I've been going through some past models and predictions I made to see if any still have validity, and I have classified them according to model type. Model D is interesting. It looks at the average increase in the debt to project forward, and then looks for a breaking point when the debt exceeds 10 times revenues. It ignores GDP entirely. So this is an update in the D series, and I call this model D-4.
1. Look at the average increase in the debt. From 3/31/10 to 3/31/12, the average increase in the gross national debt per quarter has been 2.52%. On an annualized basis, this is 10.4%. I think using 10% growth on an annualized basis is a very reasonable, even slightly conservative assumption. Start with 9/30/2012 when the debt will be about $16.35 trillion (just below the debt limit), and project forward at the rate of 10%/year.
2. Project revenue. This is difficult, but I choose to start with 4200 in the year 2020 and see growth of 5%/year.
3. Now look for when debt exceed 10 times revenue.
The tipping point is in 2024 when revenues are 5100 and the debt is 51300.
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