In this lecture, Toby Neugebauer discusses the debt crisis and its horrendous effects on the modern economy. He then explains why an economy built on debt is unsustainable, ending the presentation with an overview of the world situation and the life and death choices facing the nation in the future.
Debt does not increase the consumption of goods, but it changes the timing in which goods are consumed. While debt in the 1940s and 1950s greatly increased the GDP (Gross Domestic Product), the present GDP actually loses money at the same time it borrows. Because of this phenomenon, an economy built on debt is unsustainable. Neugebauer explains, "The US has had no real GDP growth without borrowing from your future in the last 40 years." In other words, no one knows what a modern economy without debt looks like.
Neugebauer then explains that the real debt is not $14 trillion, but at least $64 trillion, or even as high as $74 trillion. What interests and frightens economists is that in the past eight years, the worldwide debt has more than doubled the previous debt of the last two millennia. While the solution of some leaders is to print more money, Neugebauer calls for a return to a sustainable level. Most developed countries have as much or even higher debt levels than the US. And some of these countries have already experienced economic collapse.
Neugebauer concludes with an honest look at the choices Americans face in the future. "We're going to have to make life and death decisions," he explains. “Healthcare options will simply not be available. Because of the enormous debt obligations, the promises made to the American people cannot possibly be kept.”