better world · Real life education

National debts, the real problem of the average person. Part 2 – How does it affect me?

How does national debt affect you as an average person? Lets take the time to understand it, as I believe it is a fundamental question that need to be understood. It is fascinating for me to encounter many people, that are well aware of this issue, take it as an abstract fact and chose to ignore its practical consequences. National debts are one of the main reason for the lack of income, stability and prosperity on a social and personal scale. To understand why we will need to address the topic straight forward. The only way a government can get the funds needed to pay its debt is by collecting taxes. The logic behind taxes is quite simple, More taxes exist less money is left for its citizens. Lets put on the table some practical examples:

  • The increase in income tax have a direct affect on how much an individual is actually earning for his work. (more taxes= less income)
  • Increase of income taxes diminish the amount of employees small and medium businesses can employ. (more taxes= more unemployment)
  • The increase of sales tax affect directly the price of the commodities we buy on a daily basic, affecting the prices of all the products on the market. (more sales tax= less food in the supermarket basket for the same price).
  • The increase in sales tax increase the cost of basic services. (more sales tax= the price of gas, water and electricity are higher).
  • The increase in import tax, increase the price of products imported to local market. (in this case increasing sales tax and import tax is doubling the increase in the price).

Before we continue this conversation,  it is important for me to clarify an important point. The conclusion of this post is not that taxes should not exist. They are a necessity to maintain an healthy communal and public system. The problem is the amount of taxes that are taken and what they are used for. At this point another conclusion can be logically understood – more  tax money is used for paying this national debt, less budget exist for health, education and public services. This services are the core institutions that maintain a prosper society and gives roots the a better future.

How does national debt affect me

The absurdity in all of this is that instead of stopping this cycle of misery, governments are continually rising taxes, making the people poorer, decreasing the state of local education, health services and pensions without even having a solution in mind. In the way I see it, it is like we are all riding a manual train that requires all of us to work hard for gaining speed. We all know the train is going straight forward into a wall, but we continue to work harder and increasing its speed. All this time explaining ourselves that since we never saw the wall maybe in the end it doesn’t really exist.

The conclusion is very simple.

  • This national debt issue is one of the biggest burden on the majority of the western countries.
  • The majority of the western country in the world do not have the capacity to pay back this debt.
  • These countries are  ignoring this situation, by finding momentary solution in the form of increasing taxes.
  • These taxes are one of the biggest burden on normal citizens, as it makes them work more, earn less and spending more on less products.
  • These burden is blocking any path to prosperity of the individual in their lives and their society as a whole.

Hopefully, part of you start to understand why the subject of national debt is so relevant, urgent as important to handle with. Understanding is the first step toward finding a solution. In my next post we will discuss, why governments are comfortable with leaving this dangerous status quo and what can we (as citizens) can do to start fixing this problem. 

Share you thought with me in comment and express your opinion. Awareness and open conversation are the key for the creation of a better future.

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better world · Real Life Economy

National debts, the real problem of the average person. Part 1 – What is a national debt?

What is a national debt? It is not a secret that life in the west becomes progressively more complicated. People need to work more to earn less, while the cost of living is growing constantly.  The reasons for that can be divided to two. The structure of our current economy and the international relationship that has been created between the world countries. To learn more about the first reason, you can click here and read more about the vicious cycle of your current economy.  A this series of posts I will concentrate in talking about one of the most important factors that is making the economic life of so many people extremely complicated.

The reason for the increasing burden in the daily lives of many people is not as obvious as we would like to think, it is called the national debts. We hear about it all the time and take it as a reality that is bigger than us. We leave it in the domain of the abstract facts that are painting the background of our society, letting it be handle by “The professional people in charge”. The truth is that this subject is one of the most relevant to our lives and need to be addressed as a top priority in our political and social conversation.

Lets start by understanding what it is all about.  External loan (or foreign debt) is the total debt a country owes to foreign creditors. The debtors can be the government, corporations or citizens of that country. The debt includes money owed to private commercial banks, other governments, or international financial institutions such as the International Monetary Fund (IMF) and World Bank. In simple words, it means that the national debt, is money that a government (a public institution) owes to  private institution around the world attached the a certain interest rate. If you are interested to know the status of your county click here. As you can notice, if you’re living in a western country the national debt of your government is between 90% – 6000% of the GDP. In simple words it means that the country do not have the capacity to pay back the loan. In many cases, not even pay back the interest % on the loan.

What is a national debt

Why does it matter? First, it means this debt will never be paid and that no real solution exists to solve it. Secondly, It means that more the time will pass more problematic the situation will be. And the third point (maybe the most relevant to this post), is that real prosperity for those country is not possible. It is important to understand that these points and numbers are known to all and that it is not a new situation we put ourselves into. This debt problem exists for many decades. It is true that the last economical crash in the last 20 years made the balance inflate. But it is known a understood by all the world leaders and economist for many decades. Now, please take the time to think how many changes of government you had in you country in the last 20 years. All of them understood the problem, part of them not only ignored it but worsen the situation, letting it be the problem of the future generation and governing party.

The national debt of many western countries has increase dramatically in the last 15 years. The speed of loan taken by countries is a direct warning signal to us all. This loans that are taken are a clear sign of lack of responsibility of local government, as they are well aware that they do not have a real plan to solve the current debts they are in.  This lack of responsibility need to stop! simple solution exist and should be implicated. At the moment, just keep in mind that if you’re searching to understand why life has become so economically complicated for the average person in the western society, the national debt of your country is probably one if not the most important factor for that.

Share you thought with me in comment and express your opinion. Awareness and open conversation are the key for the creation of a better future.

If you like this content and would like to get more, Please like this post subscribe to this blog or to my Facebook. Your support is giving me motivation and helping me cause. For more topics in this blog click here.