Economy and Business>>The National debt
The US is the country with the highest national (or government) debt in the world, and the federal deficit is increasing this amount. When a country has higher expenses than revenues (national deficit), need to borrow money, increasing so the government debt.
The amount national debt of the US can be known every second as there is a national debt clock. However, the white house prefers to measure it in % of the GDP as this is a good way to compare from a year to another.
Graphs from the wikipedia:http://en.wikipedia.org/wiki/United_States_public_debt
Note that there is a large peak in 1945, this was a expenditure (equivalent to $10 trillions of nowadays) for the second world war, this is what boosted the US economy out of the great depression. What happened later is that the economy grew at full gear and this amount of debt turned smaller in comparison with the whole economy over the years.
The difference between public and gross debt is that public debt considers that taking money from the social security isn't federal deficit, and gross debt includes money taken from the social security and other funds held by the government.
National Deficit Policy.
Owe isn't necessarily bad for a state, is bad when the money borrowed was spend in non-senses.This is what happened to many countries of the third world when reached independence, they took a lot of government debt and spent it in things such official cars or body guards, instead of improving hospitals, roads or schools. These countries, have a big problem, because they waste their budgets paying the interests once and again.
On the other hand, a high federal deficit is good to boost the economy during an economic crisis. The great depression was so long because the timidity of the public investing. The IIWW was an excuse to increase the national debt up to 120% of the GDP and then the US left the crisis.
For that reason administration Obama is Increasing the federal deficit in these amounts, without a commitment in public expenditure the crisis would last 10-15 years .The solution is not the debt himself but the increase in public investment caused it. Some of good measures are the following:
Perspectives of the federal deficit
Because of the Bank bail-out, fiscal stimulus and the health care, the deficit achieved by Obama, has risen from the previous 3,2 to the 13,9% of the GDP ($1.85 trillion this year), according to the non-partisan Congressional Budget Office (CBO). Mr Obama vows to halve it within four years, but that will still leave it bigger than the deficits for which he once lashed Mr Bush.
Following this tendency we will reach a debt of the 100% of the GDP by 2011 and $19 Trillion by 2019. This level of deficit is dangerous, because the own feed would have a worse rating of his credit ( the trap of the credit score). Furthermore, the pensions of the large Baby boom generation are in danger because funds from the social security are taken in order to mask the deficit.
Depending on the economic recovery, the American economy will be healthy or a disaster, if there is a v recovery, all will be fine, because tax revenues will be higher and inflation will help to eat up the debt. If recovery is sluggish there will be a large problem with the debt.
