Actually, in nominal terms there is really no limit to how high it can go. BUT - there has to be a corresponding increase in all nominal inputs to obtain stability in real values (following this?) So, the fly in the ointment has been stagnant wages. No wage hikes, no opportunity to increase debt. And the system fails.
Those Assets you talk about do not generate enough funds to cover the debt. it is just inflated, air made assets. We just call them financial assets.
I have no doubt this system of debt is collapsing. I just wonder how it will happen during the 2008-2018
No, you haven't, really... Firstly, while I now understand your point about debt and GDP, I would strongly disagree with it. I think what you're referring to (and correct me if I am wrong) is the velocity of money for wider aggregates. From what I can see, that measure has actually grown since the 50s, although it is quite cyclical, as one would expect. Secondly, I just don't see this why the 'public debt spiral' has to be a foregone conclusion. Given that we have Japan as an obvious counter-example, it's just not clear-cut to me. Granted Japan is highly idiosyncratic and it seems like its situation has gotten a lot shakier in the past few days. Still, if not for the incompetent DPJ communication, I think Japan could hobble along for a while yet. Thirdly, I just don't agree that in the modern world economic activity necessarily implies production of something tangible. Given that services are an increasing share of world GDP (I think), surely that's not the case. And it seems that the one resource needed to produce services is only getting more abundant. Finally, the whole point is that increasing productivity/efficiency implies higher output for the same amount of input. Surely, if you don't put a bound on productivity/efficiency, at the very least Malthus's conclusions are not obvious. Again, I am not saying that the scenario you're portraying is impossible. I just don't think that it's all that clear what's in store and how things are going to pan out. I have been discussing these issues with people and thought about them a lot, hence my comments.
Any pool on how much they will raise the debt ceiling? I would normally say up to 15T so they wont have to raise it until 2011 as next year is an election year. But since all Republican senators will probably oppose any increase, I will say 14.5T. Any other guesses?
It is important because the number will give an idea of whether or not Congress plans to seriously balance the budget anytime soon. If it is too high, then maybe the dollar will drop farther in response.