People saying America is broke are looking at future obligations. Doing this, the 12T figure presented by the Credit Suisse link is a joke. The obligations that become current will rise so fast that GDP and household wealth have no chance in catching up and alleviating them. Add in our current run rate, and it is the straw that broke the camels back.
"Government deficit spending and tax collection should be maintained at a rate that does not impose financial hardship on the private sector. Because the Federal government is not a state or household it should not manage its balance sheet for its own benefit. Rather, taxes and government spending should be managed in a way that most benefits the private sector and encourages private sector prosperity."
"The key takeaway here is that the government balance sheet is not like a household or a state. It does not finance spending via revenues or debt issuance. The US government, as a monopoly supplier of currency in a floating exchange rate system never really has nor doesn’t have money."
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People saying America is broke are looking at future obligations. Doing this, the 12T figure presented by the Credit Suisse link is a joke. The obligations that become current will rise so fast that GDP and household wealth have no chance in catching up and alleviating them. Add in our current run rate, and it is the straw that broke the camels back.
There is more to it than that -- read the article it links to about "Understanding the Modern Monetary System" (http://pragcap.com/resources/understanding-modern-monetary-s...).
"Government deficit spending and tax collection should be maintained at a rate that does not impose financial hardship on the private sector. Because the Federal government is not a state or household it should not manage its balance sheet for its own benefit. Rather, taxes and government spending should be managed in a way that most benefits the private sector and encourages private sector prosperity."
"The key takeaway here is that the government balance sheet is not like a household or a state. It does not finance spending via revenues or debt issuance. The US government, as a monopoly supplier of currency in a floating exchange rate system never really has nor doesn’t have money."
Yes, it is a, broke relative to what. If human costs are not taken into account, it is a much easier equation.