Debt to GDP is a fake number since the debt is fully owed by the government, but the government gets only a fraction of the GDP through taxes.
So, for example, the US GDP in 2017 is about $19 trillion, but the government’s revenue is only $3.21 trillion.
However, the government owes $20 trillion.
So, what really needs to be talked about is debt-to-revenue ratio. In this case, it’s $20T/$3.21T = 6.23 or 623%
So, debt-to-GDP = 104% and debt-to-revenue = 623%. Now you can see why the economists and banksters prefer the first number. This is to lull you into thinking that the problem is not so bad.
Imagine a guy with $50,000/year salary who has a $300,000 consumer debt. That’s America.
What’s the problem?
People are so blasé about debt. Look at what happened to Greece. Now the same thing is happening in Brazil, where the government is spending half of its revenue on interest payments for the debt.
If the yield rates on US treasury bonds go to 5% or 6% (now 10-year treasury bonds have yields of about 2.5%), we will feel a tremendous pinch in the budget. If the interest rates go to 10%, it will be time for severe austerity and there will be riots on the streets.
Think that rates can’t be that high? Even in 2007, the rate hit 5%. From 1975 until 1991, 10-year treasury bond yield was anywhere from 7.5% to 16%!
This is how bankers enslave nations and people. Bait and switch. Banksters lure nations into debt-trap with low-interest rates and then hike the rates. They have been doing this to third-world and developing countries for decades, but eventually the shylock international bankers will turn on the developed nations. Greece was just the trial.
(By the way, this is why globalists hate Putin. He has kept Russia’s debt very low. It’s debt-to-GDP is 18% and debt-to-revenue is 100%. Putin also has $450 billion of foreign exchange reserves, which is more than twice as big as the debt — $200 billion. This is why Russia’s economy withstood all the hybrid economic wars that the globalists have waged for the last 4 years — drop in oil price, sanctions etc.)