Debt Debt

DEBT 5

Debt

Debt

TheUnited States` National Debt Compared To Other Countries

Regardingnational debt, the United States’ debt-to-equity ratio stands at106.5%, and it is second after Japan whose debt-to-GDP ratio is morethan twice the size of the nation’s GDP (McEachern, 2014). Overall,the US debt-to-GDP ratio is about two times that of Switzerland andclose to five times to that of Australia (McEachern, 2014).Luxembourg and Qatar, two countries that have recorded a high percapita income of $104,000 both have a debt-to-GDP ratio of 27.8% and25.8%, respectively, which happens to be less than one-third of thatof the U.S. (McEachern, 2014). When examining the five richestnations in the world, the U.S. debt-to-GDP ratio has dominated thelist for the last six years. Timiraos (2016), argues thatoverreliance on debt to finance public expenditure is the primaryreason why the American national debt is so high. One of the ways ofreducing sovereign debt would be to cut down on the spending byreforming major government programs.

NeedFor International Financial Regulation

Thereis no need for international financial regulation because one nationcannot wait for others, who may not see the issue as a pressingmatter. Gaining financial stability should be a national priority.Different countries have different public policies that outline thebest manner of running the banking sector (McEachern, 2014). It wouldtherefore not make sense for the United States, for example, to beresponsible for making decisions about how to deal with the failureof a bank in another region. Bonds would provide an effectivesolution to reducing the debt crisis (Bilney &amp Pillay, 2015).National governments can issue bonds to the public as a way ofgetting funding. Such funds help avoid a rise in the level of taxesand at the same time stimulate spending in the economy.

Incase the economy faces a challenge such as unemployment, thegovernment can buy back the bonds from the public in a bid tostimulate growth in the economy through the implementation ofprojects that will create jobs (Peñaloza &amp Barnhart, 2013). Theamount of interest paid to the creditors would not be as high as theone charged by other nations or agencies such as the World Bank.Another option would be to keep the interest rate low because it willattract businesses and people to borrow money.

Themoney will facilitate the purchase of goods and services, create jobshence bringing about tax revenues. Deep budget cuts will also go along way in solving the debt crisis. Doing so will require thenational budget to only focus on sectors that are of priority tolower the level of miscellaneous expenses (Timiraos, 2016). Anotherstrategy would be to raise taxes within a nation. The taxes wouldconcentrate on the energy sector for instance taxing industries onthe emission of carbon or gasoline. A high tax rate will translate toincreased revenues that will help pay the debt (Chin &amp Cohen,2014). The tax option is, however, a risky option as it may result ininflation.

Howthe U. S., Should Address Debt both Here and Abroad

TheBible taught people to love their neighbors as they love themselves.The aim of the teaching was to open the minds of individuals to haveeach other’s interest at heart (McEachern, 2014). With that conceptin mind, the U.S. should address debt within the nation by loweringthe interest rate to allow borrowing, which will later create revenueto settle the debt (Davidson, 2010). The strategy acts in the bestinterests of the citizens. According to Bilney &amp Pillay (2015),biblical lessons have emphasized on the principles of forgiveness andhelping the needy within the society. In the U. S. situation, thecontext would refer to applying debt forgiveness to other nationsthat have been unable to repay their debts due to a weak economy, forinstance, African countries. The U.S government can demonstrateChristian beliefs of helping others and bail out impoverishednations, by taking the burden of paying their debts.

References

Bilney,C., &amp Pillay, S. (2015). Publicsector organizations and cultural change.Houndmills, Basingstoke, Hampshire: Palgrave Macmillan Publishers.

Chin,A., &amp Cohen, T. R. (2014). The National Debt in the 2012 U.S.Presidential Election. Analysesof Social Issues &amp Public Policy,14(1), 105-122. doi:10.1111/asap.12046

Davidson,P. (2010). Making dollars and sense of the U.S. government debt.Journalof Post Keynesian Economics,32(4), 661-666. Doi: 10.2753/PKE0160-3477320410

McEachern,W. A. (2014). Econ:Macro4.New York: Cengage Learning Publishers.

Peñaloza,L., &amp Barnhart, M. (2013). Living U.S. Capitalism: TheNormalization of Credit/Debt. Journalof Consumer Research,S111-S130. Doi: 10.1086/660116

Timiraos,N. (2016). Debate over U.S. Debt Changes Tone. The Wall SreetJournal. Retrieved fromhttp://www.wsj.com/articles/debate-over-u-s-debt-changes-tone-1469385857