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Why US govt doesnt pay debt?

buntheng

There are a few reasons why the US does not pay off its debt.

  • The US government can borrow money at very low interest rates. This is because the US dollar is the world's reserve currency, which means that it is in high demand by investors and businesses around the world. This allows the US government to borrow money at lower rates than any other government in the world.
  • The US economy is growing. As the US economy grows, the government's tax revenue increases. This allows the government to make interest payments on its debt and still have money left over to invest in programs and services.
  • There is no political consensus on how to pay off the debt. Some people believe that the government should raise taxes to pay off the debt, while others believe that the government should cut spending. This lack of consensus has made it difficult to pass legislation that would reduce the debt.

It is important to note that the US government has never defaulted on its debt. This means that it has always made its interest payments on time. However, there have been times in the past when the US government has come close to defaulting on its debt. This happened in 2011, when Congress was unable to agree on a debt ceiling increase.

If the US government were to default on its debt, it would have a number of negative consequences for the US economy. First, it would make it more difficult for the government to borrow money in the future. Second, it would likely lead to a rise in interest rates, which would make it more expensive for businesses to borrow money and invest. Third, it could lead to a recession.

For these reasons, it is in the best interests of the US government to continue to make interest payments on its debt, even if it means that the debt never goes away.

In addition to the above reasons, some economists argue that there is no need to pay off the US debt. They point out that the US economy is growing and that the government is able to make its interest payments on time. They also argue that paying off the debt would require significant tax increases or spending cuts, which could harm the economy.

Ultimately, the decision of whether or not to pay off the US debt is a complex one. There are a number of factors to consider, including the state of the economy, the level of interest rates, and the political climate.

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