National debt is a huge problem in today’s society, and people like to pretend it isn’t. Economic pundits claim that debt never needs to be paid back, while business gurus claim that personal debt is good. Neither of these two things could be farther from the truth, as far as I’m concerned. In my opinion, a high national debt is one of the biggest and most commonplace problems facing us in today’s world. Everybody should be voting against a high national debt, if possible.
What is the national debt?
A country’s national debt is exactly what it sounds like, the debt its government incurs in order to create leverage for its projects and to help its citizens during emergencies. The national debt changes at any given time, and governments control it by setting interest rates and issuing bonds. Bonds function as guarantees that the government pays its debts. This is why people care about the bond market. If the government defaults on its debts, bonds become worthless and impossible to redeem. If that were to happen to the US government, trillions of dollars in wealth would disappear overnight.
National debt payments can be made slowly, but they are still loans from future generations
Money is a store of value. So, either someone works to pay back a debt, or the value is lost. This means that in order to maintain the sanctity of the global economy, every single piece of national debt must be recovered from the production of future generations. This means that you need to create an environment in which you’re not robbing future generations too much in order to create progress. It’s better to do the responsible thing than it is to go for immediate gratification. There’s no such thing as pleasure without discipline.
National debt takes a long time to pay back, which means you can lose an entire set of decades/a generation
This might not sound so bad if you’re a member of the affected generation. But it is bad for you too. You’ll be wealthier, but you’ll be in a stagnant country. The youth will be unmotivated. Wages won’t rise. Your investments will yield less and less with each passing year. You lose out on valuable good times as you’re forced to help your country pay its creditors back. Trust me, it will show up in your life somehow. I see it with my older relatives and their friends. Their savings go less and less far with each passing year. It’s sad and hurtful to watch things get harder for them. Especially those who voted responsibly.
Rising national debt doesn’t necessarily mean growth
Look at Greece and Argentina. Some countries, such as the United States and Canada, are able to make debt work for them. Others aren’t. Having a high national debt doesn’t mean you’ll have a successful country. As a matter of fact, many successful countries such as Denmark and South Korea have very low nation debt levels. Probably because they know better than to borrow against the earnings of future generations.
Rising national debt staves off reality
Something I’ve noticed when comparing other countries to mine is how similar our situations are when it comes to wealth, when you adjust for age. For reference, my country has a GDP in the high four digits annually. I find that the people, while having lower salaries, are as wealthy as countries in which. Meaning they own homes and cars, while people in those other countries are living better but renting. They own nothing. I’ve noticed that the people in countries that are more indebted also are older, on average. This means that even though have higher salaries, they had to wait longer to achieve them. Rising national debt gives the illusion of growth, but when you look under the hood, there’s usually something wrong.
My theory on why debt has a negative effect
Maybe I’m just rambling. But I believe humans struggle to spend money wisely. So, when we borrow, we become more selfish as a collective. Pay for my food, pay for my healthcare. Not all of this is bad. It’s actually quite humane. But it has knock-on effects. People have fewer kids. They get complacent. They invest in and create useless businesses like froyo shops. It’s not good to rob peter to pay Paul. The money is never properly spent, and it’s very painful when it needs to be paid back. People don’t realize how much they overconsume.
Sometimes debt is necessary.
If your people are food insecure, or there is a problem with defense, then spending needs to go up. This is also precisely why the debt should be kept as low as possible most of the time. You want something to be able to be done if it all goes wrong. If your country takes on debt just to “develop” itself and ends up building casinos, you guys are shit out of luck. The young people of your country will need to work their butts off to pay that debt off.
Pundits and economists who say debt doesn’t matter are being disingenuous. It only takes a basic application of logic to see that debt is very important, and that people should be anxious to hold their governments accountable for misusing it. You should be one of those people, if you’re a thinking person. Don’t let the money printer fool you into thinking you have sustainable growth. Debt will only end up bringing you down in the long run.
Thanks for paying attention.
