{"id":4320,"date":"2026-07-29T04:10:30","date_gmt":"2026-07-29T04:10:30","guid":{"rendered":"https:\/\/americanmovershub.com\/?p=4320"},"modified":"2026-07-29T04:10:30","modified_gmt":"2026-07-29T04:10:30","slug":"does-the-national-debt-matter-americans-are-likely-already-feeling-the-consequences","status":"publish","type":"post","link":"https:\/\/americanmovershub.com\/?p=4320","title":{"rendered":"Does the national debt matter? Americans are likely already feeling the consequences"},"content":{"rendered":"<div>\n<div>\n<div>\n<div>KEY POINTS<\/div>\n<\/div>\n<div>\n<ul>\n<li>The U.S. national debt is projected to reach $40 trillion before the end of the year.<\/li>\n<li>Deficit hawks argue that the national debt is contributing to inflation, high interest rates and slower growth.<\/li>\n<li>A new branch of economics postulates that the government needs to spend more in targeted areas to stimulate growth, which will help pay down the debt.<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<p>The U.S. national debt, which is quickly approaching $40 trillion, recently hit a new milestone when, in March, the total surpassed the nation\u2019s GDP. <\/p>\n<p>Read more <a href=\"https:\/\/americanmovershub.com\/?p=4318\">\u2018There is no substitute\u2019: Blood crisis puts trauma care at risk<\/a><\/p>\n<p>It has been more than 20 years since the government has balanced its budget. <\/p>\n<p>While most economists believe the nation\u2019s massive debt is already hurting Americans, some lawmakers and economists believe overspending won\u2019t hurt the national economy. <\/p>\n<p>Tom Hoenig, former chief executive of the 10th District Federal Bank and former vice chairman of the Federal Deposit Insurance Corporation, said that the national debt hurts everyday Americans by contributing to inflation and higher interest rates while slowing the growth of the economy. <\/p>\n<p>Hoenig said that the concern with the debt is \u201cnot that you necessarily have a crisis, it\u2019s that you slowly undermine the growth of your economy.\u201d<\/p>\n<p>A newer branch of economics called Modern Monetary Theory, or MMT, embraced by some Democrats, theorizes that governments that mint their own currency, like the U.S., hold no risk of defaulting on their debt because they can always issue more currency to meet their obligations. <\/p>\n<p>L. Randall Wray, a senior scholar at the Levy Economics Institute and leading proponent of MMT, told the Deseret News that he believes increasing spending in targeted areas would stimulate the economy enough to increase revenue and eventually bring down the debt. The debt, in his view, does not create a problem for growth or inflation. <\/p>\n<p>According to Wray, the debt poses a much different problem. \u201cThe government spending is not necessarily well targeted. It\u2019s mostly targeted to people who don\u2019t need it.\u201d<\/p>\n<p>Each year, the U.S. now pays more than $1 trillion in interest to sustain its debt. Wray said that while this money boosts the economy to a degree, interest payments redistribute money to the wealthiest individuals and institutions. <\/p>\n<p>MMT is not embraced by most economists, who still believe deficits and the debt are problems American lawmakers need to address. <\/p>\n<h3>The traditional view of why the debt poses a problem<\/h3>\n<p>Hoenig, who has been characterized as an inflation hawk, made his case for why the national debt is problematic. <\/p>\n<p>\u201cI have been a strong critic of the national debt because it has compromised monetary policy and has made monetary policy an enabler of running debts like we have,\u201d he said. \u201cThe national debt today \u2026 could not have become $40 trillion without the help of the Federal Reserve printing money.\u201d<\/p>\n<p>Hoenig said that when the U.S. went off the gold standard in 1971, it took away an external discipline on both Congress and the Federal Reserve. This move, he said, led to increased debt and inflation. \u201cOur gold stock was going down. And therefore, rather than address our printing of money and our creation of debt, we went off the gold standard.\u201d<\/p>\n<p>These actions from Congress and the Fed, Hoenig said, \u201cgave us A, consistent inflation or consistent crises and B, a national debt that we can ill afford to continue to carry.\u201d It would be difficult to return to the gold standard now, but to reverse the problems, the Fed will have to \u201ctake its mandate seriously, and that is price stability,\u201d he said.<\/p>\n<p>Read more <a href=\"https:\/\/americanmovershub.com\/?p=4316\">Episode 305: Primary general presidency talks about discovering the \u2018character of the Lord\u2019 by serving children<\/a><\/p>\n<p>Beyond inflation, Hoenig also argued that the national debt has reduced the growth of the U.S. economy. <\/p>\n<p>\u201cWhen you have debt at these levels,\u201d he continued, \u201c100% of GDP, 108%, even 90%, we have found that the, the real growth rate of your economy slows. \u2026 The real growth rate of the economy (in the 1950s) was closer to 4%. Today, we\u2019re happy to have 2%. So we\u2019re giving up enormous wealth as we think we can do more by increasing our debt.\u201d<\/p>\n<p>For the last 40 years, he said, politicians have argued that their policies would grow the economy enough that tax revenue would increase enough to pay down the debt. \u201cThat\u2019s wishful thinking. I wish it were true \u2026 yet the debt is higher (and) the growth rate is suffering.\u201d<\/p>\n<h3>Is deficit spending ok if it\u2019s targeted differently? <\/h3>\n<p>Wray holds a different view about the way that the national debt influences the economy. Wray said that seeking to pay down the debt through increased taxes and decreased spending could actually harm the economy. <\/p>\n<p>\u201cThe only way to reduce the debt is to run a surplus, and you would have to keep doing it,\u201d said Wray, \u201c(and) every budget surplus that the U.S. has had was followed by a depression. Budget surpluses for the United States have not been a good thing.\u201d<\/p>\n<p>Most economists, like Hoenig, see high inflation as a consequence of deficit spending, with some pointing to the inflation the U.S. experienced after massive government spending increases during the covid-19 pandemic. <\/p>\n<p>Wray argued that the inflation under President Joe Biden was not from increased spending, but rather from the way the money was spent. <\/p>\n<p>\u201cIt wasn\u2019t well thought out,\u201d Wray said. \u201cWe should have developed a very targeted response, make sure people who couldn\u2019t go to work still got pay, make sure that food could be delivered to people\u2019s houses \u2026 maybe it would have amounted to the same amount of money, but it wouldn\u2019t have been inflationary if we had targeted it.\u201d<\/p>\n<h3>Why is the debt being ignored?<\/h3>\n<p>Addressing the national debt is not an issue that necessarily brings voters to the polls. According to Gallup, only 1%-2% of voters see the national debt as the most important issue facing the U.S. <\/p>\n<p>The remedies, like the ones suggested by Hoenig, would require reining in spending on major programs like Medicare and Social Security and would likely include increasing taxes as well. <\/p>\n<p>The Trump administration has attempted to tackle the national debt through means that have so far proven ineffective or at least inconsequential. The Department of Government Efficiency reported to have saved $215 billion. Even assuming this figure is accurate, it has done little to counteract the increase in spending. <\/p>\n<p>Until the consequences of the debt are felt more acutely by American families, taxpayers will likely continue to quietly foot the bill. <\/p>\n<p>Read more <a href=\"https:\/\/americanmovershub.com\/?p=4314\">How Cyclospora spreads along \u2018the farm-to-fork continuum\u2019<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>U.S. debt surpasses GDP. Hoenig: Debt harms growth. MMT&#8217;s Wray: Debt manageable with strategic spending. Voter concern is low.<\/p>\n","protected":false},"author":1,"featured_media":4319,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33],"tags":[],"class_list":["post-4320","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Does the national debt matter? Americans are likely already feeling the consequences - American Movers Hub<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/americanmovershub.com\/?p=4320\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Does the national debt matter? 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