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America ’ s Looming Debt Crisis. Executive MBA George Mason University Spring 2012. Uncle Sam in Debt. Federal Debt: Then and Now. September 30, 1991 $ 3,665,303,351,697.03 Per Person 1991 $14,505 October 11, 2011 $14,822,787,487,080.00 Per Person 2011 $47,445.
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America’s Looming Debt Crisis Executive MBA George Mason University Spring 2012
Federal Debt:Then and Now September 30, 1991 $ 3,665,303,351,697.03 Per Person 1991 $14,505 October 11, 2011 $14,822,787,487,080.00 Per Person 2011 $47,445
Who Holds U.S. Debt? Debt Held by Public $9.946 Trillion by Foreign Governments $4.499 Trillion Debt Held by U.S. Gov’t $4.669 Trillion Net Debt = Debt Held by Public
Expenditure-GDP Ratio 1810 1% 1910 2% 2010 24%
Revenue to GDP 1910 2% 2010 15%
Economists Advocating Deficits Keynes Keynesians Krugman Summers
The Keynesian Logic GDP = C + I + G + (X-M) Marginal Propensity to Consume (MPC) MPC = ΔC ÷ ΔY ΔGDP = ΔG ÷ (1-MPC) (Income Multiplier)
Economists Against Deficits Smith Marx Buchanan Hayek Marx
Reasons Opposed to Deficits • Governments default on loans. • Wasteful expenditures. • Financiers get rich on taxes • Financiers influence policy • Crowds out private investment • Creates trade deficits • Burdens future generations
Debt to GDP by Country(EIU Estimates) 2010 2011 2012 Japan 200% 205% 209% Greece 143% 153% 154% Italy 119% 121% 121% U.S.* 95% 98% 101% Germany 83% 81% 80% China* 41% 41% 41%