The Diminishing Returns to Debt

One of the basic things one learns in Economics 101 is the concept of diminishing returns -- that each additional person you hire or pound of ingredient that you use, results in a smaller increase in output than the last unit. Debt is not different. Each additional trillion dollars of debt results in a smaller increase in GDP than the last. Eventually the increment becomes so small that you can't produce enough additional GDP to service the growing debt. That's where we are today. No array of politicians in Washington, no amount of Hope & Change can get around this basic economic fact. It must stop. It will stop. The only question is whether those in government will be smart enough to take charge now, or whether they will simply dither away -- business as usual - to be washed over by the economic tsunami.