by Darren Byrd on April 30th, 2004

Darren Byrd

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When is government debt a "good" thing?

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  • by SarahK on September 20th, 2007

    SarahK

    When reinvesting in the domestic economy would result in more growth than paying off national debt. We hypothetically borrow funds from foreign banks because we make more returns than the interest charged.

    Keynesian economics got us into this cycle. (Look up John Meynard Keynes... the 5th video on http://www.learner.org/resources/series79.html gives a fairly good overview.)

    I agree more with Milton Friedman, but I won't get into that here.

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  • by Ema cool on February 11th, 2005

    Ema cool

    Government debt is a good thing when they use those debts to render service like building roads and other facilities. they also make use of the money to sustain the condition; for example, if the countrymen are very poor, the government borrows money to help them sustain their condition.

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  • by Thom64 on October 14th, 2004

    Thom64

    I hope that the fact that you put "good" in quotes indicates your recognition that this is a subjective question. "Good" will mean different things to different people.

    I can make the case that it is never good and is always bad policy. I can also make the case that the benefits to the population outweigh the bad of the debt. Your evaluation will depend on you values (obviously).

    I considered proposing an amendment to the Constitution that would prohibit the Congress from borrowing money except to fund the prosecution of a declared war. I think this would be a very good thing. I also think it has no chance of passing, but the point is that defending and preserving the nation is almost certainly a higher good than avoiding taxpayer/government debt.

    I am currently deep in debt so that I can live in a house, free from a landlord. I trade this good against the bad of the debt and find it an acceptable trade. My debt to income ratio is better than the US government, but I don't think the national debt ratio is significantly higher than a lot of businesses or home owners, and is not high enough to cause serious concern (yet) since people in and out of the US are still willing to buy US debt at modest interest rates.

    Summing up: debt is "good" when the benefits of the expenditures outweigh the cost and obligation of carrying and servicing the debt.

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