Is national debt actually a good thing?

Typically we cringe when we hear how high the national debt has gotten and curse the drunken sailor-like spending habits of the government. But I read an article by a economist named Ken Fisher, who made a pretty compelling arguement that we actually want debt.

If you’d rather not read the entire thing, he basically says that when the government borrows money and then spends that money, it passes through many different people’s hands in different sectors of the economy, thereby stimulating it. He also makes the point that debt is a lower percentage of our GDP now than it was in the 1950s and 1960s, and that the return on our debt-how much we get in assets compared to what we spend-is very high right now, meaning the amount of spending we’re doing is good. Finally, people get paranoid because more of our debt is held by foreigners…yet, he makes the point that these people have no reason to simply stop loaning to deliberately screw the US, because they’re making a lot of money from loaning right now.

So what do you think? Is our national debt actually a good thing, as crazy as it sounds?

Answer #1

The way I see it, the “national debt” needs to be reined in, for times when the value of a dollar is falling (like now)…We are a consumer nation, so yes, we have a big impact on the stock markets all over the world…HOWEVER, when dollar values fall, and foreign currancy rises over it’s value, the “consumers” in this country cannot afford to buy the products other countries are manufacturing…our economy goes into recession or worse…depression…and things have to “even out” before the economy re-stimulates.

I’m sorry, too, that I can’t go to that link…If you have it, tell me when it was written, please?


Answer #2

Good points, it may be better to reign in spending during times of depreciation…although the falling dollar hasn’t been a completely bad thing for our economy. Aerobus and other European companies are now planning to build manufacturing plants in the US, and exports have risen. I still don’t think our debt is as out of control as people believe though.

The article is called “Learning to Love Debt” and it’s by Kenneth Fisher. If you google it, it should come up.

Answer #3

Rich countries like the US and the UK may be able to benefit from their national debts. The ones who have clearly found them ‘a bad thing’ are the poorer countries which incurred the debt in the 1970s (often having been ‘sold’ it by western lenders) and then saw their interest levels skyrocket in the 1980s. By the late 1990s these countries were regularly spending more on servicing these debts than they were on health and education combined. They had more than paid off the initial debt, it was just that the interest repayments had swelled in this unpredictable way.

One of the most valuable thing that western countries have done since the year 2000 is to BEGIN to cancel these ‘odious’ debts (‘odious’ is the legal term). There is more to do, but where the historic debt has been cancelled, countries are now spending on health and education again.

It’s not to say that loans are a bad idea for poorer countries. They have to be fair and transparent, and the world has to watch that such debilitating debts aren’t allowed to occur again.

What do you think?

Answer #4

Thanks…I’m going to check the article out.


Answer #5

Hmmm…I can understand why you do that, but I’ve seen quite a few posts on here that have links still in them.

But whatever…

Answer #6

I took out the link to the article because links aren’t allowed in questions. Sorry about that.

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