DEBT REDUCTION IS NOT PROBLEM ONE

DEBT REDUCTION IS NOT Problem ONE!

GET THE FACTS BEHIND THE NEWS

I believe that both political parties have their economic priorities mixed up. The mere cutting back of large parts of the federal gov’t will not help the economy or increase employment. The reason is that the economic problems are not caused by the size of gov’t or by the size of the debt.

The size of the debt has to be watched but the debt now is not an imminent danger. A study by the National Bureau of Economic Research found that public debt levels become dangerous when they reach 90% of GDP. At the present time(2010 figures) the US debt level is 63% of GDP according to the CIA World Factboo

Recent figures for other countries are Japan, 192%, France 80%, Canada 72%, UK 69%, India 60%, Saudi Arabia 20% China 18%.

Furthermore the gov’t is not having any trouble selling its financial bonds and other financial instruments. In fact during the recent stock meltdown capital from all over the world came to this country to buy our bonds as the safest investment they could find. There is also no indication that gov’t borrowing is crowding out the private sector. Money is plentiful. Interest rates are low.

My reading of economics and prominent economists indicate that our primary economic problem is a poor economy. The problem in a recession is demand. We must create an environment that encourages innovation and demand.

MY suggestion is concentrate on improving the economy so that business improves and more people have jobs. Then healthy debt reduction that does not cut needed services can follow.