In capitalism, the government’s role in creating new money is limited. It mostly moves around money that is already in the economy, funds itself by collecting taxes or selling government bonds, and then spends that money back into the economy. So most of the money the government touches is already in the economy.
In 1980, total debt—private, corporate, state, and federal—was 1.75 times the GDP. Today, it is around 3.8 times. Think of it this way: in 1980, we had $175,000 of debt for every $100,000 of GDP. Today $100,000 of GDP equates to $380,000 of debt.
The U.S. has become dependent on consumer spending for economic growth. Debt has fueled much of that spending. In 1980, the total government, corporate, and personal debt was around $5 trillion. Today, it is around $80 trillion or roughly 7% growth a year.
Total debt (government, corporate, and individual) in the United States has increased from $50 trillion in 2008 to over $80 trillion today.
