Download presentation
Presentation is loading. Please wait.
1
Have Out 16.2 note for an open-note quiz
Once you are finished, take the worksheet from the front of the room
2
Essential Skill: C-7 State implications and consequences
National Debt Essential Skill: C-7 State implications and consequences
3
News Update Violence at Trump rally in Chicago
4
Annotating Graphs on Deficits and Debt
Surplus Deficit Income Spending Keynesian/Demand-side economics (i.e., when?) Supply side economics (i.e., when?) Public debt
5
How much debt are we talking about?
National Debt clock and Debt Clock Details What does this debt look like? Global comparisons (per GDP)
6
2014 Data
8
Limits? Is there a Constitutional limit on how much we can borrow in any given year? NO, the debt ceiling is a law created by Congress, it’s not in the Constitution Congress can raise the debt ceiling whenever they choose to do so.
11
So, who are we in debt to?
13
The Total US Debt of $16.8 Trillion Broken Down
14
Intragovernmental Holdings
Intragovernmental Holdings - Nearly 30% of the Federal debt is owed to 230 other Federal agencies. Why would the government owe money to itself? Some agencies, like the Social Security Trust Fund, take in more revenue from taxes than they need right now. Rather than stick this cash under a giant mattress, they buy U.S. Treasuries with it. By owning Treasuries, they transfer their excess cash to the general fund, where it is spent. Of course, one day they will redeem their Treasury notes for cash. The Federal government will either need to raise taxes or issue more debt, to give the agencies the money they will need.
15
Why Does the Federal Reserve Own Treasury Debt?
As the nation's central bank, the Federal Reserve is in charge of the country's credit, so it doesn't have a financial reason to own Treasury notes. So why did it double its holdings between 2007 and 2014? That's when it ramped up its open market operations, purchases of Treasuries. This Quantitative Easing stimulated the economy by keeping interest rates low, escaping the grips of the recession.
16
Who is the largest foreign holder of US debt?
How much of our debt does China hold? Why does China hold so much of our debt? China.htm
19
Reflection How do you feel about the United States current debt? Does this alarm you? Do we need to reform our spending or do you believe this spending is justified because we need the services it provides?
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.