Question

How does John Tamny view the national debt? What is your conclusion? Is this a problem, why or why not? Be sure to support your conclusion with facts.

Answer 1

National debt refers to the net accumulation of the deficit budgets of the federal government over the time and which the government would owe to the creditors in the long run. Although budget deficit is found to be beneficial in the short-run economy and is said to be preferred over budget surplus, there have been various views on the National debt of which the view of John Tamny is a stand out.

                           John Tamny depends on the analysis of Salsman and works of Keynes and many other economists to make a conclusion on the effect on National debt in the short and long run economy. He sates that in accordance with Salsaman view of the debt, the effect of these debt would not be visible in the short-run and the burden would be implied on the future generations and the long-run economy. He further makes a conclusion that for inducting more money in to the economy, the government would have to depend on borrowing polices which would add to the external debt of the economy along with the budgetary deficits that would be seen within the economy. The large increase of the external debt and internal debt would force the government to increase the tax burden of the people which would affect the people in the future.

                                    There have been difference of opinion in this regard too considering the short and long run effects on the economy. The budgetary deficit would mean that the government is spending on the economy which would help in the improvement of infrastructure and similar spending patterns in the economy which would lead to the stabilization of the economy too. But it has to be noted that the advantages of this would be made available to the current holders of the economic profit and thus more tax burden and effects of the national debt would have to be born by the future generations. He also states that the current US economy in particular has no major difficulties with the rising national deficit and thus in the coming years, the burden would be lesser.

                                    With due consideration of the statements put forward by John Tamny by incorporating the views of various other economists, it can be seen that the effect of national debt has an influence with consideration to the short run and long run economic trends. Although it can be seen that there will be no visible effects in the coming decade, the effects would be visible in the coming decades and the future generation would have to deal with the rising deficits of the current economy.