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
It doesn’t, as long as the rest of the world believes we can pay it off.
Just like for you. It doesn’t matter if you have a car payment, or a mortgage, the debt itself isn’t bad. But if the bank doesn’t think you can pay it, they won’t give you the loan, and if you stop paying, they change the locks on your house or repo your car.
I have always maintained that national debt is one of the worst by-products of Western democracies. When the elected head of state stays only 4 to 8 years in power, his only interest is to optimize the short term. There are few very rare exceptions such as Clinton in the US who decided to leave a legacy of budgetary reductions, but most of the time, the image our rules is best served by ever increasing debt. In Europe – where they created one of the most undemocratic institutions ever – the European Central Bank – who yields an enormous amount of power and whose leaders are appointed by a completely opaque process that is not subject to any scrutiny – have actually managed to curb debt by imposing rigorous control over member states. It is simply that democracy and debt go hand in hand.
Because even if you never pay off the principal, the interest must be met.
Because one of the ways to continue meeting interest obligations is to cause inflation, devaluing the debt, *and* the wealth and incomes of regular Americans, and another is to raise taxes.
Because taking on debt to finance expenditures now is taking opportunities away from future generations who must service the both the debt and the decaying remains of what it purchased.
Because debt based spending encourages stupid, reckless spending, waste and corruption.
At some point it would impact the dollar and inflation (insolvency) but Japan has more than double ours and the yen is fine.
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