As recently as 2007, the amount of federal government debt—Treasury securities held by the public—was just 35% of gross domestic product. At the end of 2019, it was 79%, and it’s likely to hit 104% in 2021. It only gets worse: The debt will likely rise to 109% by 2030 and approach 200% of GDP by 2050, according to estimates from the Congressional Budget Office. Those estimates don’t include another fiscal stimulus (which was being negotiated at press time) and assume Congress won’t extend tax breaks scheduled to expire in 2025.
For most of us, that kind of balance sheet would be ruinous. Interest rates would eat away at our income, making it difficult to pay expenses. Certainly, that has been the traditional view of the federal government’s debt: As rising deficits increase the amount of interest the government must pay each year, there’s less money available for other things. There have also been concerns about what would happen if China and other foreign investors were to stop buying Treasury securities. A deluge of debt would flood the market, and interest rates would have to rise to entice investors to buy it. That would cause interest rates on consumer and business loans to follow suit, which would hurt the economy.
Diese Geschichte stammt aus der February 2021-Ausgabe von Kiplinger's Personal Finance.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent ? Anmelden
Diese Geschichte stammt aus der February 2021-Ausgabe von Kiplinger's Personal Finance.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent? Anmelden
FREE HELP FOR COLLEGEBOUND STUDENTS
This program’s mentors assist applicants as they fill out the FAFSA, write essays and more.
WHAT YOU SHOULD KNOW ABOUT SPOUSAL IRAS
You typically need earned income to contribute to an individual retirement account, but a spousal IRA provides an important exception to this rule.
SELLING SHARES? HERE'S HOW TO MINIMIZE TAXES ON YOUR GAINS
ET'S say you've been regularly buying shares in a booming tech company over the past few years, but now you want to start taking some of those profits, perhaps to rebalance your portfolio.
Strategies for Novice Investors
AS part of a lifes kills program for young, single mothers, I was asked to teach a class on how to get on top of your finances.
ANSWERS TO YOUR 529 PLAN QUESTIONS
Thanks to recent policy changes, families have more options for what to do with money sitting in these tax-advantaged accounts.
Rate-Cut Winners and Losers
NOW that the Federal Reserve has cracked the interest rate ice, the next development will be to separate winners from losers.
SHOULD YOU BUY THESE RED-HOT FUNDS?
Covered-call ETFs are popular but come with plenty of caveats.
DIVIDEND STOCKS ARE READY TO REBOUND
Our favorite dividend payers are poised to benefit as falling interest rates lure investors back.
IS A 55+ COMMUNITY RIGHT FOR YOU?
These age-restricted developments appeal to older adults seeking abundant amenities and an active lifestyle.
AT LONG LAST, RATES ARE DROPPING
Consider these portfolio moves now that the Federal Reserve has cut its benchmark interest rate.