E DeSousa wrote: Whle the US national debt at approx. $14.9 Trillions, it should be noted that the GDP (Sum of all Goods and Services produced ) of the US is approximately 15.04 T (year 2011). Debt/GDP ratio of 99.46%. For example, US debt to GDP ratio peaked just after World War II (112.7% of GDP in 1945). Now that the Middle East wars are winding down the ratio is expected to ease.
While these statistics are mind boggling, it should be noted that quite a few important countries in the world operates in this zone. Look at : Country Debt: GDP ratio India 65% Italy 136% Australia 139% Spain 169% Germany 183% Portugal 207% France 254% Sweden 262% Hong Kong 265% Switzerland 391% UK 451% (External debt per person= $161,000) Ireland 1,239% So, what is to be done? Perhaps they will all choose the easy way out and devalue their currencies and in the new paradigm the Indian Rupee will rise in value. --------------------------------------------------------------------- E, I grew up in an economy that depended on agriculture for survival. Every time there was a drought in Tanzania or the crops failed, the Tz govt had to borrow money from the IMF. The IMF had two conditions for Tanzania and every other country that came begging for loans. The IMF insisted that the borrower: 1) cut govt expenditure i.e.health, education and military spending 2) devalue its currency. As far as devaluation is concerned, it only works if your main trading partners do not devalue their currencies too. Else you start a war where the country to devalue its currency the most, becomes the winner (sic). This is exactly what is going on today with the above nations. As for cutting government expenditures, this can only be done by a political party that does not want to be re-elected. As such, the govts in power today are trying all sorts of gimmicks to reduce their debt without reducing expenditures. All they are really doing is making the problem worse. Returning once again to the family example, I think you may agree with me that anyone who really wants to pay off his debt, has to first reduce his spending. The alternative is to become bankrupt. Mervyn2121
