Marketwatch: Public Debt and Our Investments

Future investment decisions will need to take into account large amounts of government debt and the effect it has upon an economy. In the chart below, we can observe the world's most indebted country's per capita. The total of these country's debts is more than $40 trillion. That is a tremendous amount of money upon which to pay interest every year, and there is no plan to pay back any of the money that is owed. Note that the U.S. GDP is about $14.5 trillion, and our GDP is 30% of world GDP of about $50 trillion. 
 
Ten Countries Deepest in Debt Per Capita*
Country Amount
USA $48,000
Ireland $40,000
Germany $38,000
Belgium $38,000
United Kingdom $36,000
France $34,000
Japan $34,000
Italy $32,000
Greece $28,000
Portugal $26,000
* Total public debt divided by total population (308 million).
 
David Hume (1711-1776) was one of the great thinkers of the Age of Enlightenment. His writings heavily influenced our Founding Fathers in writing the Constitution. A few things he wrote in “Of Public Credit” pertain to our current economic predicament:

• “Abuse of the public treasury, either by welfare or military engagements, are certain and inevitable; poverty, impotence and subjugation to foreign powers.”

• “War is attended with every destructive circumstance; loss of men, increase of taxes, decay of commerce, dissipation (inflation) of money, and devastation of sea and land.”