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Sunday Reading : The National Debt, 101

 

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The National Debt, 101

The national debt is the total amount of money the federal government has borrowed, plus interest. This borrowed money supplements taxpayer dollars to fund government operations, from national defense to welfare programs. Today, the debt stands at over $36T, double the amount in 2014.

The US has accrued debt since its infancy. Only seven years into nationhood, debts from the Revolutionary War totaled $43M. To raise money beyond taxes, the US government primarily sells bills, notes, and bonds (collectively called securities) to domestic and foreign individuals, companies, and other governments (see chart on annual interest payments on the debt here).

Where the nation should cut spending and how much, in order to rein in debt, is an ongoing political debate. While much focus is put on debt, the debt-to-gross domestic product ratio and interest payments on debt relative to GDP are widely considered to be key indicators of fiscal health. The lower a country’s debt-to-GDP ratio and interest rates are, the stronger its economy is likely to be.

... Read our full take on the national debt here.

Also, check out ... 

> The time the US fully eliminated the national debt. (More)

> What happens if we hit the national debt ceiling. (More)

> Who owns the federal government's debt? (More)

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