A Quick Shot of Debt Perspective

I was just reading an excellent article by Dean Baker on the national debt and saw something that should be shouted from the rooftops.

"How about that $14.3tn figure for the debt ceiling? That's a really big number, really scary. So is just about every number connected with the United States budget. We are a huge country with a huge economy. Competent reporters would focus on this being about 90% of US GDP.

Is that big? Well, the debt to GDP ratio was over 110% after the second world war. The United Kingdom had debt to GDP ratios of more than 100% for much of the 19th century, as it was establishing itself as the world's pre-eminent industrial power. Japan has a debt to GDP ratio of more than 220% of GDP and can still borrow in financial markets long-term at interest rates of less than 1.5%."

So the U.S. is in the position of someone with an income of $100,000 a year and a $90,000 mortgage. Not so scary now, is it?

Baker accuses the news media of malpractice for ginning up the panic on this, and he's right. Calm down, increase the debt ceiling, and let's get on with things.