Re: Government Debt

"mally" <Malcymo@xxxxxxxxx> wrote in message news:ccbed6a6-2e48-4e62-bf7a-c42628d5d596@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
How can someone clearly establish whether a nations debt is excessive
other than by comparing it to other nations debt ratio to say GDP.
Individuals borrowing are controlled by the lending institutions who
know his earnings, what he can put up for collateral and how old he
is. What do we need to know about governments certainly in theory they
will last longer than most individuals.

Government debt is excessive when that gov. can't make the monthly payments. It is the same for individuals as you note. However, national gov. debt like for the US never needs to be paid back in full. Something that most people don't understand. For individuals, it does eventually have to be paid back in full. It is usually advantageous for the US gov. (and companies) to take on more debt when interest rates are low and slow down borrowing when interest rates go high. Both Clinton and Bush did the right things as far as borrowing goes. Clinton slowed it down when interest rates went high and Bush picked it up when interest rates went lower.

Fred

.

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