U.S. Debt question

[Dr. Evil]

This question is for those who truly understand just exactly what it really is, if there is such a person.

Our national debt is approaching 18 trillion dollars, most of which, I understand to be owed to China. No administration, whether Bush or Obama, seems to care about this. Why?

The only reasonable answer I have as to why they are not concerned is because;

If China were to call for payment immediately, it would cause the entire world economy to collapse, including China, so therefore, China will NEVER ask this debt to be paid. So if China never expects to be paid, why worry.

If this is not true, why in the world is there such little concern in Washington?

[RiverRat1]

Because once you're in the middle of a ponzi scheme you have no choice but to keep going.

And China can't ask for what we don't have LOL. So no concern there.

They also go off the logic that once inflation goes up that 18 trillion won't seem like a lot of money. But by then we will owe 25 trillion.

[rferg84]

This question is for those who truly understand just exactly what it really is, if there is such a person.

Our national debt is approaching 18 trillion dollars, most of which, I understand to be owed to China. No administration, whether Bush or Obama, seems to care about this. Why?

The only reasonable answer I have as to why they are not concerned is because;

If China were to call for payment immediately, it would cause the entire world economy to collapse, including China, so therefore, China will NEVER ask this debt to be paid. So if China never expects to be paid, why worry.

If this is not true, why in the world is there such little concern in Washington?

China doesn't own most of it, they own some.

US corporations own the majority of it.

They are owned in bonds, they have certain maturities, can't just call them.

China has huge problems right now.

[adam_p]

China doesn't own most of it, they own some.

US corporations own the majority of it.

They are owned in bonds, they have certain maturities, can't just call them.

China has huge problems right now.

What he said.


We still need to address the issue though. Unfortunately neither party will do anything about it because they are worried more about staying in office than they are at fixing things. Too many people are on the government tit now and nobody can get re-elected if they take it away.

[txdukklr]

What he said.


We still need to address the issue though. Unfortunately neither party will do anything about it because they are worried more about staying in office than they are at fixing things. Too many people are on the government tit now and nobody can get re-elected if they take it away.

and this

plus debt can only be paid down with excess cash. that's going to take cuts in government, stimulation of jobs/economy and unfortunately tax increases

[RiverRat1]

What he said.


We still need to address the issue though. Unfortunately neither party will do anything about it because they are worried more about staying in office than they are at fixing things. Too many people are on the government tit now and nobody can get re-elected if they take it away.

Look at it this way.

Who's going to be the "bad parent" that tries to fix this? I view this as two parents. Mom and Dad. They have kids who vote which one is in charge. Mom goes first and lets them buy/have everything. Dad flips out because the credit cards are racking up. Dad gets elected the next year to "fix" things so the family can be secure. Well that means the cable was shut off, cell phones gone, no Cabo San Lucas vacation etc. Doesn't take a rocket scientist to figure who will be voted in the next year.

People want to live high on the hog until the music stops.

[M16]

The problem comes when people realize the dollar is worthless. No need to be a bad parent when you have a money printing machine in the basement. Cash will eventually become worthless. It's just a matter of time,

[Russ79]

Why don't we just give California to China and call that debt square...Let the rest of the folks we owe money to split up Nevada but they have to keep Harry Reid.

[flywise]

China doesn't own most of it, they own some.

US corporations own the majority of it.

They are owned in bonds, they have certain maturities, can't just call them.

China has huge problems right now.

^^^€^^^^^^^^^^*

From what I understand china is probably is worse shape then us.
Their economy is being propped up by building ghost cities all over the country just to keep people working.

Past presidents held our debt to around 20-30% of our GDP. As long as it stayed in that range they were fine no matter how high it got.
Since Obama got in office it has bloomed to 100% of GDP( again this is just what I believe I heard) which makes for a more dire circumstance.

[GarGuy]

We should just sue China in international court for stealing intellectual property and patton infringement. Easy to find a few trillion in damages, then subtract that from what we owe them.

[perow]

34% is owned by foreign nations-China being 8% of that

The federal government owns a lot also and social security funds

[ram04]

Here is a thought process I came upon studying how the economy works, and it really made a lot of sense to me. The debt will never be re paid, our system is created on debt. Actually ever dollar in circulation is some ones debt, if all debts were repaid there would be zero dollars in circulation. The economy needs X amount of money to circulate, if the people of the country are not spending enough, someone has to make up for it, hence the reason our government is "injecting" money into the system. The theory is a lot more in depth but that is kind of the just of it.

[E.TX.BOWHUNTER]

We should just sue China in international court for stealing intellectual property and patton infringement. Easy to find a few trillion in damages, then subtract that from what we owe them.

Nice thought, but who in a world court would find in our favor anyway? They have the same issue as congress. What is best for them right now.

[JMalin]

Here is a thought process I came upon studying how the economy works, and it really made a lot of sense to me. The debt will never be re paid, our system is created on debt. Actually ever dollar in circulation is some ones debt, if all debts were repaid there would be zero dollars in circulation. The economy needs X amount of money to circulate, if the people of the country are not spending enough, someone has to make up for it, hence the reason our government is "injecting" money into the system. The theory is a lot more in depth but that is kind of the just of it.

Someone gets it! It all falls back on the nature of fractional reserve banking.

[Shane]

Here is a thought process I came upon studying how the economy works, and it really made a lot of sense to me. The debt will never be re paid, our system is created on debt. Actually ever dollar in circulation is some ones debt, if all debts were repaid there would be zero dollars in circulation. The economy needs X amount of money to circulate, if the people of the country are not spending enough, someone has to make up for it, hence the reason our government is "injecting" money into the system. The theory is a lot more in depth but that is kind of the just of it.

John Maynard Keynes' theories of multipliers and big government spending being the "savior" of all make good theories, but they don't match up to reality. Even though his theories are proven wrong every time they're tried, big government politicians and liberal philosophers still love his work. Reason being that his ideas give them an excuse for the government to tax and spend and over-regulate and such.

Read Milton Friedman, Friedrich Hayek, and Thomas Sowell if you want to get a better idea of how things work best in the real world.

Here's a couple of entertaining videos that do a good job of illustrating the basic arguments between the free enterprise school of thought and the big government control camp. The more you learn about both schools of thought, the better these videos are. But they're still pretty good for anyone who hasn't read any of the super-thrilling economic theory stuff yet.

[ame="http://www.youtube.com/watch?v=d0nERTFo-Sk"]"Fear the Boom and Bust" a Hayek vs. Keynes Rap Anthem - YouTube[/ame]

[ame="http://www.youtube.com/watch?v=GTQnarzmTOc"]Fight of the Century: Keynes vs. Hayek Round Two - YouTube[/ame]


As for US government debt.....

China is the largest foreign owner, but they don't own anywhere close to a majority of our debt. That's a very common misconception. Here's some good reading about the debt: http://useconomy.about.com/od/moneta...ional-Debt.htm

Also, if you only look at the total amount of US debt outstanding, that doesn't tell you everything you need to know. Comparing the outstanding debt today to the amount of debt outstanding at some point in the past doesn't tell you everything you need to know either. In order to get an idea of how big of a load the debt is for the nation you have to look at the debt compared to the size of the economy (the GDP - Gross Domestic Product). They call this the Debt-to-GDP ratio. It goes without saying that the US debt-to-GDP ratio is currently higher than it should be, but it is not higher than it has ever been right now. Back in the WWII years was when we had the highest debt-to-GDP ratios. We were over 100% back then. Last year it was at 71% - way too high still, but not as bad as WWII era. We're not past the "point of no return" today - yet. We definitely need to turn it around and get the debt load headed back down in the right direction, of course.

John Maynard Keynes would argue that government needs to borrow even more and "inject" that money into the economy in order to save the world. He was full of crap though.