Why Is the Government in So Much Debt and Should I Be Worried?
What’s It About? The national debt seems to have a life of its own independent of human control. The Issue? What are the implications of the national debt on public policy and how should we weigh the dangers that debt may pose?
https://mediaplayer.pearsoncmg.com/assets/_video.true/mypoliscilab-2017-AmGov-Explaining_National_Debt
1. Is the United States in a debt crisis? Make your case.
2. The dollar amount that the United States has borrowed and owes to creditors (now in the tens of trillions of dollars) is one measure of the national debt. What other statistics or ratios might be used to express it? Is it useful to compare the country’s financial situation with the debt and earnings of a family?
3. Think of the relationship between debt and investment in the both the private and in the public sense. Are debt and investment always intertwined?
4. What is the link between foreign policy and the national debt? Does the U.S. debt owned by foreign governments pose any immediate dangers to U.S. foreign policy?
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1. The United States is not currently in a debt crisis. While the national debt is high, it is manageable and the U.S. government has been able to make interest payments on time. Additionally, the U.S. dollar is considered the world's reserve currency, which gives the government more flexibility in borrowing and repaying debt.
2. In addition to the dollar amount, other statistics or ratios that express the national debt include the debt-to-GDP ratio, which compares the debt to the country's economic output, and the debt per capita, which divides the debt by the population. Comparing the country's financial situation with that of a family can be useful in understanding the concept of debt, but it oversimplifies the complexities of a national economy.
3. Debt and investment are not always intertwined. While debt can be used to finance investments, such as infrastructure projects, it can also be used for consumption or to cover budget deficits. In the private sector, the decision to take on debt or invest depends on various factors, including risk appetite, expected returns, and available financing options.
4. The link between foreign policy and the national debt is complex. The U.S. debt owned by foreign governments, such as China and Japan, does not pose an immediate danger to U.S. foreign policy. However, it can create economic vulnerabilities and potential leverage for these countries in the long run. Furthermore, the U.S. government's ability to finance its debt can be influenced by its relationships with foreign creditors, affecting its overall economic and geopolitical position.
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