Writing more about our petulant debt debate in Washington would make me type with enough anger to put my keys through the hard-drive, so we'll let that alone for now. (Plus this guy said it nicely.) I will instead type about the problems of others to make me feel better: China has a gaint debt too. (China, they're just like us!)
But, China owns all that U.S. debt! you say. Not so much. They own about eight percent of our debt. Big numbers for sure, but China's government owes between 80-150 percent of GDP in debt itself. This professor from Northwestern University (Hey, that's my school!) explains China's situation far more eloquently than I can. But in short, they don't seem to fully know what the hell they're doing either, at least as far as the long run projections go. Somehow it's both perversely comforting and utterly horrifying.
So, we aren't the only ones addicted to monetary manipulation, bailouts, debt, and giant gambits that the government is in no position to fully understand. In fact with China's brand of authoritarianism, they play even faster and looser with government spending. Oh, and they invest in infrastructure (albeit incredibly inefficiently).
Good news: China's on just as unsustainable path as we are and are hardly the economic masterminds we sometimes think of them to be. Bad news: The world's two leading economies have penchants to play potentially disastrous games of economic chicken.
Both will bail out giant institutions that have been granted special treatment. They spend more than they have, and not in an efficient manner that will not necessarily lead to growth. And they take turns blaming each other for causing inflation that makes the others country's exports less competitive.
Our leaders are beholden to a voting populace even less knowledgeable of
the economic implications than they are. Their leaders are beholden to,
well, no one, except maybe an economy growing at a rate that is completely unsustainable.
This might not end well.
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