Why is the USA Government Struggling with Borrowing Such a Massive Amount of Money?

If you spend more money than you collect, you build up debt. If this debt grows to an enormous extent, it becomes increasingly difficult to manage or repay. As of November 2024, the US government's debt has surpassed $36 trillion, indicating that paying it back is nearly impossible within a short timeframe. Hence, it seems that the US debt is reaching unsustainable levels. However, is it truly unmanageable?

Can the US Government Really Pay Its Debt?

Despite the staggering amount of debt, the government consistently meets its obligations to lenders, maintaining high credit ratings. It demonstrates that the debt is not unmanageable; it just requires more time and strategic planning. The government pays its debts on schedule, ensuring financial stability and confidence in its management.

Is Debt a Threat to US Wealth?

Many argue that the US is a wealthy nation because of its debt rather than in spite of it. Each well-managed business operates with debt, leveraging it to achieve growth and create wealth. The deficits incurred by the US government have led to significant contributions to the overall wealth of the nation. Debt is a tool for wealth creation, and the US has used it effectively to become thriving and prosperous.

The Historical Context of Debt in the US

The concept of debt is often misinterpreted, leading to misunderstanding. One critical aspect of the US financial system was established in 1913 with the creation of the Federal Reserve. This institution gave the government a means to manage and control its financial operations. President Lyndon B. Johnson's policies, such as the Great Society programs, also played a crucial role in increasing government debt. Critics argue that these policies were misused by globalist interests, but the effects were undeniably profound.

Good Debt vs. Bad Debt

Not all debt is bad. Some debt is considered good when it is used to generate returns. For example, taking a loan of $1 million that generates $1.2 million in four years means an additional $50,000 in returns. Would you take the loan if the returns are guaranteed? This reasoning applies to the US government's debt. It has leveraged debt to invest in infrastructure, education, and research, leading to significant economic gains.

American Household Wealth and Tax Levels

A key factor contributing to the US’s robust economy is the low tax levels. American households are not heavily taxed compared to other countries, such as Turkey, where the tax level is around 26%. This lower tax burden allows households to accumulate wealth. Recent data shows that from the end of 2022 to the end of Q2 2023, household wealth in Turkey increased from 145 TRN to 154 TRN, indicating a growing economy without excessive taxation.

Conclusion

The US government’s debt is complex, but it is not an insurmountable obstacle. It is a tool used to drive economic growth and create wealth. The government pays its debts as scheduled, maintaining its financial credibility. Reducing debt requires a reduction in government spending or an increase in revenue, both of which are challenging but achievable goals. Understanding the nature of debt and its uses in wealth creation is essential for managing the US economy.