
The most disturbing sentence uttered
during the debt ceiling debate/government shut down, that should raise
some concerns by both political parties, is:
"We must increase our debt limit so that we can pay our bills."
Think about that for a moment. The
U.S. has become the single largest debtor nation on the planet as
welfare dependency rises, government spending continues to increase and
economic growth slows. However, what is ironic about this situation, is
that it is the continuing increases in debt which is directly
responsible for the decreases in economic growth. The chart below shows
government debt as a percentage of GDP as compared to annualized rate
of change in economic growth.
Since the beginning of 2009 very little
of the increases in government debt, which was used to fill the gap
created by excess expenditures, returned very little in terms of
economic growth. In fact, as of the second quarter of 2013, it required
$5.61 of debt to create just $1 of economic growth.
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