In its new report, the Congressional Budget Office predicts lon0g-term economic growth at 2.2% a year vs. 3.2% from 1948-2010.
That’s bad enough. But as the above chart shows, if you assume the worst possible economic impact of a massive rise in U.S indebtedness — which would create a vicious circle of slow growth leading to higher debt leading to slower growth — the economy stops growing in the early 2020s and then embarks about a steady decline. (Until, of course, the CBO model become unstable in 2035 due to the massive debt of 250% of GDP.)
In other words, in about a decade, high debt could create a Permanent Recession where living standards stagnate and then fall.
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