For the past week I’ve been restructuring several charts I’ll publish monthly in this blog. (It’s taking some time, by the way, but they’re just about ready.) One of those charts, which I’ve already been publishing for a while, will take on a new, simpler name: Interest Burden Watch.
One thing that’s been subconsciously nagging at me, for more than two decades now, is the negative public perception of the phrase “Interest on the Debt.” Whenever it comes up, I detect an undercurrent of goes-without-saying negativity. It’s used in headlines all the time, presumably to set the tone for some kind of subliminal political message in the article to come. It’s also used by politicians all the time; in case you hadn’t noticed, they’re masters of the techniques of persuasion—and the number one motivating emotion is fear (...it’s just ahead of the number two motivator, greed). I think it was irreversibly wired into our brain stems a few billion years ago, back when we were clumsily struggling out of the ocean onto the beaches, to escape the predator-denizens of the deep.
Anyway, even though it is undeniably possible for a person, business, or government to have too much debt—and the unbearable interest burden it generates—that’s not the case in the USA now, and it won’t become the case if we keep inflation in check and keep the economy growing at least as fast as the debt. (Anyone who has read this blog before is probably thinking I sound like a broken record just about now.)
As a result, when I was updating the Interest Burden Watch chart, I decided to attempt making a dent in that false negative perception. I added a sidebar: a plain-talk definition of “Interest on the Debt.” Then I decided it deserved a post all by itself. This is it.
So, here it is in two different formats: a graphic image, followed by the plain text version, of the plain-talk definition of "Interest on the Debt." Feel free to copy either the graphic or the plain text, and post it wherever you think it might do some good in the struggle between reason and emotion.
Here’s the graphic:
And here’s the plain text:
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Plain-talk definition of
"Interest on the Debt":Rent paid by Uncle Sam on money borrowed from willing lenders like you and me.
By borrowing our money, Uncle Sam was able to buy more stuff—without having to raise everybody's tax rates to pay for it. In return, we got some interest-bearing Treasury notes for our safe deposit boxes. An even-steven deal.
A word to the wise: As long as Uncle Sam keeps inflation in check and keeps paying the rent on our money, we'll keep lending more to him, at low rates, to buy extra stuff. If the interest keeps flowing to us from Uncle Sam—as he promised—he'll be able to count on the principal continuing to flow in the other direction.
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