Because the U.S. spends more than it brings in in tax revenue.
The difference between your finances and the U.S., is that the U.S also controls the currency the debt is financed in, so it can just print money to pay off its debts. In addition, lots of government money goes into projects and programs that create economic productivity, so it’s kinda like spending money to make money.
Where it gets bad is if you’re spending money and it’s not going to productive use ( corruption, waste, fraud ), or it’s only around social programs, then it ends up hurting over time.
Well this problem’s been around since before Obama like let’s be real he was going to create a trillion dollar coin to write off the debit or something like that. Go add up all the bullshit foreign aid. The wars you sponsored not talking Ukraine or Israel i mean the wars 90% of America’s doesn’t even know their funding.
It wanted to spend more than it took in via taxes at some point and this is how you get debt.
Growth = more tax revenue
Borrow money and invest in growth, means more tax revenue. If the increase in tax revenue is higher than the cost of borrowing, you are doing good. It makes sense. There is a balance as you don’t want it to too much grow as it can lead to high inflation.
The problem comes is when you are taking out debt to pay the previous debt. This ain’t necessarily bad until the cost of borrowing shifts so much you end up with tax revenues not keeping up. You can then end up in a debt spiral.
The US is thought of as a safe haven until recently. It meant it could borrow quite a bit and people would still buy the debt. The idea being that if the US can’t pay, then the world economy is pretty much FUBAR and it probably didn’t matter where you put your money.
So the US’s debt is functionally pretty different than the debt of an individual person.
Most of the US’s “debt” is interest that is owed to people nations who have bought US Treasury bonds.
Basically, we say “If you give us money now, we’ll pay you interest later.”
And due to the US’s historical economic stability, this has been seen as a low risk investment, and an easy way to generate money.
So the whole world gives the US loads of money on the expectation that they’ll get more in the long run from the interest.
So the US’s “debt” is mostly just this unpaid interest, and it isn’t really a problem like personal debt, because the US only has this debt because other nations keep giving them money.
Government debt itself is not bad, it only can become an issue if you can’t pay the rates. Banks etc love holding government debt because it is an extremely safe investment if you need to park money somewhere and you can’t put everything into high risk.
In a sense money is only created through government debt because a major factor in its worth is the trust in government, being the one thing it accepts to pay taxes and being the one to issue it.
Everytime government debt is paid that takes money out of circulation which generally is bad for the economy. E.g. redistributing 1$ to poor people yields economic activity higher than 1$ and you get it back in taxes etc.
Like you’re five? Just like Mommy and Daddy borrow money to buy a house for up to 30 years, the government borrows money over a long period of time to grow the country.
All that military spending doesn’t pay anything back. There’s a reason why nations don’t have 20 aircraft carriers etc. They have a country to run. Britain could support a vast navy when it had an empire. The US has never had one.
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Every year it spends more than it makes in revenue, since Clinton was president.
Decades of tax cuts and economic mismanagement.
Because the U.S. spends more than it brings in in tax revenue.
The difference between your finances and the U.S., is that the U.S also controls the currency the debt is financed in, so it can just print money to pay off its debts. In addition, lots of government money goes into projects and programs that create economic productivity, so it’s kinda like spending money to make money.
Where it gets bad is if you’re spending money and it’s not going to productive use ( corruption, waste, fraud ), or it’s only around social programs, then it ends up hurting over time.
Well this problem’s been around since before Obama like let’s be real he was going to create a trillion dollar coin to write off the debit or something like that. Go add up all the bullshit foreign aid. The wars you sponsored not talking Ukraine or Israel i mean the wars 90% of America’s doesn’t even know their funding.
It wanted to spend more than it took in via taxes at some point and this is how you get debt.
Growth = more tax revenue
Borrow money and invest in growth, means more tax revenue. If the increase in tax revenue is higher than the cost of borrowing, you are doing good. It makes sense. There is a balance as you don’t want it to too much grow as it can lead to high inflation.
The problem comes is when you are taking out debt to pay the previous debt. This ain’t necessarily bad until the cost of borrowing shifts so much you end up with tax revenues not keeping up. You can then end up in a debt spiral.
The US is thought of as a safe haven until recently. It meant it could borrow quite a bit and people would still buy the debt. The idea being that if the US can’t pay, then the world economy is pretty much FUBAR and it probably didn’t matter where you put your money.
So the US’s debt is functionally pretty different than the debt of an individual person.
Most of the US’s “debt” is interest that is owed to people
nationswho have bought US Treasury bonds.Basically, we say “If you give us money now, we’ll pay you interest later.”
And due to the US’s historical economic stability, this has been seen as a low risk investment, and an easy way to generate money.
So the whole world gives the US loads of money on the expectation that they’ll get more in the long run from the interest.
So the US’s “debt” is mostly just this unpaid interest, and it isn’t really a problem like personal debt, because the US only has this debt because other nations keep giving them money.
How much time do you have and how short of an answer do you want how deep of an answer do you want?
Government debt itself is not bad, it only can become an issue if you can’t pay the rates. Banks etc love holding government debt because it is an extremely safe investment if you need to park money somewhere and you can’t put everything into high risk.
In a sense money is only created through government debt because a major factor in its worth is the trust in government, being the one thing it accepts to pay taxes and being the one to issue it.
Everytime government debt is paid that takes money out of circulation which generally is bad for the economy. E.g. redistributing 1$ to poor people yields economic activity higher than 1$ and you get it back in taxes etc.
It’s not really debt. It represents people investing in the US.
It’s like thinking NVDA owes its shareholders 2 trillion. That’s not how it works.
Say a country owes 100 million, interest is 1.7%, but growth is 2.5% and inflation is 2%.
Well after 100 years between inflation and growth that debt will have become tiny and irrelevant compared to GDP and tax revenue.
This has already happened, historically, many times over. Countries don’t bother paying off their old debt, they just outgrow it.
Like you’re five? Just like Mommy and Daddy borrow money to buy a house for up to 30 years, the government borrows money over a long period of time to grow the country.
All that military spending doesn’t pay anything back. There’s a reason why nations don’t have 20 aircraft carriers etc. They have a country to run. Britain could support a vast navy when it had an empire. The US has never had one.
Because they can. It’s nice to have money and kick the can down the road.