this post was submitted on 19 Jun 2024
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Heyo, national economies need to run at a deficit. The amount of debt needs to be maintained but running a negative is a good thing because the interest payments become stable capital injection. These regular, anticipated payments build the confidence of very conservative money managers to spend their own money. It's trickle down but in a way that helps increase the likelihood of money being spent, which is basically the GDP. And the speed of people spending money in the system is a metric that central banks use to set interest rates.
It's all connected and that's why running a deficit, a (relatively) small one, is a good thing. Nations don't use checkbook accounting.
how much of this still applies when the debt is as big as the United State's current debt? (genuine question)
It applies more. If you borrow $1000 and by the time you pay it back (including interest) you've paid $1500, but that would have had the buying power of $2000 today, you've made a pretty good deal. If you do that with a trillion dollars, you've made a great deal.
National Debt is a weird metric. For the US, the biggest foreign owners are Japan having ~4% and China having ~5% of the debt. The huge majority of the debt is within the US, either to individuals, businesses, or the government itself.
Plus there's an old adage by J Paul Getty, "If you own the bank $100, that's your problem. If you owe the bank $100 million, that's the banks problem."
Similarly everyone you owe money to is now invested in your success.