By JLP | July 31, 2009
Take a look at this graphic I found in an article in today’s Wall Street Journal:
Of course things could change (and they probably will) but if this graphic is true, the U.S. is on track to have government debt equal to about 110% of GDP (it looks like it was around 63% in 2007 according to the chart). Things don’t look much better for the other nations in the graphic.
The concern with a huge debtload is that interest rates will rise, which could put a damper on any sort of recovery. But, before we come to that conclusion, we should read this post first. According to the author, he only finds a slightly negative correlation between deficits and interest rates. Interesting… Of course, the deficits of the past are NOTHING like the one we face in the future. We are in uncharted waters. That’s what’s so troubling about the above graphic.