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Simcountry is an Online Digital World where you are the President of a country.
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What is Simcountry?

Oh no not you again (Kebir Blue)

Simcountry: Simcountry Bulletin Board  Oh no not you again (Kebir Blue)

Simon Dabney (White Giant)

Monday, September 22, 2008 - 04:53 am Click here to edit this post
John,

Sorry, Simon has been busy working and polluting the atmosphere.

There are several negative impacts to a large national debt.

1. Interest Rates: When a government keeps a large debt, their debt instruments have to be purchased by someone (even though the single largest holder of U.S. Treasury Bonds is the Social Security Administration; which will lead us into an entirely different argument about the viability of Social Security). Therefore, the Government in question is competing for money with the private sector. In order for the private sector to borrow capital for actual investment, they will have to pay a higher price.

2. Inflation: Deficit spending serves to artificially add money into an economy. This will cause there to be more money competing for goods, which will lead to an increase in prices without a corresponding level of supply increase.


There ya go, John. There's a start, anyway.

Simon

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