While Washington is buried in bungled health care reform and Wall Street is vexed about possibly jinxed tax reform, both seem to have lost sight of the one, giant, intractable monster in the economy that virtually no one talks about any more: Debt.
They seem to forget that excess debt was the repeat offender behind the bank failures of the 1980s, the subprime mortgage disaster of 2007, the global market meltdowns of 2008, the Great Recession of 2009 and the multiple European debt crises of 2008-2015.
Worse, they seem to ignore the fact that the last 7.5 years of near-zero interest rates and unbridled money printing have only encouraged still more debt pile-ups. “Money is dirt cheap, so why not?” say officials in Congress, the White House, the Treasury Department, and government agencies.
“As long as the government’s debt burden is under 100% of GDP,” they tell you, “we can handle it. It’s only when it surpasses the 100% threshold that we’ll be in danger.”
True or false? Let’s look at the numbers …