If you thought your debt was bad, don’t worry. The U.S. has you beat.
It’s been racking up the national debt since the 1930s. It was $43 billion in 1940...half of GDP output that year. Fast-forward to 1960. It’s $286 billion, again about the equivalent to half of GDP that year. It exploded in the 1980s, and just kept going. In 2018, the U.S. national debt was a whopping $21,516 billion (that’s $21.5 trillion), which was more than the total GDP of 2019 (105% of it, to be exact).
This begs the question: is there any limit to the national debt?
The answer: yes. The statutory debt limit, a.k.a. the “debt ceiling.” Congress sets the statutory debt limit: the limit of the amount of debt that the U.S. can take on to fulfill its legal obligations. The U.S. government has to cover Social Security, Medicare, tax refunds, military salaries, and any interest payments on outstanding debt (at least the interest payments). That means the U.S. can borrow money to pay for all of that...but only up to the debt ceiling amount.
How easily is that limit moved? Well, it’s been moved almost 80 times in the last 60 years, so...you do the math. Pretty often.
Why do they keep raising it? Because if they didn’t, the U.S. government would fall short of its financial obligations...and that’s just not an option. Stability is everything. Reputation is everything. The U.S. dollar has to keep up appearances, even if it costs trillions of dollars.
Now put those hands in the air, and raise that ceiling...like it’s 1990, or 1962, or...any year, really. Pick your favorite.
Related or Semi-related Video
Econ: What is a Budget Constraint?2 Views
And finance Allah shmoop What is budget constraint Oh a
budget is that thing your financial advisor keeps telling you
to make figure out how much you have to spend
and where you want to spend it and that's it
A constraint Is that feeling You get your wasteland after
a trip to the Happy have her bountiful buffet Just
can't eat another bite So put those concept together Budget
constraint on Well that's what this video is about A
budget that gets that feeling around its middle right It
just can't eat another bite Theo It's the last Friday
of the month and well you don't get your next
paycheck until Monday They're seventeen dollars in your bank account
You have thirty three in your pocket and fifty total
to your name But you've got a big date tonight
You can either take your date Teo Aunt May and
three the revenge Or you can probably just squeeze out
dinner for two at the PFC etchings And that is
at least as you only drink water and don't order
APS desserts But you can't go to the movies and
get dinner You have to pick one or the other
the concept of budget constraint attacks your love life Budget
constraints described the purchasing choices people have to make when
they have a limited income in economic circles The budget
constraint problem is usually posed as a choice between two
items This procedure allows economist to do their favorite activity
Make graphs Your brother is coming home after being in
a coma for three years He's not actually out of
the coma but his insurance ran out So you're going
to bring him home and let him keep a coma
in the living room Your family decides to celebrate the
homecoming anyway and they put you in charge of decorating
the house as if he notices you narrow your decoration
choices to two items you think are perfect for this
mccobb situation You can pick from balloons shaped like colostomy
bags and streamers that look like the chords of ivy
machines Well the colostomy balloons cost five dollars each and
the ivy streamers cost fifteen dollars each You have ninety
bucks to spend well There are all sorts of combinations
of purchases you can make You could buy eighteen balloons
and no streamers Are you Goodbye six streamers and no
balloon See they both total ninety bucks Or you could
buy a combo like two of the streamers and twelve
balloons or maybe four streamers and six balloons And this
is presuming you're going to spend all ninety dollars well
graph all the choices and the graph represents your decorating
budget constraint It outlines what's called your opportunity set I
either possible situations that you could choose from Well any
time you buy something when you spend an amount of
money you give up the chance to buy all the
other things you could have bought with that money for
the coma party Well each stream or you buy for
fifteen box means there are three five dollar balloons you
can't buy the opportunity cost for purchasing one decoration is
that you'd necessarily have less dote up Spend on the
other decorations It's the price for dealing with a budget
constraint situation another concept important to a budget constraints situation
Marginal utility Well this idea measures the added value you
get from acquiring one mohr of something like Take the
coma party situation You buy only balloons eighteen balloons and
no streamers What What's the added benefit of that eighteenth
balloon Does it make the party that much more festive
Well but then buying only seventeen balloons Well does Yoon
really no good You still can't afford a fifteen dollars
streamer Buying seventeen balloons instead of eighteen only saves you
five bucks But if you buy fifteen balloons instead of
eighteen well that allows you to purchase a streamer Well
if you want to handle the situation like an economist
you'd graft the total for festive nous of the party
you to sign each decoration a quantitative festive nous kwo
shen or index Are questions better there Yeah Q F
Q work Well you take into account that there's a
diminishing return for conflict with each added balloon Well the
first balloon in a room makes AH room much more
festive Going from zero balloons Toe one balloon takes a
situation from just sitting around with a guy in a
coma to a party However the eighteenth alone in a
room is hardly noticeable The previous seventeen balloons have already
done most of the work of creating that party atmosphere
Rock on baby well graphing the cost of each decoration
and the various festive quotients And economists can figure out
the optimal balloon to streamer ratio maximizing the total party
vibe But Keating within you know your budget constraint Well
by measuring the marginal utility of each item you can
choose among your opportunity set Which combination of balloons and
streamers gets you the most utility That is the combo
that best decorates the house for the money Not that
your brother is going to notice but we're just saying 00:04:26.349 --> [endTime] Hundred and tasty
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