Like how does it affect the average citizen on a day-to-day basis?
Why do we have a national debt in the first place (as presumably the richest country in the world)? Who lends us the money, and do we have to pay them back?
Also, as I understand it, we can’t really get rid of the national debt, but we can slow down the amount of spending. Why does the rate of our debt accumulation matter?
If we’re already trillions in debt, what difference would it make at this point to spend indefinitely to improve our country?
In: Economics
The national debt is, primarily, debt to people and entities who have purchased securities from the Treasury (bonds, T-Bills, T-Notes, collectively referred to as “Treasuries”). You can purchase some, if you wanted to. A lot of it is owned by foreign countries (China, the UK, Japan, etc. The USA also owns a lot of *their* debt in turn). Basically, the government is selling the promise of money later to provide it money now, with the idea that by getting the money now and investing it back into the economy the economy (and tax base) will grow fast enough to cover the interest on the debt when it comes time to pay it off.
Of course, the US government is continually selling Treasuries and continually paying off debt, so what often happens is the US has to borrow more money to pay off the debt it already *has*. That’s why the debt ceiling debate a while ago raised concerns about the US defaulting on its debts- the debt ceiling sets a limit on how much the executive branch (who’s in charge of paying the bills and raising funds) can borrow, and they hit that limit but still needed funds to pay off the debt.
Theoretically, it doesn’t matter how deep you go into debt, so long as people are confident you are still going to be able to pay it off, thus letting you sell more securities to raise more funds to pay off your debts now. People can’t call in debts whenever, so the US can plan for decades ahead on how to pay back its debt. For decades, the USA has been such a strong and safe investment that it can sell securities for really low interest, i.e. really cheap to pay off, sometimes even cheaper than inflation, making that debt literally cheaper than free. But if the US, say, almost defaults on its debt every election cycle, people might start to get more hesitant, making debt more expensive and unsustainable.
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