My bad...get 1000 powerball winners together...bam...you get the idea...
In the end, all we have to do is maintain GDP growing at a faster rate than debt payments over time - we do not have to "payoff" the debt...ever....we will always issue more.
Yes, to put it on a human scale, I thought of someone buying a new house for $12,000 in a middle-class neighbourhood c. 1955.
They put $2,000 down, and started with a mortgage of $10,000.
Instead of paying down the mortgage, they added 1% to it annually. The mortgage would now have increased to approximately $20,000 - but the house is now worth $600,000.
They're fine - they have lots of equity, and have no trouble making payments on a $20,000 loan.
But what if they had added 5% to the mortgage balance each year?
Now they owe about $276,000. They still have lots of equity, and can make the payments ONLY IF the interest rates are low.
How about 10%? Now they owe $6.5M, are way underwater, and can't pay the mortgage regardless of what rates are.
That's the miracle of compound interest, which can work for you or against you.
Keynesian economics is based on the government running a surplus in good times, saving up the surpluses, and deficit spending (i.e. deleting the nest egg) to stimulate the economy in hard times.
But instead, our governments tend to run deficits at all times, and thereby amass a huge national debt.
When we get to the point where the accumulated debt starts to approach our worth, lenders need more security as they are taking more risk, and we have to pay higher interest rates on the debt.
The current debt loads of Canada and the U.S.scare me.