On this episode of Tape Talk we talk about the US Debt situation and the never-ending Debt Ceiling debates. Is it as bad as the headlines make it sound?
What is the National Debt? Why Does it Exist?
When a country spends more than it takes in its budget ends in a deficit. When this happens debt must be issued to make up the difference. While this sounds like a dire situation it’s a fairly typical situation among many of the countries throughout the world. We’ll consider if the national debt is bad or if it can actually be a beneficial tool for the country.
A Country is Not a Person
Most discussions around the national debt end up trying to make parallels to an individual consumer so that we can get our mind around the size and scope of the debt situation. However, this presents a significant problem. A nation is completely different from an average household. We consider why being a nation without a life expectancy, having the ability to print money, and control over taxes all contribute to national debt being significantly more sustainable than your average household debt.
Don’t We Owe China Too Much?
One of the biggest arguments surrounding our debt levels is the fact that China owns a lot of our debt. Is this nefarious or simply the standard state of affairs? We break down the real level of US debt that China owns so we can consider how at risk the nation is.
There’s No Easy Fix
Many discussions around the national debt inevitably result in pointing one’s finger outward and expecting that someone needs to get the situation figured out. We consider how practical it is to pay down or pay-off the national debt. Also, is it possible to pay down the debt without affecting individuals’ own financial situation?