Comment on How Does a Country's Debt Affect its Citizens?

zxqwas@lemmy.world ⁨10⁩ ⁨months⁩ ago

As usual the world is a complex place. But with a focus on simplicity rather than accuracy:

Responsibly used debt is a useful tool to grow your economy both today and in the future.

Irresponsible use will buy you something useless today that tomorrow’s tax payer will have to pay for.

Your government may build a bridge to transport goods from one place to another so business can grow and generate more tax longer and a school to educate the kids and a port to sell your stuff to foreigners. You could do this with taxes but if you are to pay for all of that with taxes you’ll have to raise taxes so much that people can’t afford to live for the 5 years it takes before they get the benefits from your projects.

Irresponsible use would be building all of this despite there being no need for it or if you take on more government debt to pay for the maintenance cost year after year. (Running a deficit on maintenance cost for a few years during bad economy can be less bad than raising taxes as long as it’s temporary).

source
Sort:hotnewtop