America’s Addiction to Debt

Five Reasons Foreign Owned National Debt is Addicting to the American Government

  1. Expanding the national debt allows for lower tax rates for the wealthy. The wealthy pay for the campaigns of America’s politicians. In essence, it’s almost impossible to be elected to higher office without the backing of wealthy sponsors who want lower tax rates.
  2. Lobbyists are paid by wealthy American’s to get congress to pass legislation important to their business interests. Congressmen often take part in the benefits that the businesses receive from the passed legislation. This is why many politicians leave office wealthier then when they entered office. Many tax loopholes are written into legislation by lobbyists, while it’s great for their business interests its terrible for the deficit.
  3. Low Interest Rates: When foreign countries buy American debt, they essentially hold off on buying American goods and services. This makes the American dollar go up in value since the American government is being paid for by another country. In a global economy, the government benefits because it keeps inflation down as products from other countries are less expensive. This allows the federal reserve to keep interest rates low and that allows the economy to grow from more borrowing.
  4. Debt is Cheap: As foreign governments buy American debt the dollar gains buying power which reduces inflation. Reduced inflation means the Federal Reserve can lower interest rates on loans. These interest rates represent the cost of borrowing money. A lower interest rates means the governments cost to borrow money is less. This makes running a deficit seem reasonable even attractive.
  5. A strong dollar benefits business in a global economy. A strong dollar allows businesses to take advantage of lower labor costs and lower costs of raw materials. In turn, businesses tell their lobbyists to promote a strong dollar which indirectly means deficit spending.

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