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0 pointsroenxi2y ago0 comments

What measure do you want to use? Given that debt has been consistently trending up faster than GDP for a while ... I dunno, couple of decades? ... Debt:GDP until year infinity is also quite concerning (we could reasonably project a ratio of infinity unless policy changes - ie, the US is at crisis levels).

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3 comments · 2 top-level

tonmoy2y ago· 1 in thread

I wouldn’t compare my $400k debt with my monthly income. I’d compare my monthly income vs my mortgage payment and my investment incomes. Same goes for the government, divide debt by number of years needed to pay it off including interest subtract the earnings from economic activity and interest earning from giving out loan to other entities and the see if GDP is able to counter that

roenxiOP2y ago

I'm not sure what you're wanting to angle for here, that doesn't seem like a specific formula. If you're trying to calculate a single metric it seems to be number of years to pay off the debt? At current trend, that is infinity years. I'm not seeing how it could get worse than that, although no plans to pay back the debt is just business as usual by now. And I suspect the information in your sentence is actually contained in a Debt/GDP ratio (eg, is interest + GDP growth going up faster than debt implies Debt/GDP ratio dropping).

> I wouldn’t compare my $400k debt with my monthly income.

Pretty sure that is actually a fair way to assess your creditworthiness. I can see the conversation in the bank going "Yo I want $400k", "What is your income?", "$X", "Yea"/"Nay" with some basic due diligence.

thfuran2y ago

The amount of debt doesn't matter, only the cost to service the debt. They're certainly related though.

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