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  • As of 2011, the federal government owes $10.1 trillion to people, corporations, and foreign

  • governments and another $4.6 trillion to the Social Security Trust Fund. This doesn’t

  • count an additional $50 trillion or more that the government has promised to current and

  • future Social Security and Medicare recipients that it will not have the money to pay.

  • Let’s ignore unfunded Social Security and Medicare obligations and just focus on the

  • official debt. What does it mean for the government to carry this much debt? The interest rate

  • the government pays on this debt is currently about 3 percent. That means that this year

  • the government will rack up $440 billion in interest charges alone.

  • According to the Congressional Research Service, the Iraq and Afghanistan wars cost about $140

  • billion per year. That is less than one-third the amount of money the government spends

  • on interest on the debt. Remember that the government must go to financial

  • markets to borrow, just like everyone else. So the interest rate the government pays on

  • the debt is determined by market forces. Today, the interest rate that the government pays

  • on its debt is the lowest that it’s been since the 1960s. In fact, just three years

  • ago the interest rate was 50 percent higher than it is today.

  • What would happen if the interest rate the government had to pay on its debt rose? At

  • the current debt level, a 1 percentage point increase in the interest rate would cost the

  • government an additional $147 billion a year in interest charges. That’s more than the

  • annual cost of the Iraq and Afghanistan wars. In fact, comparing the government’s annual

  • interest expense to the annual cost of all the wars the U.S. has fought, we see that

  • the interest rate on the debt costs us more than half of what World War II cost annually.

  • At the time, World War II was the costliest effort the government had ever undertaken.

  • Three years ago the government was paying a 4 percent interest rate. Ten years ago,

  • it was paying a 6 percent interest rate. Twenty years ago it was paying an 8 percent interest

  • rate. If the interest rate rises to 6 percent againwhich historically is not only likely

  • but virtually inevitablethe interest charges the government accrues will equal the annual

  • cost of World War II. If interest rates rise to 8 percent, a level we saw only a generation

  • ago, the amount of interest the government will pay each year will be the equivalent

  • of waging all the wars it has ever waged combined. There are only two direct consequences of

  • debt: the principle payments and the interest expense. Other consequences flow from these.

  • The more the government pays in interest, the less able it is to provide services that

  • people need. This means that the government needs to take advantage of low interest rates

  • by paying down as much of the national debt as it can, while there’s still time.

As of 2011, the federal government owes $10.1 trillion to people, corporations, and foreign

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負債過多的危害有哪些? (What Are the Dangers of Too Much Debt?)

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