With the news that Moodys is talking about downgrading US debt from its current AAA rating, it seems that everyone is panicing and not thinking rationally. I encourage you to take a step back and relax. We’re not approaching a cliff. It might be a large downhill slope, but we’re not going to fall to our death.

Look at the following chart. This shows how our nation’s debt has increased over time and how it’s at very high levels. This is the chart you’ll see from the fear mongers (the media): 

HOWEVER, we live in a world of relativity and relatively speaking, we’re not in uncharted territory. When you look at our debt as a fraction of our GDP you see the following chart. 

We’ve comeback from these levels of debt before and we can do it again. However, we’ll need to cut our government spending levels as we did before after WW2. This means:

• Cut defense spending. We currently spend more than 40% of tax revenue on defense. This is insane and needs to stop.
• Input clauses that require our debt be below a certain % of GDP. Politicians will not be re-electable if our nations debt is above that fraction. Period. (This is similar to Warren Buffett’s 5 minute plan to fix the deficit).
• Rethink the role we want the government to play in our nation. Is it the American people serving under the government or is it the government serving under the American people?

Please share this with your friends / family and comment below.

Thank you,

Tony M.