describe relationship between deficit and the national debt, and how each relates to the health of the economy

Answer 1

A deficit is when a country spends more than the revenues it takes in this year. The national debt is the sum of all the debts that builds up over the years.

A deficit can help jump start an economy when it needs it. However, if the national debt grows too much foreign investors can loose confidence in your country as an investment. Also more of your annual expenditures go just to paying the interest owning on your debt.

Answer 2

deficit is the term most folks use to describe the outflow of our money into the world bank as we purchase more items for importing than items we produce for export.

National Debt has to do with a variety of ways our government finds to go on spending more than it makes. We can talk stocks & bonds... or we can even be talking about borrowing a few billion dollars from the Chinese to finance our war.

Importing more than we export eventually creates an excess of our currency at the world bank and will drive the value of our dollars down. Prices for toilet brushes at Wal*Mart skyrocket and everyone blames the government. When we export more items or even patented technologies we get residual income from, the inverse is true. Our stockpiles of U.S. dollars at the world bank go down and the value of our currency goes up... The price of Toyotas goes down and General Motors shows up in the halls of Congress looking for more corporate welfare.

When we buy bonds from the government, it used to shrink the money supply and slow the rate of inflation while yielding an acceptable return on our investment. Often times, the money was even used to help implament building our infrastructure. Nowadays, banks and lenders create more money by shoving a credit card in everybody's hands and inflation is large enough that the pay-back on the bonds isn't that attractive. When the government needs money, they don't want to alarm us so they borrow it from other little governments like China, Japan, and Korea. With us owing billions of dollars to these countries, they feel comfortable knowing that we wouldn't dare start imposing import tarrifs on their goods. If this goes on long enough, the United States can go into a downward spiral with our currency collapsing against these other countries. The $40K debt per person owed to these other countries can leapfrog to $200K while our personal incomes drop from what they are to one tenth the taxable take home pay.

The terms we should be learning here are "Conflict of Interest," and "Hostile Takeover." You might want to learn how to say these terms in Chinese. How do you say, "Do you want fries with that?" in Japanese?