You hear many stories about how high the national debt is.
However, it’s not in the numbers, inasmuch as it’s in the rate the numbers are increasing.
For example, in the year 2000:
America’s national debt stood at $ 5.7 trillion, while the annual GDP was $10.7 trillion. Now, 14 years later, with the U.S. GDP standing at $16.2 trillion, the gross national debt exceeds $17.5 trillion.
You don’t need a degree to discover that the national debt is increasing at a faster rate than the economy.
But how much faster?
Between 2000 and 2014 America’s GDP grew, in nominal terms, by 51 percent. In that same period, the national debt increased by more than 200 percent. In other words, during the past decade and a half, the U.S. national debt has grown at four times the rate of its national economy.
That rate is simply unsustainable, and if it continued, would mean that at some point in the near future, the national debt would outweigh US GDP.
Don’t think it could happen?
Japan’s debt is 200% of its GDP. It’s matched only by Zimbabwe, as some of the highest debt-to-GDP in the world.
The Japanese economy, despite being the world’s largest, has been in a slump for over a decade, and with an aging population, it doesn’t seem like this outlook will improve any time soon.
Zimbabwe’s economy has collapsed, with inflation higher than almost any country in world history. Greece follows with a national debt 161% of its GDP, with 1 in 4 Greeks unemployed.
This is not a sustainable path for any countries, and, as seen above, can happen to any country. The US currently stands at 70% debt to GDP. How soon until the US hits 100?