A new animated world debt clock has been launched covering 40+ of the world's biggest economies from the US to Australia.
World Debt Clock
It’s no secret that governments around the world have amassed staggering amounts of debt as they fund thousands of initiatives from military and defense projects to social programs for the poor and elderly.
However, many people are concerned about what these mountains of debts might do to the global economy in a financial crisis. Some geo-libertarian thinkers are trying to figure out what can be done to prevent economic disaster.
But, before you can tackle this problem, you need to have the data in hand. How do we keep track of the national debt? One way is with a debt clock.
In this article, we will take a look at what geo-libertarians think of the impending debt catastrophe, how we can track the growth of national debt, and what we can expect from the global economy in the future.
The Growth of Debt
Geo-libertarian economist Fred Foldvary claims that the large amounts of debt accrued by governments around the world will be highly problematic in the next financial crisis. Foldvary argues that the primary issue is that governments are making promises to the poor and elderly that they will not be able to keep in the future due to a lack of resources. Remember, all debt must be paid for eventually, and if it is not paid for today, it will be paid for by future generations.
Furthermore, high levels of debt could reduce trust in the US government's ability to pay its bills. This could increase the cost of government bonds, One result: the US could wind up having to pay more in interest on its debt than it spends on the military and on key social programs like Medicare.
That said, all is not lost. Foldvary proposes several solutions to the impending catastrophe brought on by unsustainable levels of deficit spending:
- Incentivize rapid growth to increase the ratio of national income to deficits
- Reduce obligations (e.g., reducing the growth level of future liabilities by raising eligibility
ages, growth of benefits, and increasing co-payments) - Increase the current tax rates
- Allow for high inflation levels, which would reduce the value of the explicit debt
(assuming that entitlement programs are not indexed, or adjusted for, inflation).
However, Foldvary understands that a lot of these solutions won't be acted upon because they are politically unpalatable. Therefore he takes the position that disaster is impending. As the national debt level rises, the economic situation becomes more and more perilous, and you can watch this happen in real-time with the help of a debt clock.
What is a Debt Clock?
A debt clock is a visual representation of how the debt owed by a government changes over time.
The first widely used debt clock was the National Debt Clock put up by real estate developer Seymour Durst. The clock displayed the total US gross national debt as well as how much of that debt each American family was responsible for.
The clock itself was a billboard, and over the years, it has occupied several locations in New York City and has been started and stopped several times.
Since then, debt clocks have been used at various times to track changes in the economic situation, either locally or federally.
What the Debt Clock Tells Us
Debt clocks are an easy-to-use tool that provides information on what is happening with regards to government spending and taxing.
However, it does not provide a full picture of the current economic situation. Detractors claim that they provide deceptive information because of the information that is excluded such as government assets and the health of the private sector economy.
Debt clocks also provide only a snapshot of the economic situation. They cannot account for anything that might happen in the future that would change things drastically. These might include actions taken by the central bank, laws enacted by the government, supply shocks, or global pandemics.
So, when looking at a debt clock to keep an eye on what could potentially be deemed a "global debt catastrophe," remember that there could be massive shifts that a simple counter is not capable of reflecting — in both a positive or negative way.
Nevertheless, the US national debt is rising quickly, and debt clocks are a good way of keeping track of its current level.
Conclusion
As national debts continue to climb, governments will find it increasingly challenging to service these debts.
World Debt Clock
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