$668,621

It certainly is insanity Don.

I can’t for the life of me believe that the administration thinks it can create this debt and then unload it 4-8 years later on Obama’s successor to pick up the pieces. A debt of this size I imagine would come to roost within a few years.

Unless this is exactly what he wants… everyone and everything indebted, thereby creating a nation where the average citizen is completely dependent upon government for his sustenance.

Bankruptcies in every sector of the economy would be much preferable. This debt load needs to be liquidated with real assets sold off. Monetizing the debt via money creation will carry a real and dreadful hyperinflation.

This is why I lean in favor of commodity standards in currencies. None of this would be possible if money were pegged to real things. As long as we are on a fiat currency we’ll be stuck in the boom-bust fantasy land.

If only I had enough fiat money to buy gold!

I think the fellow at USA Today misplaced a decimal point. There are (I think) around 114 million households in the United States. If I am not mistaken, the ratio of the federal public debt (a stock datum) to annual domestic product (a flow datum) stood at 1.19 in 1945. I do not believe it has as yet ever been higher. That would translate to $17 trillion at the present time, or about $150,000 per person.

One question of interest is the effect of structural surpluses on economic performance over periods of time exceeding one business cycle. Fiscal stimulus through tax rebates, tax cuts, or public expenditure has been a policy tool for containing economic contractions. In said circumstance, you would be speaking of manipulating aggregate demand over a time frame of a year or two. There would certainly be transition costs in making the necessary adjustments in baseline of taxation and expenditure in order to run budget surpluses as a matter of course, but would economic performance thereafter be diminished as against a hypothetical situation where the budget was balanced over the course of the business cycle as against the reality of the last five decades, where we run a deficit nine years out of ten?

Consider the following parameters: population stasis, complete price stability, and rates of improvement in real income near historical means (about 1.3% per annum). Recall also that the United States government paid off the whole of the national debt during the period running from 1792 to 1835. A commitment to run a budget surplus of 2% of domestic product per annum (2.4% during years of expansion and balanced during recession years) would allow for the liquidation of a debt of 119% of domestic product over that sort of time frame. Of course it would require that our politicians be very different sorts than in fact they are.