The Problem with the National Debt By: Gabriel PotterMBA, AIFA® 2020.07.14

The federal government debt just hit an all-time high.  The monthly deficit (i.e. the rate at which the debt is increasing) also just hit an all-time high in June because spending programs are accelerating while tax-revenues have been slashed. 

Manageable debt is often a necessity for creating a debt record, fungible currency, and long-term capital financing.  The overwhelming national debt is really bad.    However, I think we can safely say that nobody cares about debt right now.  Investors in the stock market are essentially ignoring it.  The actors making government policy certainly don’t care.  The general populace couldn’t care less.

Humans can only care about a finite number of things at any given point.  After a while, we become numb or indelibly resigned to the problem or we simply have to laugh at how bad it gets.  Here in 2020, there is no shortage of things to worry about:  structural unemployment, long term health problems for corona survivors, the loss of mobility freedom, and so on. 

The national debt has not been on people’s minds because the national psyche does not have the capacity and the ability to worry about the national debt when they have person financial and health concerns.  We are overdrawn our capacity for worry, and there simply isn’t any space left to care about new problems.

 

 

 

 

Gabriel Potter

Gabriel is a Senior Investment Research Associate at Westminster Consulting, where he is responsible for designing strategic asset allocations and conducts proprietary market research.

An avid writer, Gabriel manages the firm’s blog and has been published in the Journal of Compensation and Benefits,...

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