“On the one hand, debt as a pct of GDP is large but not excessive by either international standards or by historical standards.”
alarmclock, in your journeys down the rabbit hole have you come across shadowstats.com? Another user forum turned me onto it, and it is quite informative. Check out this article:
A little more than halfway down the page is a chart that shows US debt as calculated according to generally accepted accounting principles (which should be trusted more than the govt. propag… er, um, statistics) vs. GDP next to the rest of the world’s debt vs. the rest of world’s GDP. By international standards, we’re the most insolvent, negative net worth debtor in all of history. He also points out that if the govt. seized 100% of all salary and corporate income this year, according to GAAP we would still be operating at a deficit. Yikes!
Frankly, I see little difference between debasing the currency and defaulting. Inflation is a sneaky way to default, but it is defaulting in spirit none-the-less. So how soon? The government is already defaulting, and at an accelerating pace as they ramp up the bailout machine. China has already called for a new reserve currency in response to this slow default. The catastrophic “default” that you fear will be a massive flight from the dollar, which China could easily instigate. Maybe the floor will drop tomorrow, maybe many years from now. But I can not allay your fears because I too fear it could be very soon.
