None of the figures (debt to GDP, savings rate etc) I cited are controversial. Lots of people have been talking about those figures for many, many years, that's why I left out citations. Just to cite a recent example, the Sequoia presentation has all of these and more, in gory detail. Of course, you can interpret that data whichever way you want, but the data itself is clear.
A couple of common objections to my line of argument are:
a) debt to GDP is just an accounting number or paper ("we owe it to ourselves" - in a global sense) and we can adjust that without much consequence to the real world.
Response: Given that current incomes are not able to service the debt, the debt needs to be written down. As that debt gets written down (for example, if GM or Ford were to file for bankruptcy), there will be economic consequences like lay-offs. Those economic consequences are another way of saying that the projects that the debt financed were unviable and therefore have to be terminated.
Those layoffs will cause further debt erosion - those laid-off workers default on their credit card payments, for example. So there are real economic effects to that accounting fiction. Even the dot-com bubble needed several years to be worked out. This is a far bigger bubble.
b) The US savings rate is underestimated.
The savings rate underestimation argument actually used to cite rising asset values, particularly housing, not being counted in savings. Falling asset values kills that argument.
You can find the presentation, for example, at: http://www.slideshare.net/eldon/sequoia-capital-on-startups-...
A couple of common objections to my line of argument are:
a) debt to GDP is just an accounting number or paper ("we owe it to ourselves" - in a global sense) and we can adjust that without much consequence to the real world.
Response: Given that current incomes are not able to service the debt, the debt needs to be written down. As that debt gets written down (for example, if GM or Ford were to file for bankruptcy), there will be economic consequences like lay-offs. Those economic consequences are another way of saying that the projects that the debt financed were unviable and therefore have to be terminated.
Those layoffs will cause further debt erosion - those laid-off workers default on their credit card payments, for example. So there are real economic effects to that accounting fiction. Even the dot-com bubble needed several years to be worked out. This is a far bigger bubble.
b) The US savings rate is underestimated.
The savings rate underestimation argument actually used to cite rising asset values, particularly housing, not being counted in savings. Falling asset values kills that argument.