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Oftentimes, when the American debt is reported on, it is difficult to conceptualize. Trillions upon trillions of dollars may seem huge, but such a figure also lacks appropriate context. When per capita debt is framed against the average American's yearly earnings, however, the seriousness of America's growing debt begins to crystallize. If divided equally among each American, our national debt would still be greater than the amount that the average US citizen takes home in an entire year.
Is that big or small? How many Americans have mortgage debt greater than their annual income? And that debt I'd wager is at a way higher interest rate.
This actually makes it less scary. However, which direction is the per capita debt going, up or down? It is what it is, but if it's going up I am more concerned than if it's going down.
Good question. Christian, can you get data like this chart but over the last 10-20 years or so?
I will certainly take a look for that data. To Noah's point, you are right that many individuals hold a larger amount of debt than their yearly income, but most are in the process of paying off that debt a little at a time. America's debt is different, however, in that it continues to accrue without any sign of reversal. Any individual that took this approach would undoubtedly be headed for financial ruin.
I beg to differ. Any individual who took this approach would be fine - if they were never going to retire and never going to die. That's pretty much the status of our country. We can sustain this debt level forever (unlike mortals). This is why the historical trend is important. Because what we couldn't sustain would be unlimited growth of our debt.
That's fair, if the amount of debt in real terms (instead of nominal) was constant, there wouldn't be much to worry about. But unfortunately that isn't the case. America's debt to GDP ratio continues to climb rapidly. Recently, our debt surpassed 100% of America's yearly GDP, up from 68% in 2008. Here is a link to the data:
Very interesting that we actually peaked at 116% in 1945. Somehow we turned it around then. I wonder how.