Wednesday, November 10, 2010
Government Debt: In The Red
Governments have been indebted for centuries, running ongoing Ponzi schemes involving tax-payers, investors and future generations. But data sets on debt levels over time are rare (the most comprehensive ones only begin in the 1970s). A new paper from the IMF seeks to resolve this. Data gathered from a number of different sources allow the fund to give a historical perspective on today's mounting debt. The maps in this article compare debt levels in 1932 and 2009. Most countries have become more indebted in the intervening years. In 1932 US debt amounted to 33% of GDP, compared with 84% in 2009. What has been the cause of this?
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2 comments:
um...that we aren't good at saving. in the united states, we dont really have a saving culture- when we buy a house we take out a mortgage to pay back later, when we get old we expect social security to pay for us- but this has allowed us to be the worlds largest consumers, not necessarily a bad thing.
But check out the map...debt has increased everywhere, not just in the United States. The problem is deeper than a low savings rate. The culprit seems to be fiat money - money that has no intrinsic value and that is not "worth" anything. When central banks increase the money supply by printing more money (to pay debtors), inflation and deficits are generated.
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