Does the U.S. National Debt Matter? Exploring Its Economic and Political Impact
Let’s imagine that the U.S. government needs money to build roads, schools or other things. If it doesn’t have enough saved, it borrows. It does this by giving out IOUs called “treasuries.” All these IOUs make up the national debt.
For many years, other countries trusted the U.S. and bought these IOUs. They saw the U.S. dollar as strong and safe so they were willing to lend money.
However if the U.S. doesn’t treat its trading partners well they might stop buying its debt. This means the U.S. would need to pay more interest to get people to lend which makes borrowing more expensive.
Americans have also seen the debt grow for each person. A strong dollar helped the U.S. buy goods more easily. But if other countries lose trust in the dollar they may not want to use it as much.
If countries stop trading with the U.S. they won’t have many dollars. They might not buy IOUs or they might even sell the ones they already hold. That makes the problem worse.
Some people worry that too much debt could cause inflation when prices go up. So yes, the national debt matters because it affects what the U.S. owes and how others react to its money.
