Download The Problem of the National Debt

The Problem of the National Debt
I)
The Government’s Debt
A) The gov’t borrows from
1) Savings bonds ___________________
2) Banks and the Federal Reserve System
3) Savings Bonds __________________
4) Gov’t trust funds that use extra money to buy bonds
(a) Invest Social Security $ in bonds
B) In the last few years, a large part of the national debt has been through the
selling of bonds to foreign countries
II)
Is the National Debt Bad?
A) Some point to the fact that the national debt is now more than ______
larger than it was in 1942
B) Others argue that it is not the debt that should be evaluated
1) Rather, that our __________________________
2) Ex. In 1942 our debt was $230 billion, which was more than our GDP
(a) Today, our national debt is ______ of our GDP
(b) We should worry only if the debt grows faster than the GDP
C) Other Worries to Keep in Mind
1) If there is a rise in interest rates, then our debt will grow more rapidly
2) The gov’t must provide necessary services regardless of debt
3) That a growing part of the debt is _____________________
D) There is little agreement of the effect of the debt
D
E
B
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%
G
D
P
$
Year
Payment
On Debt
(% of
annual
Budget)
Year