Debt-Deficit - SIZE OF NATIONAL DEBT IN CONSTANT DOLLARS OF...

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SIZE OF NATIONAL DEBT IN CONSTANT DOLLARS OF YEAR 2000
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NATIONAL DEBT AS % OF GDP (IN 2006 IT WAS ABOUT 66%)
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STRUCTURE AND OWNERSHIP OF DEBT National Debt (Year 2005) $7.7 trillion Public debt $4.6 trillion Intragovernmental debt $3.1 trillion Public Debt Holding ($4.6 trillion) 100% Domestic Residents 56% Foreigners 44% Debt owned by Foreigners 100% Foreign central banks 64% Foreign private citizens 36% Largest foreign owners of national debt Japan’s central bank China’s central bank
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SHOULD AMERICA PAY DOWN THE DEBT? 1. Paying down debt may introduce deflationary (recessionary) pressure in the economy, because it may mean decreasing G or raising taxes. So, only gradual reduction of debt should be planned. 2. The focus may have to be on expanding GDP to reduce debt-to-GDP ratio. Expansion of GDP may even generate surplus to repay debt with no deflationary pressure (this in part is a supply-side argument of expanding GDP by reducing taxes). 3.
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Debt-Deficit - SIZE OF NATIONAL DEBT IN CONSTANT DOLLARS OF...

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