---
title: "The nation's wealth grows by X% every year.  The debt grows by Y%..."
date: 2025-01-25
source: facebook
type: comment
context: "Archer T. Ships replied to Brad Templeton's comment."
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# The nation's wealth grows by X% every year.  The debt grows by Y%...

*January 25, 2025 — Comment Archer T. Ships replied to Brad Templeton's comment.*

The nation's wealth grows by X% every year.  The debt grows by Y% every year.  If Y > X, then it becomes impossible to pay down the debt, even if the USG could seize 100% of newly created wealth. As government debt grows, it consumes capital that would have otherwise been available for economic growth.  Less economic growth means less tax revenues, which means that the government must tax a higher percentage of GDP just to meet existing payment obligations. The negative spiral continues until the government can't collect enough to meet debt payments, even if they seized all of the wealth. "Succinctly, for now, the increase in debt “crowds out” private capital formation, which lowers GDP growth and the size of tax bases. This crowding out is especially pronounced in the moonshot OLG when reaching limits of the economy’s debt carrying capacity. At the same time, more tax revenue is needed to implement the closure rule that stabilizes debt relative to GDP. Even when using an efficient VAT, the tax distortions shrink the economy even more so that interest payments can no longer be made. In effect, the economy collapses under the sheer weight of government debt. https://budgetmodel.wharton.upenn.edu/issues/2023/10/6/when-does-federal-debt-reach-unsustainable-levels The Wharton team (cited above) estimates that, assuming nothing bad happens (war, pandemic, etc), that this will happen when the debt is 200% of GDP, or about 20 years from now.   The debt is currently at 100% of GDP.