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Thursday, August 26, 2010

A More Realistic Debt-to-GDP ratio

If you watch mainstream media, they will tell you that Debt-to-GDP is 54% or somewhere in that arena.  Other economists come to consensus by dividing total Debt by current GDP.  If you do this, we get a number 93.77%  (  (13,371,301,700,295.28/14,623,900,000,000)*100 = 93.77% ).  The problem is that it doesn't account for Fannie Mae and Sallie Mae, which are government owned entities now.  In an article posted on, JimQ points out that Fannie and Freddie add an additional $5,602,000,000,000 to the number, thus bringing our known debt to 18,973,301,700,295.28.  Do the math over again and you get a Debt-to-GDP ratio of 130%.  So as you can well see we are much farther than stated.  This does not take into account any programs like Social Security, Medicare or others (which brings the number much higher).  [ read more... ]

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