Debt articles you should know -America’s debt path alarming?

Date Posted: October 13, 2022
By: Maggie Marques

Recent debt articles about America’s gross national debt have been causing alarm to many. With the economy still reeling from the effects of current financial triggers- the COVID-19 pandemic, high defense spending, and recession – understandably, Americans are keeping an eye on the issue. In October 2022, the U.S. Treasury reported that the national debt reached a record high of $31.14 trillion.

How will the gross national debt affect ordinary Americans?

Like it or not, the ballooning national debt will affect Americans and their way of living for a few reasons:

  • When the national debt increases, the possibility that the government will default on its debt obligations increases. If this happens, the Treasury Department needs to issue securities so new investors will come in. When tax revenues come, the government will prioritize paying back the interest on the national debt leaving a lesser budget to improve the standard and way of living of the citizens.
  • The moment treasury security increases, businesses will increase the prices of their products and services so that they can repay their debts and obligations. Ultimately, this cost increase will be shouldered by the general population.
  • As treasury security continues to increase, interest rates will also increase, affecting short-term loans and mortgage rates. If this happens, home prices will plummet because buyers can’t qualify for a big mortgage, and the buyer needs to allocate a more significant amount on the interest rate.

These are some possible scenarios that could happen if the downward spiral continues. If the country defaults on its debt servicing, the possibility of losing control economically, socially, and politically becomes more prominent.

Debt articles like this can be alarming, but as it affects the American way of life not only in this generation but in the generations to come, we can’t help but be hopeful and sit tight until the economy gets better.

 

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