• ‘ALARM BELLS’: American Debt Is In The ‘DANGER ZONE’ With Greece

    Greece’s swollen debt has caused an international financial crisis and risked the country’s future, but the U.S. is only a few years from reaching debt levels just as dangerous, and many economists are worried.

    About 25 years ago, Greek debt was 75 percent of its economy, which is about where the U.S. is now. Since then, Greece’s debt has grown to more than 175 percent of its economy.

    The U.S. debt is projected to be more than 180 percent of GDP by 2039.

    “So 24 years from now we will be at the level of debt at which Greece is right now,” Romina Boccia, a budget expert at the Heritage Foundation, told The Daily Caller News Foundation.

    If America today is Greece 25 years ago, that raises the question: will the U.S. be in the same trouble as Greece 25 years from now?

    Boccia said the U.S. is barreling through the “danger zone” of debt where serious economic problems become increasingly likely.

    She said American debt is not as big of a problem because we are able to monetize our debt by printing money to pay off loans, unlike Greece which is on the Euro. Instead of growing debt, the U.S. grows inflation, but that can only continue for so long.

    “What research does show is that when countries’ debt levels reach 85 percent of their economy and higher, you see a strong correlation with lower economic growth,” Boccia told TheDCNF.

    She said after you cross the 85 percent mark, you’re at risk of becoming like Greece, whose entire economy now hangs in the balance.

    “From that perspective there are ranges where the alarm bells go off, and that is when the debt levels approach levels that are larger than the country’s economy,” Boccia told TheDCNF. “If that debt is larger than your economy and growing you’re in the danger zone.”

    Aside from that, Boccia said the debt acts like a weight that drags down the economy. She said there could also come a point where creditors stop lending to the U.S.

    “It is possible,” Boccia told TheDCNF. “Nobody knows when that moment will come. We find ourselves in a very dangerous and precarious situation when it comes to the U.S. debt.”

    (U.S. Debt Projection, Heritage Foundation)
    (U.S. Debt Projection, Heritage Foundation)

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