It is official now, the United States national debt has hit the 23 trillion dollar milestone, that’s twenty-three with twelve zeros after.
That’s a pretty staggering figure — $23 trillion dollars in debt and climbing every second of every day. And in order to give you an idea, that is basically every taxpayer is in debt for $186.576 dollars. And if you were to break it down evenly across every citizen in the United States including those who don’t pay taxes, every United States citizen is $69.735 dollars in debt. And the debt to gross domestic product ratio is now a 106.6 percent. That is very significant; for that ratio to be over a hundred percent, it means that it’s above and beyond 100 percent would be an equal right to the gross domestic product, but it’s now above it by six-point six percent. Unfortunately, the economic collapse always arrives eventually, and our future is looking extremely bleak at the moment. And as the argument goes, the more the debt spirals out of control, the more you’re going to have inflation, the more you’re going to have undisciplined frivolous spending. So a lot of different people will have a lot of different opinions when it comes to this subject, the more and more this national debt figure climbs. And as you know, nobody’s really doing anything to curtail it, not the FED, not the president, nobody.
And it’s not only a bipartisan problem. It is a national problem; in other words, by every measure in the United States, we are a Debt loving nation for sure.
It is quite crazy to see how much debt we have in the United States. We live in a society where our government likes to spend spend spend, and both parties are involved, and any time there’s any mention of any kind of cut or even a decrease in spending from the allocated, it becomes a big deal, or it raises a big fuss among the halls of Congress. We are paying a lot in interest alone. In fact, 13,000 almost 14,000 dollars per adult just in interests every year.
But wait, there is even more debt, the U.S. total debt when you include private, and public debt is seventy-four trillion dollars, so it’s not just a problem with the federal government, although that is a huge problem.
They can print money, you and I cannot, so when you take into account all those factors involved, you know that the debt owed by every American citizen it’s over two hundred twenty-four thousand dollars.
We need to take all that into account for sure. So there is that we’ve got mortgage debt we’ve got student loan debt and we have credit card debt , and if you take in account the average round that credit card debt which is probably one of the worst kinds of debt there is, that’s over sixty-six hundred dollars per holder, but the average I’ve heard was a lot more about fourteen thousand dollars in debt for the credit card debt . Student loan debt almost becomes a necessary evil in this day and age. There’s so much pressure to go to college, and there’s so much waste in the public education system. The education is not what it used to be these days. And then you have mortgage debt too, and the average in the United States is about two hundred four thousand dollars per individual per mortgage for each house out there.
The fact of the matter is that we are in debt-driven Society, unfortunately, and it’s a shame that has to be that way. This debt that was accumulated over so many years that most of us agree will never be paid off in our lifetimes or in the lifetimes of our children, and then there’s the fear of how much we can really rely on the dollar, which has survived a lot. I think it survived in some ways by the skin of its teeth because of the nature of other fiat currencies around the world. There’s only so long that will last.
When the Federal Reserve lowers and raises interest rates, they do that to help steer the economy in a specific direction, and so this is something that we have seen time and time again. A dollar today is not what a dollar was twenty or fifty years ago.
So let’s explain what this national debt we are talking about shall we is:
every year the federal government spends X amount of money, while it takes in Y amount of money when X is greater than Y we create a budget deficit when you add up all the annual budget deficits you get the National Debt.
Think of it in your own life say you take in fifty thousand dollars a year and you spend fifty-five thousand that means you have an annual budget deficit of five thousand dollars, if you make and spend that same amount for 20 straight years, your personal debt would be five hundred thousand dollars . so to put it very simply over the course of our republic we have spent 22 trillion dollars more then we have taken in .
Which is a lot, in fact, the national debt right now is the largest it has ever been in the last decade, or so we are adding to that debt at record rates.
At the end of 2000, for example, the National Debt seemed manageable. Nine years later and the debt more than doubled to now 23 trillion, which makes us the most indebted country in the entire world.
The U.S. has almost always had some sort of national debt, way back in 1789 the Treasury Department was created to help us manage our debt, by 1790 the country was seventy-five million dollars in debt, we now add that amount seventy-five million to the national debt roughly every hour.
Now the only time we paid off our national debt was in 1835 under President Andrew Jackson. And we have been spending more than we’ve been taking in every year since 2001.
Now the Federal Reserve, which is essentially the Bank of the United States, has kept interest rates very low for a very long time, meaning that the government’s interest payments haven’t been all that bad ish.
In 2017, for example, interest in our national, the debt was two hundred and seventy-six billion dollars, which were less than seven percent of the total budget for the country that year.
Now back in the 90s, when interest rates were higher, our interest payments were more than fifteen percent of our overall budget.
Now, if the Fed begins to raise interest rates, it means the amount that the government will owe on its debt is very likely going to go up, and it might go way up. The Congressional Budget Office has estimated that it’s going to cost the government nearly three times as much to pay off its debt in 2027 as it does right now.
Now with the massive tax cut plan that President Donald Trump and congressional Republicans pushed through and into law in late 2017 that bill is estimated to add one point nine trillion again trillion with at 12 zeros to the debt by 2028 and before that President George W Bush is seven hundred billion dollar bank bailout and President Barack Obama seven hundred and eighty-seven billion dollar economic stimulus package also helped to drive debt through the roof, and then there’s the fact that the baby boomers are getting older and older which shoots Medicare and Social Security costs skyward with really no end in sight . Add all that to the fact that Wars like the one in Iraq and Afghanistan cost a whole lot of money.
So what we do?
Well, there’s a seemingly simple solution: start spending less than we make every year, tightening our collective belts by among other things reforming massive entitlement programs like Medicare and Social Security. Sorry baby boomers, except those programs are popular just like tax cuts are popular and, breaking news, the politicians hate to do things that are unpopular. If you owe a hundred thousand dollars in personal debt, the only way you get out of debt is to save money by making more and/or spending less.
The U.S. government has a much easier option, it can just print more money, and while you probably have to pay off your personal debts within some time period, the U.S. government can theoretically carry a massive debt forever.
In fact, there’s an argument gaining some traction in politics these days: that running a massive national debt isn’t really any big deal at all.
That’s called Modern Monetary Theory, and it relies on the two unique traits of the U.S. debt: number one, the government can always print more money, and number two, we never really theoretically have to pay it off.
Now while most people and that includes most economists don’t have that “who cares” attitude about our mounting debt, the big concern is that if the economy hits a significant downturn, it may be impossible with such a big debt for the Fed or anyone else to stimulate the economy back into action.
And that could lead to inflation or even hyperinflation where the cost of everything we buy goes way way up, and our currency starts to become not just devalued but fundamentally meaningless.
It turns out all those warships cost a lot of money. It turns out all those fighter jets cost a lot of money. It turns out all those food stamps cost a lot of money. Yes, the United States of America can pay back the debt if we increase the taxes, but this theoretical solution is not practical because nobody is going to pay 33% more taxes. We also need to reduce expenses. In the U.S., the wealthy/corporate class controls the government. Therefore, it is the rich, and the corporations, who design economic policy. And they create a financial system to benefit themselves, and no one else. So our National Debt is a product of plans designed by the wealthy for their own benefit. The rich enact tax cuts to increase their wealth. The shortage of revenue necessary for the government to meet its obligations is then borrowed, which increases the debt. For this to change, it is incumbent on the U.S. to improve the economic policies that have created the monstrous National Debt in the first place. So the first step would be to restore democracy in the United States, by taking the power of government away from the Corporate Fascists who now control it. Unless and until we do that, the only thing that will happen with the National Debt is that it will expand. If we ever manage to restore democracy in the United States, the path to dealing with the National Debt then becomes clear: Reverse the economic policies that created the majority of the National Debt. Repeal all of the pernicious tax-cutting legislation which has been enacted over the last 40 years. Make the rich and the corporations pay their fair share, as they did when the U.S. standard of living was at its peak, after the end of WW II, and before the election of Ronald Reagan. Increase the wages of the US Working Class. The Working Class is the demographic that makes up the most substantial portion of the tax base in the U.S.
Working Class wages have been stagnant for about 40 years. The U.S. minimum wage has actually fallen in real terms over that period and has not been adjusted to account for rises in the cost of living in over a decade.
By reversing the ruinous policies that are responsible for the creation of most of the National Debt, and at the same time encouraging wages for the Working Class to rise, you stop the ruinous policies responsible for the debt, and you increase the tax base that will be required to pay the National Debt down. That is really all there is to it. Economics is basically just common sense. Unfortunately, common sense does not prevail in the design of economic policy when the policy is left to the rich and the corporations.