I feel like the United States is always meddling in other countries affairs and yet still climbing further into debt. Kind of like someone giving you advice on a golf course who is terrible themself. Is it the military presence? Economic relationships?
In: Economics
Debt is not necessarily a bad thing. Money in hand is usually better than the promise of money later. In order to pay for a project, you need a lot of upfront cash. The USA could afford to pay for the project by collecting taxes for the next ten years, but they need the money *now*. So, instead of waiting, they go into debt to raise that money. While in debt, they comfortably make their payments and eventually pay it off.
For example, let’s say the USA wants to build a bridge. This bridge will cost $100 million dollars upfront to get started. The USA does not have that money on hand. Instead, they borrow the money and build it right away and pay it off for the next 10 years. Yes, they would have to pay interest on that loan, but having that bridge in position 10 years earlier means they can also get 10 years worth of revenue from that bridge, which could be more than the interest lost.
Everybody uses this same principle. Very few people can afford to buy a house. However, they might have good jobs and could afford to buy one if they save money for the next 20 year. But, since they cannot live on the street for 20 years, they get a mortgage and buy the house now. Living in that house for an extra twenty years is worth the added cost on interest on that mortgage.
Latest Answers