how can debt destroy the economy?

Question

this is for a debate. the resolved is the quantity of credit available to American consumers should be significantly reduced.

Answer 1

The ability to borrow has essentially eliminated cash flow problems in otherwise successful businesses (and individuals) and is not necessarily bad.

Obviously, if there is no plan to service the debt, which creates "bad debt", then it is a negative.
Otherwise, there's nothing wrong with debt.

Answer 2

Debt is bad for the economy, but federal goverment does not worry about defaulting on its bonds, and T Bills because the US dollar always been a stable currency, and goverment always pays the interest on the debt. I do not remember exactly when, but the republican congress raised the debt ceiling on spending for the country. Its a complex question your asking, and the truth lie between the answers of easy money from China, and reckless spending by congress. I would not worry so much about the goverment debt because the goverment always pays the bills on time, and goverment does not interenve in the economy like it did in the past. The Fed Chairman will raise interest rates if the economy gets too hot, or spending gets out of hand, or inflation creeps up.

Longer term were gonna need to slowly cut spending to fund Medicare, Social Security payments. For example, 1956 the Untied States goverment only spent 20% of the budget on soical Security payouts now in 2006 that increased to about 60% of the budget. With babyboomers retiring in the next ten years funding social security and medicare will be a problem. The solution is you have to cut spending in other goverment programs, or raise taxes to payout the social security and medicare benefits to prevent the goverment debt rising even higher. Another solution is privatization of Socail Security, but that would run into oppostion from retirees, leftwing lawmakers prevent the privatization from happening.

Finally. no easy solutions to cutting goverment, personal , or private debt