That's a lofty assumption, and really not backed by much empirical evidence.
How do you explain the Government debt implosion in Portugal, Italy, Spain and Greece over the past 5 years? How do you account for that?
US debt-to-GDP was much higher after WW2, but both the American and global economy were totally different. After WW2, America was the only industrial power left standing and rebuilt the world. Exports exploded in the United States, huge trade deficits were amassed, and the debt paid down. Germany and Japan paid down some of their debt but had a lot forgiven. Today, the situation is completely opposite. America is a gross net importer, with a decimated manufacturing base. And the world is built up. No broken windows to replace.
While you can dismiss us as pessimists, you can't account for the European debt crisis. This shit has happened for millennial. Try Reinhart and Rogoffs this time is different. 8 centuries of financial folly. This is nothing new. Govenrments have blown out economies for thousands of years by running up the national credit card to the point of bankruptcy. You're the aberration because you're the one saying this time is different. It's not. History is on the side of the pessimists, unfortunately. Do you honestly think America can borrow into perpetuity forever? That the national debt has no absolutely no bearing on the economy, interest rates, or inflation? At 100% debt-to-GDP, modest growth and interest rates offset each other (IR = 3% and growth rate =3%). There is no way to "out grow" the debt unless huge levels of growth are achieved. At that point, it becomes an economic blackhole. The debt never shrinks. We just carry this albatross around our necks in the form of debt-interest payments, forever. This creates a 'low growth' economy. Anyway, that's a rosey picture. The deficit and QE continue to mount. That's where all this BS "growth" has come from over the past 8 years since the big R = DEBT. Not nascent, real growth. But Government borrowing from China and spending that into the economy to create the illusion of economic activity that shows up in NFP and GDP prints YOU INTERPRET as a "Strong" economy. If I made a paltry 30K a year and put another 70K a year on credit card, would you say my income is "strong"???? Cause that's exactly what you're doing. All the stats you think indicate a strong economy only exist because the Government ran up the national debt to stratospheric levels and spent that into the economy to prop it up. Soon it'll be time to pay the piper, just like in the PIIGS. When debt-to-GDP gets too high, investors know Governments can't pay interest on the debt. Eats too much of the budget. Voters will never allow politicians to pay Goldman Sachs over putting granny out on the street. So investors jump ship. Selling begets selling and the situation becomes a self-fulfilling prophecy, that would have happened regardless. First out, gets to save their ass. This is the real world. Investors don't give a flying fuck about rosey optimistic itll never happen here scenarios. They just care about the numbers. When Government debt gets too high, they know they ain't gonna get paid back. Boom. Floor drops out, yields explode, then we're in some serious shit.
