There Is No Debt Crisis

Fake Debt Crisis

The graph above is from Matt Yglesias. It is taken from information in a new book by Thomas Piketty, Capital in the Twenty-First Century. What it shows is something that Dean Baker talks about a lot: it is ridiculous to simply look at government debt. As he has pointed out a number of places, the federal government owns hundreds of trillions of dollars in land. If it wanted to pay off its debt, it could just sell a bit of it.

What the graph shows specifically is that since the country was founded, we have had more federal government assets than we have had debts. Even at the peak of our debt during World War II, we were producing more in assets. And that has continued all the way to today. As Yglesias writes:

The conventional way for debt scaremongers to measure the national debt is to compare gross public debt to GDP. But the normal way you measure the debt load of a business or a household is to ask for a net figure. Just because you have hundreds of thousands of dollars in mortgage debt doesn’t mean you’re a pauper. In fact it probably means you’re a rich person who owns an expensive house. It is of course possible to take out a large mortgage and then end up “underwater” because house prices decline, but it’s simply not the case that a large amount of gross debt is a sign of overextension. It’s typically a sign of prosperity and creditworthiness.

This is the graph we should all look at whenever the “problem” of public debt comes up. There is no debt crisis. There has never been a debt crisis. It is just a fear that conservatives use to force cuts on government programs for the poor and middle classes.

There is no debt crisis!
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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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