Can someone explain how national debt effects the lives of normal people? It seems like almost every developed western nation runs massive billion dollar deficits every year, and that seems to be totally fine. Nothing bad ever seems to happen. Occasionally you hear old school conservatives saying we need to balance the budget, but why should we if every country is in debt with seemingly no negative effects?
In: Economics
In essence, it doesn’t affect anyone’s lives. The national debt is not debt in the same sense as household debt is, at least when the debt is denominated in a currency that the government has control over. That is because the government can print as much money as it wants to if it felt like repaying it all at some point. Finance works differently when you’re the one issuing money.
However, the national debt is frequently used by politicians to scare people away from policies that prioritize public investment. “How are we going to pay for all this?” is what they often say when someone suggests expanding the welfare state or investing in infrastructure, but when it comes to things like the military they spend like crazy. This attitude is called “fiscal soundness” amongst other things and it’s generally a big fat lie that politicians like to say to win political arguments.
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