Is the national debt (of USA) a bad thing? Is it causing the U.S. dollar to become weak?

Question

Isn't it true that the national debt doesn't really hurt the economy, or was Ross Perot right after all? Can't we borrow as much money as we want to? Does the national debt really hurt the strength of the US dollar? Does it harm the economy in any other way?

Answer 1

Any debt is bad.The scarcity of money is constant problem.Our expectations in life are demanding more and more finances, so we borrow go into debt.The same thing is with a country. The interesting point is that every country on the globe has debts.To whom? there is no one sitting on the mountain of money. All transactions are book entry. Loans are created out of thin air, but you pay interest on it.When loan is paid off you remove that fictional entry, except that it did cost you all the money you paid in interest.
If you will apply the same to a country you have an answer.

Answer 2

The greatest harm of the national debt is not that it pulls down the dollar, although that's probably an indirect result. The greatest harm is that it demands more and more interest payments to maintain, and becomes harder and harder to reduce. Ross Perot wasn't really wrong on this issue.

But the weakness in the dollar is a result of a lot of things. The relative strength of the Euro and other world currencies has a major effect. But the biggest reason is subtle inflation. Our government has simply allowed the money supply to increase quite rapidly in recent years, and that causes the weakening of the dollar. Anytime supply increases faster than demand, the price will fall. That's the major influence in the price of the dollar.

A weaker dollar won't necessarily destroy our economy, but it will make it harder for us to afford imported goods, and even locally produced goods. We'll just see prices rising slowly at first. Ultimately, it will lead to general economic weakness if it continues for long. The "plus" side, if you want to call it that, is that it will make our exports appear cheaper to foreigners, so we'll probably be able to export more goods and services.

Answer 3

Debt, in it's own right is not "bad". We are often in positions where our government would need to spend more than it pulls in to finance various projects in our economy. Some of this spending helps keep the economy running healthier. The problem with debt is , "ability to pay" and "who we owe it to". Therefore, debt as a % of GDP is more relevant then absolute dollar amounts. If you told me you owed $60,000 on your credit cards, this should mean nothing to me. I should not be alarmed until I have some indication of your income and your ability to pay. The other issue is the increasing lending/borrowing from foreign countries. Used to be the debt was financed by American. It was like we owed ourselves the money. Now we owe a significant amount of money to foreigners.

Answer 4

a weak dollar always precedes a recession here in the UK, and a global slowdown however the rise of Asia should make sure that it don't hurt as much as it did in the past