April 25, 2008

The Cursed National Debt

In the United States today there is a struggling economy. Many economists call upon the U.S. debt as a leading factor. What we need to focus on is the cost-benefit of having a deficit in the United States.

Many economists argue about getting rid of the national debt, or letting it be. Across the board, there is little debate over the fact that the debt is increasing at a rapid rate. However the National debt does serve some purposes that are generlly overlooked. The Federal debt is an economic asset. The economy is the creditor, and for a creditor, debt is an asset. The federal deficit is an economic surplus. This means the economy receives more money from the government than it sends to the government. This can be seen through tax cuts and refunds such as the 2008 economic stimulus plan.

The second thing that the national debt does for our economy is that it relys on the purchase and sale of a government bond. This is how the Fed adds or removes money in our economy, so it can be said that the Fed requires this type of "transaction." On the other side of this "transaction," we have those who would like to buy or sell bonds, such as U.S. citizens, businesses, or even other third party countries. Many are dependant on this relasionship with the Fed.

So to say that we should completely pay off the U.S. debt would be going a little far. We must make this cost-benefit choice of whether to or not to have the U.S. debt. One thing is for certain, and that is the rate that it is rizing. We do not want to be too hasty with paying it completely off, however aside from sarcasm, we don't want to get over our heads with debt. One thing is for certain, we have really put our country in a bind with a cursed national debt.

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