Visualizing the Snowball of Government Debt

[NeoGreen]

https://www.visualcapitalist.com/visualizing-the-snowball-of-government-debt/

Visualizing the Snowball of Government Debt
Jeff Desjardins, January 7, 2019

Over the last five years, markets have pushed concerns about debt under the rug.

While economic growth and record-low interest rates have made it easy to service existing government debt, it’s also created a situation where government debt has grown in to over $63 trillion in absolute terms.

The global economic tide can change fast, and in the event of a recession or rapidly rising interest rates, debt levels could come back into the spotlight very quickly.

(snip)

Japan and Greece are the most indebted countries in the world, with debt-to-GDP ratios of 237.6% and 181.8% respectively. Meanwhile, the United States sits in the #8 spot with a 105.2% ratio, and recent Treasury estimates putting the national debt at $22 trillion.

[dhol82]

1. Interesting, but what does it really mean for the future?

Not being snarky. I just don’t see what it would presage except a world wide depression that might never end.
Or else Hong Kong ends up with all the marbles.

[NeoGreen]

2. My bets would be on...

...Russia and Saudi Arabia would take all the marbles.

[dhol82]

3. Well, we still have more bombs.

[NeoGreen]

4. I presume you are speaking of our nuclear arsenal...

...if so, I would suggest that those are just defensive weapons. MAD, as supported by our triad, is a defensive posture.

In the event of a financial meltdown, they would (should) play no role.

However, to win in such an economic scenario, all Russia would have to do is not reciprocate on their 1998 bailout.
https://en.wikipedia.org/wiki/1998_Russian_financial_crisis

But I'm sure they would, with certain strings (steel cables?) attached.

Like China, Putin plays a long game.

[dhol82]

5. Yes

I have no confidence that if we go into a Lord Of The Flies scénario some yahoo in government won’t decide to go for the gold.

[Farmer-Rick]

6. I'm not so sure this debt is the buggy man it's made out to be.

Politicians are convinced raising taxes on the top 7% is bad, cause they get most of their donations from them. So, they borrow from those exact same 7%. The 7% now pay less taxes and get interest by letting the government borrow from them.

All that has to be done is increase taxes on that 7%. With rising taxes, pay off the debt gradually. Several Democratic Presidents were able to reduce the debt to near zero. But, if you can hamstring spending by the government, you can prevent any social improvement, regulation and enforcement. It's called austerity and it only benefits the richest 7%.

I think this be afraid of government debt is just another con from the uber rich.

[sandensea]

7. +1

Plus, Republicans said it best: Deficits don't matter - well, when they're in the saddle anyway.

But it's become largely true because the major countries/areas (US, China, EU, UK, Japan) have Feds/central banks that can buy most of the annual bonds emitted, without depending on the fickle bond markets.

That said third world countries have an added problem: growing foreign debt - which can usually only be serviced in dollars.

The larger said foreign debt grows, the harder it is for them to generate the needed foreign exchange to service it.

Goldman Sachs and Citibank don't take pula, ngultrums, or pesos.