Letter: US debt not as bad as it seems

We often hear about the travesty of the growing national debt. In fact, your opinion page recently published a letter from a Bluffton resident on this topic (“Large US debt should concern us”).

The comparison is often made to our personal budgets and the dangers of spending more than we earn. There is an important difference between personal budgets and federal government budgets.

To solve our personal budget issues we can’t print money. However, the federal government can “print money” (through buying government bonds) during periods of low growth and low inflation, which inevitably will stimulate economic growth. Despite cries of impending inflation, the issue for most of the world today, including the U.S., is deflation, not inflation, despite efforts by the Federal Reserve to achieve a target inflation rate of 2 percent.

Who has been buying U.S. debt as investments? Foreign governments own about 32 percent of the debt. China holds just 6.5 percent and Japan holds 6 percent. A multitude of other foreign governments own smaller percentages of U.S. debt. The rest of the debt is owned by us.

Most of the debt is held as investments at Social Security, various federal agencies, the Federal Reserve, state and local governments, mutual funds, retirement funds, financial institutions, and individual investors. To be sure, the U.S. is a safe haven for investors, and foreigners are more than happy to buy and own U.S. Treasury debt.

So will our children and their children have to pay off this debt, as most assume? Of course not.

This story was originally published June 24, 2016 at 4:34 PM with the headline "Letter: US debt not as bad as it seems."