National Debt Essay Example

lower socioeconomic status, they would have spent more and saved less leading to a potential rise in economic growth.

The United States government has amassed the largest national debt in history due to reduced taxes and misused tax stimulus. This has resulted in borrowing more money from foreigners and a significant IOU, despite the negative impact on the economy. Although cutting government program assistance is not an option, continuing to borrow remains the only alternative, even though there is potential inability to repay debtors. Regrettably, political miscommunication has caused a lack of awareness among Americans about how severe the impact of national debt can be on daily life, resulting in an ongoing ripple effect in our economy that appears to have no end.

Due to the government's heightened borrowing, its ability to loan funds to major corporations has decreased. This is due to facing increased interest rates and as a result, there has been a shift in the economy from manufacturing towards service-based industries. While some people may view this change positively for improving quality of life, salaries within the service industry are notably lower than those offered within factories and mills. As a consequence of reduced wages, spending decreases which ultimately hinders economic growth. Additionally, companies such as General Motors have redirected their investments away from manufacturing and towards banking and sales sectors which results in an excess of employees working in service positions leading to persistent low wages despite high demand.

The loss of manufacturing jobs has led to increased reliance on government programs such as Welfare and Unemployment for family support. This has resulted in an expansionary approach by the government, causing further borrowing for

these initiatives. Compounding the issue, the cycle perpetuates itself. Presently, foreign nations like Rosenbaum are funding the government's interest payments on their debt, accumulating at an average rate of $1.4 billion daily. Economist Bradley Schiller points out that during Europe's initial adoption of the Euro by the United Nations, the US dollar held a value close to 1.

For just 10 Euros, Americans could formerly purchase over a dollar's worth. Unfortunately, due to the rise in national debt and the act of monetizing, inflation has resulted in a significant decrease in the dollar's value to only .64 Euros; almost half its original worth. This devaluation causes European hotel rooms that are typical to potentially cost Americans up to $600 while they are only valued at around $400. To break this harmful cycle, Americans must prepare themselves for a severe recession caused by not only the devaluation of the dollar but also necessary tax increases.

The government can utilize taxes to shift funds from servicing debt interest towards paying off the principal, a strategy successfully implemented by President Bill Clinton in the 1990s despite opposition. This approach resulted in one of the most prosperous economic periods of recent decades, leading to stabilized mortgage rates and an increased value for the dollar bill, ultimately stabilizing the economy after an initial downturn.

Some experts suggest that to avoid a deflationary recession caused by a decrease in the money supply due to debt repayment, the focus should be on boosting Gross Domestic Product (GDP). By doing so, the percentage of debt represented by GDP would decrease. Others are advocating for stimulus packages that increase government spending in order to jumpstart the economy

and encourage consumer spending.

Despite implementing ten Keynesian economics-based initiatives aimed at increasing the money supply and spending their way out of a recession during the 1990s, the Central Bank of Japan's attempts to stimulate economic growth were unsuccessful in resolving Japan's economic crisis and instead led to significant government debt. Meanwhile, national debt is one of the top five most pressing issues facing the United States.

There is a chance that an economic depression may occur as a result of borrowing from foreign countries and excessive spending, which can cause the value of the dollar to decline. Although this situation may appear improbable, it is feasible considering the present economy and increasing gas prices (which are mainly due to the weakening dollar). Americans should be equipped and knowledgeable about the sources and ramifications of national debt in order to make informed decisions that will gradually overcome this challenge, just as we have done previously.

The following sources were consulted for information on the national debt of the United States:
- US National Debt Clock at http://brillig.com/debt_clock/
- Schedules of Federal Debt at http://zfacts.com/p/461.html
- United States Treasury at http://www.ustreas.

Visit http://www.gov/education/faq/markets/national-debt.shtml for more information.