National Debt and You
National Debt is the net sum of annual budget deficits within the National government. Budget deficits occur when a government’s expenses exceed its revenue, or income. To reduce these differences, the Treasury will often issue bills, notes, and bonds in which people can invest their money to increase the government’s income. National Debt is not a recent concept. It has been a governmental problem since the Revolutionary War. In 1791, the debts amounted to over $75 million. By the start of the Civil War, though, the debt was reduced to $65 million, but grew dramatically following it. By the end, debt in the United States had reached $2.7 billion. But that’s just the beginning. Following World War I, the debt …show more content…
This is because it impacts the government in essential ways. The most important effect it has is that it rids the government of its ability to control its social, economic, and political power. National Debt forces the government to use a large amount of its money to try to get out of debt, increasingly so, and therefore decreases the amount of money that will be contributed to its governmental responsibilities. This makes our country’s debt a National Security issue.
National Debt will also impact your personal finances. It does this in four crucial ways:
First, as national debt increases, the less likely it is that the government will be able to pay back its debt. Meaning, people who have loaned the government money (such as bonds) are less likely to get their money returned. Also, because the government has to pay interest on all these returns, they are losing money to pay back other debt, so they will need even more loans. This results in the government having less money to spend on other governmental services, because tax revenue is being used to pay off national debt. This will eventually cause a lower standard of living, because they won’t be able to borrow money to pay for economic enhancement …show more content…
These rising interest rates makes it more difficult for interested buyers to get a larger loan for their prospective home because they will have to pay more of their own money in interest on the loan they do receive. This in succession will decrease the cost of homes, and reduce the net worth of homeowners.
Finally, the U.S. treasury is considered a risk-free rate of return, and yield on government bonds is increasing. It is more difficult for corporations to higher risk premiums and stock dividends, so the risky corporate investments lose appeal. This is called the crowding out effect. It encourages government growth and reduction in
National Debt is the net sum of annual budget deficits within the National government. Budget deficits occur when a government’s expenses exceed its revenue, or income. To reduce these differences, the Treasury will often issue bills, notes, and bonds in which people can invest their money to increase the government’s income. National Debt is not a recent concept. It has been a governmental problem since the Revolutionary War. In 1791, the debts amounted to over $75 million. By the start of the Civil War, though, the debt was reduced to $65 million, but grew dramatically following it. By the end, debt in the United States had reached $2.7 billion. But that’s just the beginning. Following World War I, the debt …show more content…
This is because it impacts the government in essential ways. The most important effect it has is that it rids the government of its ability to control its social, economic, and political power. National Debt forces the government to use a large amount of its money to try to get out of debt, increasingly so, and therefore decreases the amount of money that will be contributed to its governmental responsibilities. This makes our country’s debt a National Security issue.
National Debt will also impact your personal finances. It does this in four crucial ways:
First, as national debt increases, the less likely it is that the government will be able to pay back its debt. Meaning, people who have loaned the government money (such as bonds) are less likely to get their money returned. Also, because the government has to pay interest on all these returns, they are losing money to pay back other debt, so they will need even more loans. This results in the government having less money to spend on other governmental services, because tax revenue is being used to pay off national debt. This will eventually cause a lower standard of living, because they won’t be able to borrow money to pay for economic enhancement …show more content…
These rising interest rates makes it more difficult for interested buyers to get a larger loan for their prospective home because they will have to pay more of their own money in interest on the loan they do receive. This in succession will decrease the cost of homes, and reduce the net worth of homeowners.
Finally, the U.S. treasury is considered a risk-free rate of return, and yield on government bonds is increasing. It is more difficult for corporations to higher risk premiums and stock dividends, so the risky corporate investments lose appeal. This is called the crowding out effect. It encourages government growth and reduction in