Global Debt

Zero Hedge points out that the biggest problem facing the world today is a massive debt-to-GDP ratio that is drowning the economies of most industrialized nations. In fact, 9 countries are in debt to the tune of over 300% of their GDP!

When we put that into household terms it might not seem too alarming. After all, it is common to buy a house and a mortgage that may be 3 times your annual income. The difference here is you typically pay DOWN your mortgage and then you own a substantial capital asset at the end.

Governments are not paying anything down. No principle payments are being made, and no real capital goods exist at the end of this tunnel. No, it is more akin to a credit card balance being the size of your mortgage and you are unable to make more than the minimum payment.

It is even worse than that. The credit card is not even maxxed out. Actually there is no limit. Every time we, in the US, bump up against our so-called debt limit, Congress hems and haws and eventually raises it. This renders the “limit” on spending useless. If there is a “government shut down” , it is only a dog-and-pony show. Spending doesn’t really decrease, and furloughed employees always end up with back pay as part of the deal to raise the debt ceiling again.

There is no will in Congress to rein in government spending. Not even close. And government spending is THE reason sovereign debt is so out of control.

Increasing taxation to keep up with debt payments is tremendously politically unpopular, and with good reason. We are taxed enough already. Besides, we could be taxed at 100% and it wouldn’t cover it. We need for government to figure out how to live within its means.  We need them to stop spending money on wasteful programs and giveaways that are unsustainable just so they can buy off a constituency and maintain their political positions. We also need for them to figure out how to stop taking so much money from productive citizens. The amount we pay in taxes is already un-American.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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