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  • U.S. debt is ticking up.

  • In fact, every second, national debt increases by thousands of dollars.

  • So just since you started watching this video, debt has gone up.

  • U.S. national debt is more than $21 trillion.

  • Yep, that's 12 zeros!

  • Having trouble visualizing it? Well, think of it this way.

  • You could wrap $1 bills around the Earth more than 80,000 times with that amount.

  • So how did we get here? Well, it's simple really.

  • The government is spending more money than it's taking in.

  • The government makes money in one key way: taxes.

  • Your income or payroll taxes are revenue for the government.

  • It then spends that money on things like social security, health care and defense.

  • The catch is the government doesn't have enough revenue to pay for all of these programs at once,

  • so it borrows money in the same way that you or I might.

  • For example, as a consumer, it's good for me to be able to take out a loan for things like a car or a home.

  • Without credit, I probably wouldn't be able to do that. It kind of works that way for the government, too.

  • Without borrowing money, the government wouldn't be able to

  • invest as much in education, national security and infrastructure.

  • So how does the government borrow money? Well, it issues bonds.

  • Investors and central banks buy U.S. debt in the form of Treasury bonds and securities,

  • and they get returns when the government pays interest on those bonds.

  • Of the $21 trillion debt, around $15.5 trillion is defined as held by the public.

  • The other $5.7 trillion is money the federal government owes itself, for example in social security trust funds.

  • When it comes to debt held by the public, six percent is owned by state and local governments

  • and 15% by the Federal Reserve.

  • Foreign investors hold 39% of American debt with China and Japan as the two biggest buyers.

  • The remaining 40% is owned by U.S. investors.

  • So that means the biggest buyer of U.S. debt is actually the American people.

  • So does all of this debt matter?

  • Most economists would agree the short answer to that question is yes,

  • but there's plenty of debate over just how much.

  • Economists generally think it's okay for debt to increase when the economy needs a boost.

  • You can see in this chart, federal debt held by the public spiked during World War II

  • and during the financial crisis, when the government borrowed money to boost the economy.

  • The problem is that the federal debt is set to continue to increase to its highest level since 1946,

  • even though the economy is now in much better shape.

  • The Tax Cuts and Jobs Act is passed.

  • One reason for this is a big law Congress passed at the end of 2017

  • that lowered taxes without cutting spending, which will result in even more borrowing.

  • Another reason the national debt is likely to grow?

  • America's population is getting older.

  • And that means the government will need to pay for more programs for senior citizens.

  • For example, spending will increase on Medicare, Medicaid and social security.

  • Some investors have gotten used to sky-high debt levels that have become the norm,

  • not just in the U.S., but around the world since the financial crisis.

  • U.S. bonds have remained a popular investment and the country still has a AA+ credit rating,

  • meaning it's rated one of the safest places in the world to put your money.

  • But economists, policymakers and politicians have warned that a debt crisis is looming

  • where the U.S. won't be able to pay its bills or where it's already so deep

  • in debt when the next crisis hits that it can't spend its way out of it.

  • U.S. Director of National Intelligence Dan Coats called the growing debt a

  • In April, the International Monetary Fund warned about record-high global debt levels,

  • and it said the U.S. needs to address solutions for its growing deficit.

  • The Fund found that over the next five years the U.S. is the only advanced economy

  • where debt relative to GDP is likely to increase.

  • That's not even the case for Italy or Greece, countries that have notoriously struggled to pay their debts.

  • Some here on Capitol Hill have said the growing debt needs to be addressed now

  • by doing things like raising taxes or cutting spending. But, so far, their efforts have fallen short.

  • As Congress kicks the debt can down the road, Wall Street doesn't seem too worried yet.

  • That could change as interest rates go up, meaning the U.S. owes even more to pay off its debt.

  • In fact, just since you've been watching this video,

  • interest on the national debt has increased by more than a million dollars.

  • Hey everyone, it's Elizabeth.

  • Thanks so much for watching our video from here in Washington.

  • Be sure to check out more of our CNBC Explains over here.

  • We're also always taking your suggestions for future ideas

  • so leave those in the comments section, and while you're at it, subscribe to our channel.

  • Bye for now!

U.S. debt is ticking up.

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米国の借金は問題なのか?| CNBCが解説します (Does U.S. debt matter? | CNBC Explains)

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    kstmasa に公開 2021 年 01 月 14 日
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