Is the national debt that big of a problem? An article by John T. Harvey explains why it might not be as big as a problem as you think. Let me first start by stating that the current debt to GDP ratio is not the largest that the Unites States has ever experienced. The current debt to GDP ratio has slightly crept over the 100% mark but is still not as high as it was at the end of WWІІ which was around 120%. Having the debt to GDP ratio eclipse 100% is alarming because of how fast the ratio grew over the last decade but will it cause the
government to go bankrupt? The answer is no. U.S.
You are probably frequently given the analogy between the government’s debt and a family’s debt to illustrate how bad the growing debt problem is. The problem with that analogy though is that those two things are not analogous. They are not comparable for a few reasons: the government has an infinite lifespan and can print its own money. That is why people and other countries are willing to lend to the
at such low interest rates because they know it is a safe investment. Let me put it this way; if you could continually borrow money at 2% interest for an infinite lifetime and have the ability to print the money due, wouldn’t you run a deficit? U.S.
There are a few other fallacies that I would like to point out. Many compare the
United States’ situation to ’s. This is another comparison that it not analogous for many reasons. One main reason is that Greece owes its money in a currency that it does not control. Once again, the Greece can print its own money if it chooses. U.S.
One last fallacy that I would like to address is that
China essentially owns the Unites States because of the huge amount of U.S. debt that owns. Many Americans don’t know that much of the China U.S. debt is actually held by the government. U.S. China owns around 30% of the debt which could be printed and paid if wanted it. But keep in mind that China China’s economy hugely relies on the to purchase their exports that their economy desperately relies on. U.S.
Before losing sleep about the national debt, remember that the
does not even have close to the largest debt in the world. We do have one of the largest economies though. United States