan 9, 2004
    Location:
    Grand Rapids, MI, USA
    #1
    Bruce Bartlett has an interesting blog post at NYT today about how the US debt would look if accrual accounting were used, and what the potential impact of debt servicing on the budget may be over the next 50-100 years.

    http://economix.blogs.nytimes.com/2012/01/03/the-true-federal-debt/?hp

    [​IMG]

    The question of what would happen if the US government stopped incurring debt (e.g. if there were a real balanced budget amendment or something like it, and the T-bill market disappeared, etc.) has come up before. This is an interesting take on how to manage our ability to handle long-term debt and the interest payments it requires.

    (As an aside and counterpoint, it's interesting how the Pentagon budget is discussed -- which seems to me something like saying that I have cut my personal budget by $50,000 because I stopped buying coffee and am now projecting that out as an actual captured savings over the rest of my life...possibly true, but somewhat misleading.)
     
  2. Iscariot macrumors 68030

    Iscariot

    Joined:
    Aug 16, 2007
    Location:
    Toronteazy
    #2
    I got up early this morning and made coffee at home for once.

    Now I'm going to go buy a Jag!

    Thanks, mkrishnan!
     
  3. mkrishnan thread starter Moderator emeritus

    mkrishnan

    Joined:
    Jan 9, 2004
    Location:
    Grand Rapids, MI, USA
    #3
    Last I remember, you were consuming less than one earth's worth. :) The Jaguar is rather going to ruin it for you!
     
  4. miniConvert macrumors 68040

    miniConvert

    Joined:
    Mar 4, 2006
    Location:
    Kent, UK - the 'Garden of England'.
    #4
    I'm not sure where all this is going to be honest. The money supply has become increasingly dependent on government debt. Money doesn't exist until somebody borrows it, and in order to repay that debt plus the interest somebody else has to borrow some more.

    It's a flawed system as it is, and with governments in on the act it's only going to amplify the problem.

    I'm assuming governments are, collectively, now the world's biggest borrowers. I reckon that makes us all pretty screwed. I reckon it's too late to stop borrowing now.

    If only they'd stick to collecting and redistributing taxes in peacetime.
     
  5. mkrishnan thread starter Moderator emeritus

    mkrishnan

    Joined:
    Jan 9, 2004
    Location:
    Grand Rapids, MI, USA
    #5
    I think they are (and probably have been for a long time, although in some countries like the US, there is also a staggering amount of personal debt).

    I get a headache trying to understand debt theory as it applies to governments from the ground up. But it seems to me that it is at least conceptually possible to be perpetually in well managed debt, as long as the amount of money going to debt servicing is stable. This is basically an expansion of the situation where I pay my credit card off every month (inclusive of this kind of debt, I've never been debt free, although I also never pay any interest on it), or perhaps if I buy a new car, captive-financed, every four years or whatever (and so I'm always in debt for my car but my debt is stable over longer time scales and never becomes catastrophic). From that standpoint, I think that a "balanced" budget is the wrong idea and instead there should be "sustainable debt," although to this article's point, that requires a long view no politician likes to take.

    Neocons instead tend to argue for a balanced budget mechanism, but this has complex potential long-term consequences. Paleocons tend to argue for a mechanism that prevents the arbitrary printing of money, like a gold standard. Liberals seem to insist that this is a non-problem and that Keynesian pump-priming will cause a large enough improvement in the economy that the government will be flush with revenues to beat down the debt (to their credit, this almost happened during Clinton's reign and the internet bubble, but this sentence is difficult to say without the word "bubble" being in it).

    I wonder if it's possible to not stop borrowing, but sort of "right size" the debt so that the long-term likelihood of inability to service the debt or compromise of other services in favor of debt servicing is highly unlikely even with a wide range of predicted economic scenarios.
     
  6. Iscariot macrumors 68030

    Iscariot

    Joined:
    Aug 16, 2007
    Location:
    Toronteazy
    #6
    Not a problem! It's 10km round trip to work, so that's about 8 000 kilo joules of energy. I just bought an energy efficient kettle that'll save 10 000 kilo joules over 50 years, so I come out ahead!
     

Share This Page