The idea behind a democratic nation, is that it should be reflective of its people. This is the case in regards to the United States and her people. However when it comes to American spending habits this is definitely an unwanted correlation. Why? Well for one thing the monthly US household savings rate have been negative multiple times over this last year (savings rate of -0.4%). This data is tracked over at the Commerce Department's Bureau of Economic Analysis. The worrisome issue is that our Federal Government is on the same path. However how can you blame one without blaming the other for financial mismanagement. Here are some statistics on the US public debt in terms of Gross Domestic Product or GDP , according to the CIA Factbook.
- The United States Public Debt: 64.7% GDP (2005)
- French Public Debt: 66.2% GDP (2005)
- British Public Debt: 43.1% (2005)
- Swedish Public Debt: 50.4% (2005)
- Chinese Public Debt: 24.4% (2005)
- Japanese Public Debt: 158% GDP (2005)
- Bangladeshi Public Debt: 44.5% GDP (2005)
What do these statistics tell us? For one our debt level is the same or worst then some of the major European nanny states. We have 3x the public debt of that of China one of the emerging super powers. Japan on the other hand has 1.5x more public debt then we do in the US. Forshadowing??? Well Japan was put into difficult economic times in the early 1990's with a stock market crash followed by a major housing crash and then subsequent deflation. Remember they went into deflation with massive governmental expenditures & a central bank cutting interest rates to effectively zero! What can we learn from this is that Japan went to a more socialists slant with heavy deficit spending on social & government programs. They have been in a 15 year slump and only when former prime minister Koizumi put forward real reforms aimed at pro-business and the break up of the giant governmental institutions have they shown signs of life.
We are most likely in for some troubling economic times due to a variety reasons including a debtor society. The government in our case is really representative of its people. However usually people in rough economic times cut spending and so should the government. Government rarely cuts spending and either cuts taxes or raises them. Why is it so wrong for them to cut frivolous spending? American consumers will likely cut its frivolous spending on Hummer's, plasma TVs, and granite countertops. SO I would hope the government will cut its frothy bureaucracy and little used social programs. This investment mercenary isn't holding his breath....