Money For the Rest of Us National Debt Masterclass Finale - What To Do
May 22, 2024
Learn about the growth of national debt over 50 years, factors impacting debt levels like interest rates and economic growth, potential U.S. debt default scenarios, investing strategies to protect against debt uncertainties, and the importance of diversifying portfolios amid economic uncertainties.
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Debt-to-GDP Ratio Growth
- The US national debt, relative to GDP, has grown significantly since 2007.
- Measuring debt relative to the economy is crucial, as the private sector's income funds debt service.
Unsustainable Fiscal Path
- The US is on an unsustainable fiscal path, according to Federal Reserve Chair Jerome Powell.
- This means the national debt is growing faster than the economy, making the debt-to-GDP ratio increase.
Model Assumptions
- Economic models often assume future fixes to the national debt to avoid model breakdown.
- These fixes, like tax increases, haven't been implemented yet but are assumed as inevitable.