National Debt

Greetings, all! If you’ve ever been to Manhattan, maybe you’ve seen it: the National Debt Clock. Located on the western side of One Bryant Park (coincidentally the Bank of America building – hello irony!), the National Debt Clock is a billboard-sized display that constantly updates the United States gross national debt as well as each American family’s share of that debt. Is this something that should keep you up at night? Should you be worried about the yearly deficit, the rising national debt (and your share of it)? We thought we would take this month to provide a little context for you. Hopefully, the links and our comments will help shed some light on these often misunderstood concepts. 

• Read: With a new administration in the White House and another stimulus bill in the works, government spending (and our national debt) seems to only grow. This article from The New York Times explains the issue in detail without getting bogged down with too much jargon. With low-interest rates and a stock market that seems content to chug along, it looks like we’ll continue much on the same path that we’ve been on. What do you think about that?
• Listen: “The deficit is the shortfall between the tax revenue the government collects in a given year and the money it spends.” From NPR’s Planet Money, this podcast digs into what the deficit is, and whether it is the universal ‘bad’ that it is usually assumed to be. This quick bit of listening also prompts you to think about whether running a deficit is moral, and what kind of deficit spending could actually be a good thing that leaves future generations richer. For a follow-up, focused on inflation, check out this episode where a 13-year old asks a great question.
• Watch: As stated in its name, Modern Monetary Theory is a new way of understanding money. Where does it come from? How does it work? Do we have to worry about inflation and interest rates? What is the role of the government in controlling monetary supply? This video from Money for the Rest of Us is a succinct dive into the basics of Modern Monetary Theory. If you’ve got another 20 minutes to spend and want some more concrete examples, we recommend this video from Economics Explained (and avocado toast makes an appearance!).

Thank you for taking the time to check out this month’s newsletter. We hope we have given you something to think about and maybe even talk about with your friends and family. The above concepts are foundational to our understanding of the economy and the role of government in it. Please reach out if you have any questions or comments. We love hearing from you!

Make it an amazing month!
The Bona Fide Family