Debt Growth and Instability??

DEBT GROWTH AND INSTABILITY

The national debt in the United Stated has risen almost every years for the past 50 year. Does that mean the government budget is bound to get out of hand, with interest payments rising so high that taxes have to keep rising, until eventually something terrible happens? The answer is no, because the economy has been growing

Figure 20-2 shows the US public debt as fractions of GNP for a long stretch of time, staring in the early nineteenth century. The most striking fact is that the debt rises sharply as a result of large wartime deficits. Then, in each post-war period, it declines. Over most of the period from World War II to 1974 the debt-income ratio was falling even though the debt itself was rising as the result of budget deficits.