If it does, the capital structure of the US is just fine. Current GDP is 15.8 trillion. Let's apply a real discount rate of 4 percent (which is probably high, given that the yield on 10-years TIP is negative), and assume a real long-term growth of 2 percent (which is likely low). This means the country is worth about $316 trillion (this figure includes human capital as well as asset values).
Total debt outstanding in the US, public and private, is $55 trillion. So we are about 17 percent debt funded, which means we are about 83 percent equity funded. This should be OK. What I am missing here?
(note: it was Matthew Yglesias' Slate piece today that got me thinking along these lines).
Total debt outstanding in the US, public and private, is $55 trillion. So we are about 17 percent debt funded, which means we are about 83 percent equity funded. This should be OK. What I am missing here?
(note: it was Matthew Yglesias' Slate piece today that got me thinking along these lines).
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