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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Sweet Ol who wrote (154709)	8/1/2011 3:41:22 PM
From: KyrosL	1 Recommendation Read Replies (1) \| Respond to of 206097

You have to look at the debt to GDP ratio, rather than the absolute debt number. If we keep increasing our debt at a real rate less than the real GDP increase, the debt to GDP ratio goes down, which means we are paying less for debt service and we are on a good course. For example, after WWII, the debt kept increasing but the debt to GDP ratio plummeted from more than 100% to around 30% at the time Reagan was elected president in 1980. I hasten to add that this deficit reduction package DOES NOT result in a decreasing debt to GDP ratio, especially if real GDP grows sluggishly. More spending cuts and/or tax increases are needed to reach that goal. Essentially we need to increase our debt at a rate less than the nominal increase of GDP, which is around 4-5%.