The Truth About Government Debt: Why the U.S. Does Not Have a Debt Problem
U.S. government debt now exceeds $16 trillion. Each day now we hear about the European "debt crisis." Shouldn't we be hearing about the U.S. debt crisis too? How come the U.S. government's been getting off the hook lately?
Well, we don't have to get all caught up in this. The U.S. does not have a debt problem. Yes, you heard correctly. That $16 trillion of debt isn't the problem. In fact, the deficits that cause the debt aren't even the problem.
Before you think I've lost my mind, just watch this video. It's a clear and concise explanation of exactly what the problem really is. As an aside, I've written a number of papers on this subject and I fully agree with this professor's assessment. See if you do too.
This made a lot of sense to me. It's not just a different way of looking at the problem. It's a clear, logical explanation of why we have all that debt. Once you understand this, you see that unless the problem is attacked at the root, it won't ever be solved.
All the schemes the central banks, including our own Federal Reserve, have come up with to "solve" our financial crisis don't get at the root of the problem. The gargantuan overhang of debt that's pressing down on our economy not only remains intact, it's been building steadily since the 2008 crisis.
Anyone using their reason and common sense should be able to understand why this is never going to solve the problem. Even increased revenue won't do the trick. Where will the increased revenue come from? Government revenue comes from taxes - federal, state and local. Since the economy isn't sizzling these days (indeed it seems to be slowing), the tax revenue won't grow much, if at all, from economic activity. That leaves raising taxes. Do you think that raising taxes on people who are having a tough time making ends meet will spur economic activity? Does that make any sense?
Oh, right, we'll tax the rich. That'll do it. You don't really think this, do you? It's been tried in the past - many times - and never really works. It's simply a convenient way for politicians to sound like they're helping you, when if fact all they're doing is stoking the flame of envy of those who have more than you have. None of this is good for either you as a person, or the peace and stability of our society. But if that's not a concern of your, then here's a more "economic" explanation.
The increased revenue from raising taxes on the rich won't raise that much money. And it certainly won't put a dent in a federal budget that grows each and every year. Besides, if you raise taxes too much, the rich simply have ways of reducing their income that's subjected to taxes. (If you don't understand this, or aren't sure about this, click here for more detail.) Bottom line: It's not a solution!
The reality is the problem of too much debt comes from too much spending. Attack the problem at the root, and you can work your way to a solution. Otherwise, the debt will just keep growing.
Got it?
Well, we don't have to get all caught up in this. The U.S. does not have a debt problem. Yes, you heard correctly. That $16 trillion of debt isn't the problem. In fact, the deficits that cause the debt aren't even the problem.
Before you think I've lost my mind, just watch this video. It's a clear and concise explanation of exactly what the problem really is. As an aside, I've written a number of papers on this subject and I fully agree with this professor's assessment. See if you do too.
This made a lot of sense to me. It's not just a different way of looking at the problem. It's a clear, logical explanation of why we have all that debt. Once you understand this, you see that unless the problem is attacked at the root, it won't ever be solved.
All the schemes the central banks, including our own Federal Reserve, have come up with to "solve" our financial crisis don't get at the root of the problem. The gargantuan overhang of debt that's pressing down on our economy not only remains intact, it's been building steadily since the 2008 crisis.
Anyone using their reason and common sense should be able to understand why this is never going to solve the problem. Even increased revenue won't do the trick. Where will the increased revenue come from? Government revenue comes from taxes - federal, state and local. Since the economy isn't sizzling these days (indeed it seems to be slowing), the tax revenue won't grow much, if at all, from economic activity. That leaves raising taxes. Do you think that raising taxes on people who are having a tough time making ends meet will spur economic activity? Does that make any sense?
Oh, right, we'll tax the rich. That'll do it. You don't really think this, do you? It's been tried in the past - many times - and never really works. It's simply a convenient way for politicians to sound like they're helping you, when if fact all they're doing is stoking the flame of envy of those who have more than you have. None of this is good for either you as a person, or the peace and stability of our society. But if that's not a concern of your, then here's a more "economic" explanation.
The increased revenue from raising taxes on the rich won't raise that much money. And it certainly won't put a dent in a federal budget that grows each and every year. Besides, if you raise taxes too much, the rich simply have ways of reducing their income that's subjected to taxes. (If you don't understand this, or aren't sure about this, click here for more detail.) Bottom line: It's not a solution!
The reality is the problem of too much debt comes from too much spending. Attack the problem at the root, and you can work your way to a solution. Otherwise, the debt will just keep growing.
Got it?
Comments