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In my freshman year of 1962, my college roommate pointed out that government debt is different from the money we owe other people. Government bonds amount to just money we owe to ourselves. Fifty years later, I'm in a business that has me explaining that when we borrow from our 401(k) accounts, it is just money we owe to ourselves. Every dime of interest we pay accumulates as part of our plan's annual earnings. The irony of 401(k) loans is that, for much of the past decade, they have been the best-performing asset in retirement plans.

On the political landscape, the need to pay down our national debt (the country's 401(k) loan equivalent) has become an obsession for many Americans and their political representatives, but the question I would ask is why we have to be in such a rush to pay it back right now. We only owe 70 percent of our GNP to non-government bond holders. An additional 30 percent is owed to government agencies like Social Security. To view the possible consequences of delaying full payment, we can look at Japan. I was an exchange student there in 1961, so it captures my interest as a country.

Japan is a poster child of how debt doesn't have to crimp a style of living. They owe themselves a quadrillion yen (15 zeros) which is about $14 trillion -- an amount that is 200 percent of their annual GDP. While their stock market has been moribund for the past three decades, the Japanese haven't let that bother them. Their lifestyle is enviable, unemployment is at 4 percent and life expectancy has increased by four years over the past 20 years. Their health care, delivered by private companies, costs a fraction of ours and is monitored by what amounts to a Public Utilities Commission that sets prices -- just like we control monopolies like the power industry.

Japan offers an example of how those of us looking for answers regarding the prospect of a ballooning national debt can be stymied by the "fact-free zone" of the current political scene. So-called "experts" who have been predicting for three years that the national debt would send interest rates through the roof are still waiting as rates have declined. On the other hand, far more experts with real money instead of just theories and political agendas are lapping up billions of those 10-year bonds paying less than 3 percent. Those satisfied with 3 percent interest for the next 10 years are clearly not concerned about some mythical spike in interest rates.

What has changed over the 60 years since my freshman year is that a lot of our debt is owned by foreigners. Those who are apoplectic at the thought of China owning so much of our government debt forget about the debt of other countries that we own. Foreigners that own a piece of us are more than offset by the money we have loaned to other countries -- especially when considering that what we pay in interest is peanuts compared to what we collect in interest on money loaned overseas.

When scare tactics become a big part of the national dialogue, it's important to be able to grasp some understanding of the fundamentals of economics. Grip the arms of the chair as tight as possible and breathe deeply. The current national debt we shoulder is not some end of the world. Percentage wise, it is less than it was at the end of World War II. Over time, interest rates are bound to rise -- but probably not very fast. In the meantime, businesses will continue to expand with borrowed money that costs next to nothing. The prospects for the stock market over the next few years are excellent based on historical relationships between company earnings and stock prices.

At the end of this year, taxes will increase, military spending will decrease, and the budget will get balanced like it was in the '90s when we had a surplus. Meanwhile, inflation over the years will help to reduce the value of the dollars we will have to pay back. The answer to all of this, for an otherwise anxious investor, is to sit tight with money spread out over funds that invest in established dividend-paying companies and add in some bond funds for stability. I miss Ross Perot, with his charts and a pointer, who used to say, "It's that simple."

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