Debt

A major polity issue that affects many communities is debt. Debt has been a thing for thousands of years. It began during the development of early civilizations and trade systems where around that time people were trading silver, gold or even livestock. Back in the day, the way debt was recorded was on clay tablets. As the economies grew, everything fell into place making it more organized which now up to this day we use banks and the government. Not only does debt affect the citizens in a community but also companies, economies and even the government themselves. Throughout history, debt has played a major role during war eras and economic crises. Sometimes taxes can lead to debt if a person or company is unable to pay. “First, the more money the government collects to cover its costs, the less residents are left with to spend and invest.” (Pg 587). With them doing this leaves individuals fighting for their lives trying to buy necessities like food, clothing, or putting aside for savings and leaving business owners with less money for their company, employees and creating new products. Throughout history, debt has played a major role during war eras and economic crises. “By the 1970s, however, high inflation began to slow economic growth. There were a number of reasons, including higher oil prices and the costs of fighting the Vietnam War.” (Pg 573). Wars are another big reason why debt exists. During wars the government spends loads of money on soldiers, weapons, transportation, food and medical care. Sometimes if the government does not have enough money they begin borrowing from banks. As war continues, more money is being borrowed causing national debt to increase. After war ends the government must repay what they borrowed and if they are unable to pay, this is where inflation starts to increase which then affects citizens in a community. This means higher taxes and raises in prices. Another reason why debt occurs is because of low interest rates. “In the 2000s, consistently low interest rates and readily available credit contributed to the sub-prime mortgage boom and subsequent bust, which led to a global economic recession beginning in 2008”. ( Pg 579). A decrease in interest rates can lead to something called economic recession. This means there is a decline in economic activity such as reduced business profits and higher unemployment. The effects the economic recession can have is job losses and lower wages. This makes many people low on money because they are having a low income from their job. This affects their lives physically and mentally because they don’t have enough money to provide for themselves or for their families. Overall debt has played a big part in people’s everyday lives up to this day. High levels of debt can lead to overwhelming financial stress and a slow down in economic growth. Managing debt carefully is something everyone needs to do, although there are some people who may have it worse than others and may have themselves in a tough situation, finding ways to reduce unnecessary borrowing can help people manage debt and build better stable futures.
– Jaelyn