If Locker Room discussion of the problems associated with federal deficits and debt haven’t convinced you yet, perhaps you should read an interview in the latest Money magazine with money manager Robert Rodriguez of FPA Capital.
Won’t the economic recovery help us grow out of these problems?
At best, we’re facing a substandard recovery. It will probably take another eight years for the consumer to recover. But mainly I worry about the swelling debt of the U.S. government, which is ballooning faster than the economy is expanding.
We’ve been concerned about this as far back as 2003, when federal debt was $6.8 trillion, or about 60% of GDP. At that point we went on a buyer’s strike — we wouldn’t lend long-term capital to a fiscally irresponsible borrower at low interest rates. And we haven’t bought long-term Treasury bonds since.
Okay, we were eight years early. But now the ratio of debt to GDP is above 90%, about $14 trillion. This is not a sustainable trend.
