Quote:
Originally Posted by Lamplighter
Glatt, "deficit" is for a particular period of time, whereas "debt" is the cumulated deficits
So I look on GDP as the total output of energy and resources ($) of the country.
So, looking at a given year's deficit as a %GDP is a measure of what
the country would have to expend to reduce that deficit (to zero).
OTOH, higher inflation has the effect in future years of
reducing the subsequent debt-to-%GDP ratios
... i.e., older debts can be paid off with "cheaper" dollars
BUT, I'm open to being educated out of the error of my ways.
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My issue with % of GDP is that the government doesn't have access to the entire GDP to spend it. I think a more useful statistic might be to see a % of the total revenue.
But I'm no economist.