1 0. The burden of the national debt has long been a controversial issue. It is not true that the debt will eventually have to be paid off. Nor does the debt indicate that the federal government is about to go bankrupt. During the last 25 years, private debt has grown more rapidly than the federal debt. The debt affects future generations through its impact on capital formation. During the period from 1946 to 1966, federal borrowing had little impact on the private loanable funds market. In contrast, during the period from 1967 to 1978, there was a vast increase in the growth of Treasury borrowing in the private credit market. Given the declining share of government expenditures allocated to capital investment, there is reason to believe that the borrowing during the period from 1 967 to 1 978 retarded capital formation and economic growth.