The United States’ national debt is $12.5
trillion. So lot’s of people are freaked out. But how big is that really? National income,
the total value of everything the U.S. makes each year, is also huge. And all that misses
the most important point: the U.S. government can never run out of dollars. Unlike you,
or the company you work for or the town you live in, the federal government prints dollars.
Or, actually, the Federal Reserve mostly makes it with computers. The only think to worry
about is inflation. If you have too much money chasing a fixed amount of stuff, that means
higher prices. And if inflation gets out of control, the Fed will slow down the economy
by raising interest rates. Higher rates for the government mean even higher rates for
businesses. That means less investment in the private economy and slower growth. That’s
why you worry about deficits, because they lead to inflation and higher interest rates.
But these days inflation is the lowest it’s been in 30 years, and interest rates are also
near record lows. So we could reduce debt with higher taxes, or by cutting benefits,
but that would take money out of people’s pockets — means fewer jobs, it means lower
incomes. So trying to reduce debt might actually make the debt situation worse. So let’s think
of something else to worry about… Debt just isn’t a problem right now.