July 10, 2011 –
In 2011, the American economy has crossed the 90% sovereign debt to GDP number that modern economic textbooks define as the Rubicon point of diminishing returns for long-term productivity growth and wealth creation for a nation. (Sources: U.S. Treasury Direct website for outstanding debt, http://www.treasurydirect.gov/NP/BPDLogin?application=np, U.S. BEA press release for 1st Quarter GDP, 6/24/11,http://www.bea.gov/newsreleases/national/gdp/2011/txt/gdp1q11_3rd.txt)
I strongly suggest intelligent investors expose themselves to the comprehensive study put out last year by Carmen M Reinhart and Kenneth Rogoff regarding national debt levels and expected economic growth rates, as viewed through the lens of the latest 200-years of Wealth of Nations history. (Sources: VOX – Leading Economist website, http://www.voxeu.org/index.php?q=node/5395, Business Insider column, 8/11/10, Gus Lubin, http://www.businessinsider.com/kenneth-rogoff-carmen-reinhart-sovereign-debt-2010-8, Wikipedia entry on Adam Smith’s seminal work, http://en.wikipedia.org/wiki/The_Wealth_of_Nations) [more]
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