Does the U.S.'s debt matter?

Does anyone really expect to get paid back? We might as well tell everyone to go eff themselves, and have zero debt. Why do we borrow money, when we make our own monopoly money?

Originally posted by dementedtheclown
Does anyone really expect to get paid back? We might as well tell everyone to go eff themselves, and have zero debt. Why do we borrow money, when we make our own monopoly money?

In theory leveraged money is a good idea.

So is Marxism.

reply to post by dementedtheclown


no they never expect to pay it back and what do they do ? spend more money.

and why do we borrow simple fact is we print our own money making it worthless

if they stopped printing money and took a crapload out of circulation the value of the dollar could double overnite

but that makes too much sense......they want us to be dependent on foreigners they have sold us out to japan and china two of the largest debt holders in the world.

why? so they can have all their entitlement programs.

Originally posted by dementedtheclown
Does anyone really expect to get paid back? We might as well tell everyone to go eff themselves, and have zero debt. Why do we borrow money, when we make our own monopoly money?

True...being the only Superpower left on Earth..what are they gonna do if we don't pay our debt?

reply to post by dementedtheclown


The idea of a country being in debt is about as silly as it is complex and overstated.

There are two concepts of the national debt. The first is deficit spending. All this really amounts to is how much printed money is floating around out there that doesn't have any real basis in productivity/assets. In a sense - it is money that is borrowed from the tax payer... and can only be paid back by the tax payer. It sounds crazy - and it is crazy to have the national deficit approaching a 1:1 with the GDP.

The second is when countries, like Japan, decide to back U.S. grants and other such securities as a form of investment. In theory - it works well for both parties, Japan subsidizes development of one of its trade partners and gets a return on their banking (with more powerful trade).

In practice, since currency values are relative, I don't think anyone has any clue how much is really owed by anyone, as the quantitative value is almost meaningless and every country is so indebted to other countries that we may as well call it all even.

I like the idea that our fed will "buy" our bonds to produce more money.

It's like writing yourself a check to spend more out of your checking account.

I've heard people say the day will come when our system collapses. Heard it when we owed just a few billion in public debt, then a few hundred billion, now trillions. I'm beginning to think it really doesn't matter.

thats a very good question, OP.

Honestly, what could China do if we don't repay? Turn us into a collection agency?

Well in about 2 weeks you will see that is does matter. A say good by to life as you knew it as in money in the US.
Good luck, the dam will break after the elections and more....

Originally posted by Snarf
what could China do if we don't repay?

That's when they send in their forces to reclaim what's theirs. Might not happen now, but in 20 years could be possible.

I think it's a great point.

It's all theoretical. It's all meaningless, ultimately.

Real wealth are our physical resources, water air land, etc.


And I have to chuckle at the guy above who seems to imply the coming elections will effect our debt in any way. chuckle/

Originally posted by ppk55

Originally posted by Snarf
what could China do if we don't repay?

That's when they send in their forces to reclaim what's theirs. Might not happen now, but in 20 years could be possible.

Sure, they could send in forces. But what are they going to do? Stage themselves in Canada?

They're not going to risk millions of their own people's lives to collect on a debt...and besides, our civilization is pretty much beyond foot patrolled invasion, unless it's of a crap hole 3rd world country.

anoneelse seen this (ridiculous) ad?

I wrote the following:

Debt vs Budget Deficit

Every year the government has a federal budget. The Budget of the U.S. Government is the president’s proposal that recommends funding levels of various federal programs for the next fiscal year, beginning October 1st. A deficit is the difference between the money Government takes in and what the Government spends each year. Receipts include the money the Government takes in from income, excise and social insurance taxes as well as fees and other income. Federal spending includes social security and Medicare benefits along with all other spending ranging from medical research to interest payments on the debt. The total accumulated public debt is the combined deficits that have not been paid back each year. As the government draws its income from much of the population, government debt is an indirect debt of the taxpayers.



Public Debt

The US has a near 1.3 trillion dollar budget shortfall in the financial year that ended in September 2010. That was equal to 8.9 percent of gross domestic product GDP.1 This was brought on mostly by the government spending on bailouts and stimulus packages, the growth of the structural deficit as the government has refused to raise taxes as much as is spent on public services and transfers combined with a shortfall of tax revenue because of high unemployment in the US.2 As of 9/30/2010 the accumulated debt was approximately 13.6 trillion dollars.3 According to the International Monetary Fund calculations, the US debt/GDP ratio in 2009 was 83.2% and is predicted to climb to 109.7% by 2015.4 The federal debt is larger to the relative size of the economy than it has been in more than 50 years—and is headed higher.

According to the Congressional Budget Office it predicts that cutting taxes and increasing government spending would only increase government debt in the long run. Therefore alternatives to these options would provide an economic boost but will still increase debt in the short term.5 A combination of tax increases and spending cuts will be needed to avoid the unsustainable debt, but the higher the debt climbs before action is taken the more likely it is that we will find ourselves in an economic crisis and the more painful the unavoidable response is. In the article, “Public Debt – A Potential Crisis in the Making?” by Philipp Wörz, the author explains that the only options left for nations with higher debt are fiscal pain, inflation and default.2 Fiscal pain is the raising of taxes and cutting government spending to build a primary budget surplus. Inflation occurs when banks print money to pay down debt at the cost of inflation. Default refers to when government does nothing.

On October 4, 2010 Chairman Ben S. Bernanke gave a speech on our current fiscal rules and policies and their sustainability. He described the effects of the increasing debt if new policies are not given:
[…] Failing to address our unsustainable fiscal situation exposes our country to serious economic costs and risks. In the short run, as I have noted, concerns and uncertainty about exploding future deficits could make households, businesses, and investors more cautious about spending, capital investment, and hiring. In the longer term, a rising level of government debt relative to national income is likely to put upward pressure on interest rates and thus inhibit capital formation, productivity, and economic growth. Larger government deficits increase our reliance on foreign lenders, all else being equal, implying that the share of U.S. national income devoted to paying interest to foreign investors will increase over time. Income paid to foreign investors is not available for domestic consumption or investment. And an increasingly large cost of servicing a growing national debt means that the adjustments, when they come, could be sharp and disruptive. For example, large tax increases that might be imposed to cover the rising interest on the debt would slow potential growth by reducing incentives to work, save, hire, and invest. Finally, a large federal debt decreases the flexibility of policymakers to temporarily increase spending as needed to address future emergencies, such as recessions, wars, or natural disasters. […] 6

A 24-strong Committee on the Fiscal Future of the United States is urging the government to take action on the mounting debt issue. The panel of economic experts finished a 2-year study headed by the National Research Council and the National Academy of Public Administration. They agree that the government must raise taxes or cut government spending to curb its debt, or else face a dollar crisis. Investors could lose confidence in the economy and the nation’s ability to keep to its obligations, pushing up interest rates and causing a steep fall in the value of the dollar as international creditors seek safer returns elsewhere. The committee identified curbing Medicare, Medicaid and Social Security spending as being the top challenge.7

Sources

1. www.cbo.gov...

2. www.moneyweb.com...

3. www.treasurydirect.gov...

4. www.imf.org... pg. 13

5. www.cbo.gov...

6. www.federalreserve.gov...

7. www.reuters.com...

Originally posted by dementedtheclown
Does anyone really expect to get paid back? We might as well tell everyone to go eff themselves, and have zero debt. Why do we borrow money, when we make our own monopoly money?

If the debt was paid back the economy would collapse because money is not money, money is debt, and debt is money. Therefore, we will always have debt under this system. The more debt we have - expansion - the more currency, the less its value. The less debt we have - contraction - the less currency, and the more its value. People can be screwed either way, you have to know whether to keep currency or commodities or stocks and at what times. The expansion of debt tends to get people hooked and dependent and the contraction calls in the markers and busts everyone that is ill prepared. The banksters then foreclose and take the real value - the assets which were produced with the labor that was paid for by debt. Its some kind of system isn't it?

They don't care about the debt.
NWO wipes it all out and fixes everything!

No breaks for the peasants though

Originally posted by Snarf

They're not going to risk millions of their own people's lives to collect on a debt...and besides, our civilization is pretty much beyond foot patrolled invasion, unless it's of a crap hole 3rd world country.

Oh yes they would. The chinese State values the lives of the common people very little. Read a bit of history.

reply to post by ..5..


i think you have missed the forest for the trees, sir.

the point is, the Chinese would not benfit from 'collecting' their debt, in any way, be it through an 'invasion' of soldiers that is basically impossible to implement at this point, or though the se of international law. China ONLY has leverage BECAUSE they hold US debt. As soon as they collect, they lose that leverage. And since their entire economy is dependant on American consumers, an 'invasion' certainly woud be counter-productive.