U.S. National Debt- A Risk Management Approach

Abstract

The U.S. national debt reached the astounding figure of 22 trillion dollars in 2018 (Gomes & Sinclair, 2019). It splashed onto the headlines of newspapers and became a topic of interest for Nobel laureate economists, dividing opinions on the potential impacts and the necessity of corrective measures. Krugman (2019) advocates that the national debt is trivial for a large economy like the U.S.; whereas, economists, such as Summers (2019), assume a more cautious position in recommending clear restrictions on the never-ending rise in the national debt. Some intriguing questions persist: should measures to restrain or reduce the debt be taken? If so, what is the ideal time to put them into effect? The purpose of this study is to analyze the reasons for the increasing U.S. national debt and to raise a discussion on the ideas of these reputed economists to address these questions. Additionally, the fundamental principles of risk management have been explained to evaluate the national debt from a different perspective (Homan, 2013). The findings of this research show that there are similarities between the theory of risk management and the risk concerns involved in the U.S. national debt. The social impact of this research includes the potential for the risk management tools identified to be used in analyzing the sovereign national debt.