Hmmmm, the national debt and how it might effect our progeny.
The US contracts to have a highway built and pays $20,000 for the work.
The builder does the job for $10,000 and then spends $10,000 for a new Chinese car. (No comments on the profit and then the car decision; I just needed some numbers.)
The Chinese dealer deposits the $10,000 in her checking account and is faced with a decision, does she go to the money market and buy yauns with the dollars? Assuming she hopes to sell another car. perhaps buy some new shoes here, and may have bills to pay in the US, like US taxes, she will probably just keep the US dollars in the checking account. Or, perhaps, want to invest for a little interest in something safe, like US bonds.
She buys $10,000 worth of bonds; the Treasurer looks at the $10,000 and says," Wow, we have our road and some of the money back too. That drains some money out of the public pool that we put in earlier, which eases inflationary pressure but, unfortunately, it also reduces demand; we must watch and see if more spending is needed."
Note Well: The money used to buy bonds, increase the National Debt, had to have been spent first by the government. There is no other source for that money. Even if the Chinese government wants to buy US bonds, it must go to the financial market and buy US dollars with its yauns. And the dollars it buys were spent for some project earlier. The only new money involved in paying back bonds is the interest and at present there is damn little of that. The principle is merely recycling back money that had already been spent.
Are we burdening our children? With poor education, health care, crumbling infrastructure? Yes. With a debt and inflation? No.
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