How is the US in trillions of debt but still able to spend more money and deepen said debt without having to repay anything?
In: Economics
Because countries last forever (yes, I know countries cease to exist on occasion) so the timescales involved are completely different then your personal finances.
Next up, as long as the debt is managed appropriately and growth continues, you can keep going into ever further amounts of debt, and this isn’t a bad thing.
For example, in country X, a new bridge will generate $20 fun bucks a month in economic growth. Government debt will “cost” 10 fun bucks a month. So the debt and servicing costs are more then made up for by the increase in the economy. Next month, the country can add additional debt that will again, increase the economy by $20 fun bucks with the associated debts costs of $10 fun bucks. The government is paying debt costs of $20 fun bucks a month, substantially more then a couple months ago. But the corresponding economic is at $40, so the government’s finances are actually in better shape then if the country had taken on no debt.
The total *amount* of debt in this case is completely meaningless, unless you want to get elected or write a click bait article.
Now if this country takes on debt to buy a bridge that only has a return of $9 fun bucks a month, and does so month after month, year after year, you eventually come to the point where you can no longer pay for additional debt. A good example of this is Greece, though that is a very simplistic explanation of that issue.
TLDR: The ***total*** amount of national debt doesn’t really mean anything. It’s about the quality of debt, and US debt is considered very high quality.
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