Debt is an ugly word, and most Americans are sick of hearing it.
Aside from those majoring in accounting or political science, most students’ knowledge about debt is probably limited to the price of a monthly car note and the prospect of having to pay back student loans in a couple of years.
For the country, however, the reality of debt is far more complicated.
According to the U.S. National Debt Clock, the country owes more than $12.6 trillion in debt as of March 21.
As if that amount isn’t staggering enough, many economists estimate that the U.S. has surpassed the mark of a 100 percent gross domestic product-to-debt ratio.
GDP is the measure of goods and services produced by a country. In America’s case, the higher the debt ratio is, the less likely it becomes that the government will pay off the loans, because it has borrowed more than the nation is producing.
For the most part, his debt is owed to businessmen and foreign governments who buy U.S. Treasury bonds. The government also owes itself money, which is held as government account securities.
U.S. citizens have relatively high standards of living. Most people own cars, many attend universities and nearly everyone has basic necessities such as running water and electricity.
It’s likely that the burden of repaying the national debt will become our generation’s responsibility.
The effect of the national debt on the economy isn’t always obvious, but it does have a significant impact. For example, the government is obligated to pay back borrowed money to the Social Security Administration over time, which will most likely be funded through tax increases.
The dollar, which has been the symbol of a stable currency for decades, will face inflation. With foreign investors becoming more influential and thus more likely to invest in their own economies, the dollar is becoming a less desirable currency, and therefore its value is decreasing.
While students are faced with the responsibility of cleaning up earlier generations’ mistakes, they can learn to be responsible with their own money to help decrease the national debt.
Many college students depend on loans for their livelihoods, but they need to be sure to only borrow and spend the amount they need.
The more students buy on credit and the more they borrow from lenders, the more the government is involved in their personal finances.
There is no instant solution to solving the nation’s debt crisis, but students can start by being informed and doing their part to decrease it. It’s important to be unafraid of modesty when it comes to personal spending and not living beyond one’s means.
A national debt that stands at more than $40,000 for every American may seem overwhelming, but the reality is that it’s not impossible to clean up.
Liz Price is a communication junior and may be reached at [email protected]
