The National Debt, Dangerously High?

I have written several articles on postings related to politics. A list of links have been provided at bottom of this article for your convenience. This article will, however address different aspects on these political events.

The National Debt is the public and intragovernmental debt owed by the federal government. There are two types of debt, the first is held by the public (country’s citizens, international investors, and foreign governments), the second type is intragovernmental (government departments ie, Social Security Accounts). Increased government spending initially boosts economic growth. Departments expand, new workers are hired, new construction takes place all causing the economy to expand and thereby increasing revenues. However, increased spending is always greater than the tax revenues it creates. There is only way to reduce the deficit, is to raise taxes. This slows economic growth. The only other way to reduce the deficit is to reduce spending. This occurred during the Reagan Administration, he reduced spending, and reduced the total deficit. The economy improved, more jobs were created and revenues increased. You can also see this policy in effect in Canada. There debt was too high, they made drastic cuts in spending, eventually they were able to reduce there deficit. The economy is stronger than it has ever been. When left alone the private sector is self regulating and adjusting. It is based on the law of supply and demand. It is much more effective in controlling the economy than any governmental regulations are.

How the debt affects the economy, larger debts gradually cause an increase in interest charged by the creditors, R/T a decrease in the debtors credit rating. The debtor becomes a higher risk. The national debt causes the country to enter into a crisis situation when it is unable to pay its bills. The debt to GDP (Gross Domestic Product) is too great, usually over 77%. The country is unable to roll over its debt, and the creditor threatens to default on its loan, ie Greece and its debt crisis. Our country currently is greater than 100%. The other source of money is Social Security. There is too little money available to pay retirement benefits and pensions. Either the benefits are cut to the pensioners and retirees or Social Security calls in its loans so it can maintain its payments. This causes a need for increased taxes or borrowing from other higher interest rate sources.

We need to reduce wasteful governmental spending. The number of jobs needs to increase, we need to bring production back to the United States. By making increases in these areas, revenues will increase. Once the Budget is balanced, we can start creating surpluses that will allow our country to reduce our national deficit. Our debt is the largest in the world, if we are unable to make payments and the debts are called in by the creditors, the global economy will fail.

In the beginning of this year our economy was very strong, we were making progress towards balancing our budget. Then the Covid-19 crisis struck. Our economy and most of the worlds’ great economies took a major hit. The country responsible for this was China. Their lack of transparency created the pandemic. A substantial portion of our debt is owed to China. There is growing consensus that we should renege on our debt to China, in lieu of reparations made by China. We have spent trillions of dollars to recharge our economy. Money that we did not have. Unless our economy improves, we are in for a long hard depression, the likes of which we haven’t seen since the great depression of the 1920′ and 1930’s.

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