Is America's Debt Crisis A 'Good Thing?'
By Emily Marks | Apr 25, 2016 04:30 AM EDT
Media is abuzz with reports about America's massive debt crisis. This came after James Grant, from TIME, shared his thoughts about the country's financial problem.
"This much I have learned about debt after 40 years of writing and study: It is better not to incur it," he wrote. "Once it is incurred, it is better to pay it off. America, we have a problem."
"Debt per se is neither good nor bad, though less is usually better than more. How it's priced and how it's used are what tips the scales."
Grant noted that the public debt will need to be repaid or refinanced someday. Moreover, it could be the people's responsibility to fully repay the debt incurred by the government.
According to The Week, America's debt crisis may be a good thing since debt is not always necessarily evil. The publication contradicts Grant's assumption that things will go worse for the market from here.
"In a sense, Grant is correct that super-low interest rates on U.S. debt are bad," The Week wrote. "But they're bad because of what they signal, not because of what they do. They signal the economy is sick and sluggish. Investors are voluntarily looking for a safe place to park their money, and can't find anything else in the economy they want to invest in."
There are conflicting reports regarding America's debt crisis. It was noted that American corporations keep on borrowing money to fuel growth which is larger than is actually needed.
However, there is also news that America is nowhere near to having a debt crisis. Apparently, the national debt is still "modest and sustainable" and that the federal government has been "remarkably responsible in their borrowing.
It was also explained that the U.S. government's debt does not mean that the country owes money. They are two totally different things.
"In other words, the U.S. deficit is now perfectly sustainable," Bloomberg View wrote. "This represents a remarkable -- possibly even excessive -- display of fiscal responsibility by the U.S. government."
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