The news is all the buzz over debt and its impact on our economy. Debt over the past 2 decades exploded to $33 Trillion (U.S. Treasury) is starting to cause some serious headaches. People are concerned that the cost of that debt and the servicing of that debt could impact other factors in economic and quality of life. Finding a method through the madness is not easy and there people out there with different theories on debt but solutions seem difficult at best to be found.
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Degas 1873 As a representation of how global economics influence adaptation of industries nationally. |
The Current State:
The Fiscal Times has a quick snap shot it Deficit Rises to $1.7 Trillion in 2023: CBO
-The federal government revenues were $4.4 trillion from Oct 22' to Sept. 23' year, $455 billion (9%) less than the year before.
-Oct 22' to Sept. 23' year was $6.1 trillion, $141 billion (2%) decline from last year.
-$33 Trillion total national debt.
Consolidation:
From an article in Capital Matters we find that consolidation might help. Inflation Matters
-Debt at 94% of GDP.
-Suggestions long term debt roll over and consolidation (Might be only a short term solution if that long term debt is not worked on.)
Consumer (Business) Debt:
Reason put together an article on Fiscal Control and Inflation that discusses reducing consumer debt.
-Short term negative wealth effects consumer debt reduction lead to slowing demand driven inflation.
-Can we extend that concept to businesses as well for a higher effect if needed?
Congressional Budget Office has information related to what is has approved and the work it has done.
A Couple of Studies:
There is a little older study that seems to give some support that increases in debt also raise inflation and the cost and perhaps the size of that debt. Public Debt, Money Supply, and Inflation: A Cross-Country Study There is also a blog article on the difference of impact on demand and supply inflation and Inflation Shocks and Public Debt. Not finding something that definitively answers inflation questions and that may be part of the reason why a comprehensive strategy hasn't been created.
Reducing Debt and Increasing Wealth:
A few questions to ponder that don't have definitive answers because there is complexity in the economic decision and not enough research to fully ferret out cause and effect.
-Does reducing debt decrease inflation and in turn the cost of that debt?
-Would allocating more (unknown percentage) reduce resources in the short run but increase resources in the mid and long term?
-Does consolidation, adjustment of spending to reduce debt, and reallocation of "saved" resources to net positive industry-government investment (i.e. innovative transactional clusters) impact total national and personal wealth (perpetual sustainable economy)?
-Can industry innovation, human capital development (broad based and biased free) and technology integration create centralization to the highest value of the supply chain in a way that increases wages, profits, and net wealth positives?
-Could a review of the effectiveness and positive benefits/detractors of government programs save 10-15% of government cost while not radically reducing outcomes?
-Is debt a hindrance to transactional costs and in turn reduce the greasing of underlining economic mechanics of growth?
No definitive solutions here yet but a few ideas to ponder. What do you think?
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