And how does government debt affect you or the economy? How did the US credit downgrade affect anything? Wait, let me guess, the confidence fairy?
Nevermind the fact outstanding federal debt almost mirrors GDP since forever, so I find your worries completely unjustified.
And Greece? Don't they use a currency their government can't control? So the US is not Greece, and the US has experienced minimal inflation from all the 'printing of dollars' going on lately... so the Austrian hyperinflation worries are completely unjustified, also.
Incorrect. As recently as 30 years ago, total US debt, private and public was less than 40% of GDP. Now it's approaching 100%. When Obama is done, it could be 125%. Interest payments are now in the $100's of Billions. A downgrade in your credit rating will add $10's or $100's of billions in new interest payments.
Where do you think the money comes from to pay that interest? Taxes. I pay taxes, lots and lots of taxes. For someone who doesn't pay income taxes, gov't debt has no effect whatsoever because they receive things from the government and pay no income tax. The more they get the better off their lives will be. Nowadays in your country and probably ours, that's more than half the population. Their vote is the same as mine, one. They have no reason whatsover to vote for anyone advocating austerity because they save nothing and get less through good sound conservative government policy
I on the other hand, pay taxes. Every year I pay more and more and more. In my lifetime, when our local provincial sales tax was introduced, it was 3% and only applied to goods, not services. Now it's 8% and recently it was amended and applies to both goods and services, effectively more than quadrupling it's rate over time in my lifetime.
Federally, the government introduced some years ago, a General Sales Tax, or GST, which stands at 5% now and applies to everything except necessities like food and clothing.
So I work, run a business, and the feds and the province take upwards of 25% of the business income off the top. With the 75% that's left, I lose another 40% to personal income taxes. I'm now down to 45% of my original 100%. I lose another 13% of the 45% (% in relative terms) to just about every purchase outside necessities. I pay more than 50% tax on fuel, built into the price ($6 per gallon here). If I sell my house there's a land transfer tax. If I dispose of a tire I pay a tax. If I go to the city dump it costs me money. I pay for for several licenses for motor vehicles. I pay for a license to fish. I pay $30 for a 26oz bottle of booze and $30-35 for a case of beer and have to buy it in a government run store staffed by employees dramatically overpaid by me the taxpayer, because they work in a public union.
Why? Taxes. For every dollar I make in business, I keep less than 35 cents. The rest pays for all the government waste, inefficiences, beauracracy, entitlements, green energy boondoggles, overpaid and overbenefited government employes and financing on huge debts etc. etc. etc. In Ontario where I live, just the interest on the debt alone, forget about repaying the principle, is $2000 for every working person in the province. But that's an average. Lots of low income earners pay little or no income tax and so the average share of someone earning a good living is probably more like $3-4000. I had dinner with some mates a couple of weeks ago, and we calculated that our annual share of interest payments on provincial debt taking our whole immediate family into the mix, was more than $30,000.
If I'm lucky enough to save some money I've already paid taxes on, and make a profit on it by investing, I'm taxed again, even though I've already paid 40% tax on the money as earnings.
The taxes continue to go up and up and up and up and up and up forever. Why? Who is paying for the interest on the debt? I am. If that isn't a consequence of continuously high deficits then I don't know what is.
