The charts below from 2016 show total debt in two ways. The first show total debt as a percent in Gross Domestic Product (GDP) and the second show total debt in dollars. Today the United States’ debt, as a percent GDP, is close to that of the 1940s. Yet in WWII, we fought and won against three fascist dictators, rebuilt the world (Marshall Plan, talk about Tobin’s Q!), funded the Manhattan project, invented more new technology, built more highways, ships, trucks and factories, etc. and created more infrastructure than ever before. What infrastructure do we get today? For the same debt to GDP, if we are not careful, we will simply create more debt to finance existing debt.
What could possibly go wrong with this scenario?
