Could government debt create a poor economy?

1. 61

   SportsBetterposted 11 years ago

   Could government debt create a poor economy?
   
   The US government has more debt than any country throughout history.  Could this be a problem to the economy?
   
   

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   thegeckoposted 11 years ago

   Definitely! As government increases our debt, it borrows money from elsewhere - banks, countries, etc. As we increase the demand for money, we increase the cost of borrowing that money (interest). We also limit the amount of money now accessible to others. Limiting that money and increasing the interest rate hurts the ability for others to borrow and expand, weakening business growth, and overall growth of the economy.
   
   Those other countries might also decide to simply print more money, which in turn increases their inflation. Inflation devalues the spending power of both consumers and businesses. It makes that currency less attractive for other countries to invest in. It also makes it difficult for those countries to buy goods and services from foreign sources.
   
   The national debt now consumes a huge portion of our taxes, taxes which could be better spent on our own people, infastructure, businesses, etc. Taxes which could be left in the hands of people (consumers) and biz (growers).
   
   So does the debt create a poor economy? You bet it does!

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3. 66

   conradofontanillaposted 11 years ago

   A government debt is different from a personal loan. The debt expands the economy but there must be a cap so that inflation does not occur. In theory, the economy expands by the same amount as the government debt, if the debt or loan had been used in production. read more

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4. 78

   wba108@yahoo.composted 11 years ago

   Of course! The more debt a country has the more risky it is to invest in that nation. This is true both domestically and internationally, debt creates a more unstable environment for investors because it increases the likelihood of government actions that threaten those investments. Debt also decreases the ability for a nation to act independantly to protect its financial interests, therefore decreasing flexibility of action.
   
   Debt produces a likely threat of future threat of future taxes and inflation that acts as a double edged sword which both depresses econonomic growth thereby decreasing government revenues and discourages future investment.

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5. 61

   Nick Hanlonposted 11 years ago

   America is becoming the new Argentina...it just does not know it yet.Socialism believes that something can come from something;this is just not true.Believing in the free market is the only way out of the jam.production and savings rather than borrowing and spending is the way forward.Cut taxes and spending;suffer some pain now rather than just fade away.Diets require sacrifice but the payoff is long term.Binges feel good now but the long term effect is awful.

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   American Romanceposted 11 years ago

   The question is: Does the government want a poor economy?  The answer is YES!  Socialist believe the lie that equality equals utopia.  Each set of socialist throughout the world believe they have the ideas to make it work. They tend to ignore history or history lessons because no matter what happened before doesn't matter...........This time they will get it right.  Only mother government has the ability to dictate what you need, when you need it, and how  you will get it.  You must surrender your soul to the almighty government to live in the utopian society they have prepared for you.   American family households have lost approx $3400 in pay under Obama.   Household incomes grew by $2400 under Reagan..............time to shift power back to Republicans.

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      wba108@yahoo.composted 11 years agoin reply to this

      You've got that right, it seems that socialists continually disregard the lessons of the past! No matter how socialism is packaged, presented or argued, it never has worked and never will work because its a deeply flawed idea!

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   junksellerposted 11 years ago

   Debt is also an asset so it really isn't that simple.

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      SportsBetterposted 11 years agoin reply to this

      Not always, not if your buying bombs then blowing them up, or blowing up bridges then paying to rebuild them.  Not when your giving the money away to certain groups.

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      thegeckoposted 11 years agoin reply to this

      When is debt ever a good thing? Debt is always a liability.

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      SportsBetterposted 11 years agoin reply to this

      Yeah, debt financing is never good.

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      junksellerposted 11 years agoin reply to this

      Tell that to the bankers or the 30 trillion dollar CDO market. Also, check out the Modern Monetary Thoery (MMT). I'm not qualified to comment on it, but it is very interesting.

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      thegeckoposted 11 years agoin reply to this

      Eventually debt will come back to destroy somebody. Right now, the people profiting are just passing the buck.

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      junksellerposted 11 years agoin reply to this

      Not if you get more for it than it costs.  Not if you can invent money at will (like we can). I agree some are profiting at other's expense but it doesn't have to be that way. Point is, it does not in any way seem that simple or clear to me.

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   7. 61

      SportsBetterposted 11 years agoin reply to this

      Yeah a normal person couldn't just keep adding debt, even if they are accumulating assets.  Someones taking those assets back.

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      thegeckoposted 11 years agoin reply to this

      Sounds like trying to infuse the economy with Monopoly money to me o.O

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