HOW IS NATION’S DEBT IS BECOMING A MAJOR FACTOR IN THE COMING INFLATION

So I want to take some time today to address a receiving issue and concern that’s being shown up Lot and that’s about the massive debt in the untied states otherwise known as the upcoming debt bubble and what that means for the future of our money. After all, at the time I’m wrong this article, the United states is nearly $25 trillion in debt and as things continue as they have being with the government adding more stimulus on top of this, we cab very well be seeing a $30 trillion in debt in the next year, just to show you how massive $25 trillion dollar is.
That’s enough money to pay everyone’s mortgage, in the United States and have money left over to pay off everyone’s Student Loan and still have enough to pay off everyone’s auto loans and still have enough to give everybody a $25,000 check. That’s how massive $25 trillion is.
But as our debt continues to grow larger and larger with no sighs of slowing down, it does raise the question: is all of this outstanding balance debt something to worry about, how is it ever actually be paid down? And what does this mean for you and me in terns of the value of our money and our entire economy.
First let’s start here, what do we even need or have a US debt to begin with, you would think in a perfect way, just buy things when you need them with Money that you could afford to pay for outright and then you don’t take on any debt, it would be like thinking, don’t borrow 20 grand to go on a huawei vacation when you only have $200 in the bank, that would be really bad, so in that train of thoughts is $25 trillion worth of natural debt any different, well how it works is actually a little bit different it’s not like the person out there who’s in a whole bunch of debt because they’re living above their mind buying things they can’t afford and its very easy to point out fingers at them and say “that’s bad be a financially responsible adult, now Shame on you” but running a countrdoesn’t work that way and here’s why, you see the United States is at its core and kind of like a business it gas what’s called the GDP which stands for Gross domestic product, and that’s the entire market value of all the goods and services that was produced here within the United States.
The purpose of this is to measure the economic output of our economy to safer growing as a society and if that number goes up, it tells us that out incomes are increasing and spending is also increasing. Now that’s Is real important because alongside the GDP includes all the other revenues the country makes to keep itself running after all, roads need to be built, infrastructures needs to be made, police and fire fighters have to get paid, the military nerds finding, now a lot of those services are paid through our tax dollars.
And just like any business there’s going to be times where tax revenue are not enough to pay for all the services , that we use and lay for now when that happens. We have to get some of that d-word and that would be debt, that’s when the government starts borrowing money, typically this is done through issuing bonds and treasury bills which is basically just a fancy way of saying the government is going to pay you interest if you lend it some money, now that loan is guaranteed by the United States which gets the real chance of the US not paying off it’s debt on time as agreed is pretty much slim to one and it’s probably not going to happen so people see this type of loan as being a very safe investments, but in terns of who actual buys and owns this debt it’s actually interesting.
Statistics have shown that 32% of the US debt is owned by US investors or it’s very citizens, this include people like you and me, who go and buy US treasuries, you loan the government some money and get paid back a little bit of interest. Now this is essentially really good because this means it’s citizens are actually making the money and the more money they make, hopefully the more they would send and the more they’re going to be circulating back into the economy and everybody wins.
Next after that 11% of the US debt is owned by the Federal Reserve and 27% is owned by the federal government which basically means they’re just loaning money to themselves, why you might ask?. Well some government agencies actually make more money then they spend, so when that happens they invest the extra Money back into the government and get paid some interest and then if they ever made the money in the future, they could sell those bonds or treasuries and get paid back and then finally 29% of our debt is held by foreign investors in other countries who want to invest within the United States because they see it as a very stable and safe guaranteed return, now this is really important for Mr to mention up front because in order to understand how the national debt works, it’s important to clarify that this is not just like some credit card out there with the 25 trillion dollars bounce, that needs to be paid down as soon as possible otherwise you get a late fee and it hurts your credit report or you’re whole bunch of interest.
Because in a way holding debt like this could actually be a good thing, now it’s word to say but it could be a good thing, let me explain in reality simple terns think of it like this you have one trillion dollars and you want to go and buy a million dollars house and the lender comes to you and say I’m going to loan you one million dollars in return us I’m going to want a 1% return annually.
You don’t have to pay off that debt anytime, you can keep it as long as you want but all I ask is you pay me 1% annually, pretty much anyone would take that deal because they know if they take that one million dollars, instead and pit it in a savings account earning 1.50interst they could just profit the difference by not laying down that loan or they could go and invest that money in the stock market to get an average Return Of 6.1 annually over the next 20 years.

Leave a Reply

Your email address will not be published. Required fields are marked *