2009-12-02ritholtz.com

"In order for the ratio of debt to GDP to stabilize, GDP must grow faster than the growth in debt. This has not happened in the last 30 years. A good portion of GDP growth since 1982 came from the increase in debt, which means GDP growth will on average be lower, without the debt steroids of the past 25 years. Slower economic growth in coming years will generate less tax revenue for all levels of government, which will force most states to raise taxes. The Federal government is expected to run $1 trillion deficits for a number of years, which will cause the debt to GDP ratio to continue to rise."


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