A Debt Inspired Milestone

US Public Debt to GDP ratio over 102 percent. In the early 1980s public debt grew at one point by 20 percent. We hit that point in the 2000s yet GDP did not come along.

from My Budget 360

What is the significance of having too much debt? Does it even matter? It seems that politicians understand something must be done but while the bickering occurs, the status quo remains. We recently surpassed a milestone when it comes to our debt. Total US Public Debt to GDP now stands at over 100 percent. That is, we have a larger public debt than what we produce per year as an entire nation. The last time this occurred was during World War II. Europe is dealing with massive debt as well and many countries within the union are in depressions like Spain and Greece. There now seems to be a marginal impact on the real economy with every increase in the public debt. There isn’t a fast rule of thumb as to what is the maximum level of debt but going over 100 percent of our GDP is not exactly a good starting point.

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