A Trillion Has Twelve Zero’s
The glutinous Wimp was to represent the Government with its
voracious hunger for “burger-bucks.” In the heights of
Depression-era politics, one can only imagine Segar’s boldness in standing
against the increasing debt and public works that had been promised by
Washington to be paid on “Tuesday.” What Tuesday? Segar was concerned. You
might be as well.
In 1932, Franklin Delano Roosevelt, was elected President
of the United States. He had a plan to help fix the problems with the U.S.
economy. He called that plan the New Deal.
As part of the New Deal:
· The
U.S. Government started programs that gave unemployed people jobs.
· As
part of those projects, people built many public buildings and roads.
· Other
New Deal programs helped raise the price of farmers’ crops and the animals they
sold.
During the New Deal, changes were made to make the U.S.
banking system more stable so banks would not go out of business without giving
people their money back. The Federal Deposit Insurance Corporation (FDIC) was
created. The FDIC:
· insured
the money people put into a bank up to $5000.
· prevented
people from losing all their savings if a bank failed.
The New Deal also changed the way businesses operated to
help make sure people were paid more fairly. All the New Deal programs were
administered by the Government and, more importantly, the Government paid the
bill. This meant that the national debt
increased a great deal, from $22 billion in 1933 and grew to $33 billion in
three years.
Then America entered into WW II.
Taking part in this war was very expensive for the U.S. Not
only did the U.S. pay for its own military, it also lent money to Britain and
other countries fighting the German military. The estimated cost for the U.S.
was $323 billion. To help pay for the war, the U.S. took on even more debt,
borrowing about $211 billion. Much it ( approximately 18% of the total U.S.
debt) in the form of U.S. Savings Bonds, which were also called War Bonds at
the time. Government’s debt had grown to
more than $258 billion.
According to the U.S. Treasury
Department, the current national debt of the U.S. is $31.3 trillion.
That’s a huge number, and on a per capita, each of us owes about $94K. But
that’s not so bad, right?
According to Business Insider (November
14, 2023):
- The US's $33 trillion debt mountain may not be
as bad as it seems.
- There are some misconceptions surrounding the national
debt, according to experts.
- Still, economists say debt problems could arise
in the future given the current rate of spending.
The national debt
just blew past $33 trillion for the first time ever, thanks to years of
frenzied spending following the pandemic. And that debt load is likely to soar
even higher – potentially reaching $50
trillion within the next 10 years, according to a projection from the Congressional Budget Office.
It may spell
trouble ahead for the US, especially in the context of rising interest rates.
But experts say that there are major misconceptions floating around the
US debt problem that could make the nation's debt load appear more dire
than it actually is.
Here are five
misconceptions about the country's debt burden: (Ready?)
1. The US needs to pay off $33 trillion
Technically, the
US needs to pay the interest on its debt, and the principal of maturing
government bonds. It's actually uncommon for nations to completely pay down the
debt after accruing large balances, according to Nobel economist Paul Krugman. Such is the case
for Great Britain, which is still holding onto debts it incurred during the
Napoleonic wars. (That’s reassuring)
It cost the US just $395 billion to
service its debt last year, according to the Office of Management and
Budget. That's around 1% of last year's
GDP.
Still, economists say debt
servicing costs could rise dramatically in the coming years. The US's annualized debt costs
hit $1 trillion last quarter, according to a Bloomberg analysis.
Meanwhile, there's
around $7.6 trillion of
government bonds that's set to mature over the next year, according to a
September analysis from the research firm Apollo. That's around a third of the
total balance, or a quarter of America's entire GDP.
2.
The current debt balance is far too high
The public debt
balance actually needs to be evaluated in relation to GDP. The US's debt-to-GDP ratio
hovered around 97% last year,
below a key threshold of 100%.
"[$33
trillion is] meaningless. It's really in the context of GDP, the resources that
are available to make good on the interest of the principal payments on that
debt," according to Mark Zandi, the chief economist at Moody's
Analytics. "A common mistake people make is that they quote these big
numbers, but fail to recognize that there's some really big numbers supporting
that debt," he added.
3.
Debt is bad for the US economy
Debt helps the government carry
out critical functions. It also helps fund important investments like climate
change initiatives and building new infrastructure, Zandi said. (So debt is
good.)
"In the case of the
government, using debt is a very appropriate and desirable way to finance a lot
of what they do," he added. "People get really anxious about the
government borrowing anything, and that's a istake. We need the government
to be out there borrowing money because of the long-term investments it's
making in our economy."
4.
The US needs to pay off the debt quickly to prevent a crisis
The US isn't at
immediate risk of a debt crisis, though trouble may be brewing down the
road given the current rate of spending, Zandi said.
The US can quell
worry among bond market investors by moderating its spending in relation to GDP
and the current interest rate level, or by revving up economic growth. And by
some accounts, the US is growing too fast to spiral into a debt crisis now, with the Atlanta Fed forecasting 5% GDP growth during the
third quarter.
5.
America's debt problem is not unique. (Like
misery loves company?)
Rising debt levels
are a worldwide issue. China's debt problems are now eating away at the nation's
property sector. Middle Eastern nations
are also flirting with a debt crisis, and the worldwide debt balance will likely trend upwards in the coming years, according to
International Monetary Fund economists.
"This is more
of a broader sovereign debt problem that's starting to develop. So I do think
this is an issue that, unless policymakers change policy or the economy does
much better than anticipated, is going to be a problem down the road,"
Zandi said.
Now, don’t you
feel better? I don’t There are too many experts here, too many “may’s”, and too
many economists’ opinions.
Remember?
If
all the economists were laid end to end, they'd never reach a conclusion.
From the Socratic
Method:
In
his famous quote, "If all the economists were laid end to end, they'd
never reach a conclusion," George Bernard Shaw captures the essence of the
complex and often contradictory world of economics. At first glance, the quote
may seem like a whimsical observation about the endless debates and differing
opinions among economists. However, when examined more closely, it reveals a
fascinating philosophical concept - the nature of subjective interpretation and
the limitations of objective truth. The straightforward interpretation of
Shaw's quote is that economists, despite their collective expertise, frequently
find themselves at odds with one another. They tirelessly analyze data,
construct intricate models, and conduct endless research, yet conclusions always
seem to elude them. This portrayal highlights the inherent complexity and
uncertainty of the field of economics, where so many variables, both tangible
and intangible, shape our understanding of the world's financial systems.
Underlying Shaw's quote lies a deeper philosophical concept: the relativity of
truth. Economics is not a realm governed by absolute laws like physics or
mathematics. Instead, it is a social science intertwined with human behavior,
values, and culture - elements that are inherently subjective and variable.
Different economists approach the subject matter through their unique
perspectives and biases, which invariably lead to divergent opinions and
conclusions.
So,
it all comes down to a matter of opinion but sleep well, and don’t worry about
your per capita share of the national debt. Tuesday is never going to
come. At least that’s my opinion.
God
Bless America
.jpg)
Comments
Post a Comment