Below I re-post part of mine from 15 March 2015:
... a cost argument:
Imagine a world where there is $3.50 of debt for every dollar of
spending-money. Now, gradually, over 60 years, the level of debt
increases to $35.00 for every dollar of spending-money.
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| Graph #1: Dollars of Total (Public and Private) Debt, for Each Dollar of Spending Money |
If the interest rate is fixed at one percent, then at the start debt
imposes a cost of 3½ cents on every dollar of spending-money. By the
end, debt imposes a cost of 35 cents on every dollar.
If the interest rate is three percent, the interest cost is 10 cents per
dollar at the start. By the end, the entire dollar is absorbed into
interest. This is the cost of finance.
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