Federal Debt With GDP Growth

This chart paints a stark picture of the United States’ fiscal reality. The federal debt, measured as a percentage of GDP, has climbed to concerning levels, nearing 120%. Historically, such high debt-to-GDP ratios have been rare and often signal a tipping point for economic instability.

While debt financing can be a useful tool for stimulating growth during downturns, the consistent rise of federal debt beyond sustainable thresholds highlights a deeper systemic issue. Keynesian economic principles advocate for deficit spending to counter recessions, but the persistent reliance on this approach, even in periods of recovery, has led to an erosion of fiscal discipline.

The exploitation of Keynesian policies has effectively created a feedback loop of debt accumulation, raising concerns about long-term economic viability. Without strategic fiscal reform, this trajectory could lead to insolvency, undermining our nation’s financial stability.