HISTORY OF US NATIONAL

DEBT

Presented by

Veennee Shakya

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Content

Concept of Economics

Debt History of U.S.A.

Surge in National Debt

Consequences of Large National Debt

About Economist Paul Krugman

Conclusion

References

What is Economics

The economics is the study of behavior of human beings in producing, distributing and consuming material goods and

services in a world of scarce resources (McConell, 1993)

Economics helps to build the general understanding of how the world is operating and this course help to relate all the other subjects to relate with each other. (Paul G. Keat, 2009)

Era of Bush and Obama

Debt History The national debt of America is to be paid by

federal government of the United States.

When there is national deficit then the debt increases because it means that the money spent is more that it’s received and that has been happened since long period of time in America.

There are two components of national debt which are debt held by the public and the debt held by the government accounts or also known as intergovernmental debt. (U.S. Government Accountability Office, 2012)

U.S. Gross Federal Debt

Source: (U.S. gross federal government debt, 2010)

Surge in National debt

Difference of Debt in these Era

What amount of Huge Debt

The increase in debt from $5.662 Trillion from Bill Clinton's period

$10.7 Trillion in GWB administration

$19.887 Trillion to Barack Obama's Administration.

(Source: Treasury, 2016)

Consequences of Large National Debts

Example of Germany economy collapse because of excess loan in America.

The similar case might be with America

As Around 35% of this amount is to be paid to international investors.

China owns $1157 Billion, Japan owns $1136.4 Billion

In 2017, the debt per American citizen is $67500 if we divide it to the total population.

Consequences of Large National Debts

Additional crisis of unemployment, wages, etc. might arise.

Huge rate of Inflation

Bad relation with other countries which might worsen the situation

As in Germany, once in 1929 the loaf of bread cost Marks 200 Billion because of hyperinflation

About Paul Krugman

“The ironic thing is that these foolish policies, and all

the human suffering they created, were sold with

appeals to prudence and fiscal responsibility.”

Paul Krugman

Idea of Paul Krugman The debt is the way to pay for useful things and

Americans should do more of that when the price is right.

US were suffering from obvious deficiencies in roads, rails, water and more and the government can borrow with lower interest rates.

It’s better to borrow and invest for future. When the other people were criticizing the debt of America.

“The great debt panic that warped the U.S. political scene from 2010 to 2012, and still

dominates economic discussion in Britain and the Eurozone, was even more wrongheaded than those of us in the anti-austerity camp

realized.”

~ Paul Krugman

Conclusion The debt is not a big issue is the government can

handle it in a managed way.

It’s good to create money out of other money.

It might not create a big issue in America as in Germany in 1929.

Relating to Nepal, underdeveloped country, the expenses is far greater than income.

So, Nepalese government should not hold huge debt in their shoulder.

For such Country huge debts are very dangerous.

References: Krugman, P. (2015, Aug 21). Debt Is Good. Retrieved 12 10, 2017, from New

York Times: https://www.nytimes.com/2015/08/21/opinion/paul-krugman-debt-is-good-for-the-economy.html

McConell, C. (1993). Economics. New York: McGraw-Hill.

Paul G. Keat, P. K. (2009). Economics: Economic tools for today's decision makers. New Jersey: Prentice Hall.

Tradingeconomics. (2016). U.S Department of Treasury. Retrieved 11 23, 2017, from US Government Debt: https://tradingeconomics.com/

Treasury, D. o. (2016). U.S. Department of the Treasury. Retrieved 11 23, 2017, from Department of the Treasury: http://www.treasury.gov/Pages/default.aspx

U.S. Government Accountability Office. (2012, April 28). Fiscal Outlook & The Debt. Retrieved 12 10, 2017, from U.S. Government Accountability Office: http://www.gao.gov/fiscal_outlook/overview#largefeddebt

U.S. gross federal government debt. (2010, April 07). The white house. Retrieved 12 10, 2017, from U.S. Office of Management and Budget: http://www.whitehouse.gov/sites/default/files/omb/budget/fy2011/assets/hist07z1.xls

Thank You