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Politics : Foreign Affairs Discussion Group

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To: Neocon who wrote (140762)	7/17/2004 4:12:14 PM
From: Dennis O'Bell	Read Replies (1) of 281500

The main point is that the growth in debt is only important in relationship to GDP growth, and if GDP growth is greater in the long run, there is no problem. "Past performance predicting future results" is one of the pernicious aspects of examining "rates of growth" and then feeling comfortable about things. One is always on less sure ground than in looking more conservatively at non extrapolated data, and here the increase in debt as a percentage of GDP has been enormous, to the point where we are at about double the national debt as percentage of GDP that we enjoyed during the Nixon, Ford, Carter years not so long ago. And something not taken into account above is daily inflow of foreign capital being parked in US dollars, because at the moment the dollar is still the most attractive and sure place to put capital. If this situation ever changes we in the US will be in serious trouble. But I have absolutely no idea of the time frame where such a change could take place, or I'd be making concrete plans right now. It's one of those subjective/belief things that is hard to quantify.

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