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THE DEBT SPIRAL

When someone needs more money than they have, they usually borrow it. 

There are a lot of ways to get loans. The hard part is paying them back.

When someone lends you money, they expect you to pay them back plus a fee called interest. Interest is the cost of borrowing money. The more you borrow, the more the interest, and the harder it is to pay off the loan. The debt becomes an ever larger part of your monthly expenses.

For example, if you have too much credit card debt, you have two options.  You can find a way to make more money or you can cut expenses and use the extra money to pay down the debt.

The U.S. debt just reached $40 TRILLION. 

The debt continues to go up by about $6 million every minute. Every U.S. taxpayer owes about $360,000. The national debt is the amount of money the U.S has borrowed, plus interest.  Paying the debt and interest is called “servicing the debt”. It is now the second largest expense our government has, after Social Security. We are paying huge amounts for the interest on money we have already spent.

We get the money to pay the debt by selling Treasury bonds to domestic and foreign corporations, banks and wealthy individuals. We promise to pay it back plus pay interest. 

Each new treasury bond is like a new credit card. 

If lenders think our economy is getting weaker, 

they will demand higher interest rates because lending is riskier.

National debt is nothing new. During World War II, we borrowed a lot of money to finance the military. After the war, the country worked to bring down the debt. One way was to collect more taxes from the richest Americans and corporations. Later, during the administrations of Ronald Reagan, George W. Bush and Donald Trump, taxes were cut for corporations and for wealthy Americans. This cut our country’s income.  At the same time, government spending increased. We had to borrow more money.

Just like a person with way too many credit cards, we end up in a spiral, paying forever for what we already spent and leaving a debt for the next generation.

By Ben Boardman and Friends.

Barn Owl is paid for by Ace Allen, in loving memory of his Linn County grandparents: Bessie Epps Hart (Graham) and John Talbot Graham, 

Submit comments or questions to ace.allen@me.com