How would paying down the debt effect the economy?

[Article 15]

In the last 60 years only three times has our national debt been less than it was the year before. Every time this happened it was in the 1950's and in each instance the debt decreased by less than 1%. To find the last time the debt was being paid down at any kind of significant manner you have to go back to the 1920's. It's been a while and things have changed a lot since then.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm

So ...

What do y'all believe would happen to the economy if by some miracle we got into the black and were able to start chipping away at the debt?

 

[rdean]

If the economy is growing and we are bringing in more than we spend, then the point is moot.

From 2001 to 2008, the US sent millions of jobs to China with the support and help of the US government. Look how well the Chinese economy grew. That proves it works.

 

[Neubarth]

Technically paying down the borrowed debt would be foolish, as all money borrowed from the FED is free and we never have to pay it back. A lot of really stupid people do not understand that, but it is the current reality. The FED takes our interest payments and sends them to the Treasury.

No Interest = Free borrowing.

 

[Article 15]

Technically paying down the borrowed debt would be foolish, as all money borrowed from the FED is free and we never have to pay it back. A lot of really stupid people do not understand that, but it is the current reality. The FED takes our interest payments and sends them to the Treasury.

No Interest = Free borrowing.

What about the foreign debt?

 

[Article 15]

Here's an interesting chart

 

[Mad Scientist]

Technically paying down the borrowed debt would be foolish, as all money borrowed from the FED is free and we never have to pay it back. A lot of really stupid people do not understand that, but it is the current reality. The FED takes our interest payments and sends them to the Treasury.

No Interest = Free borrowing.

That's right. The Fed is a privately owned company. If they lost money on their "investments" well, too fuckin' bad for them.

Then maybe Congress would get back to it's Constitutionally mandated job of managing the money supply.

 

[Two Thumbs]

In the last 60 years only three times has our national debt been less than it was the year before. Every time this happened it was in the 1950's and in each instance the debt decreased by less than 1%. To find the last time the debt was being paid down at any kind of significant manner you have to go back to the 1920's. It's been a while and things have changed a lot since then.

Government - Historical Debt Outstanding – Annual

So ...

What do y'all believe would happen to the economy if by some miracle we got into the black and were able to start chipping away at the debt?

A lower debt = stronger dollar.

Basically we will be able to buy more with the same amount of money.
Once we can buy more, (increasing taxes collected) demand for products goes up.
When demand goes up, biz has to hire more people (increasing taxes collected)
With more people paying taxes the debt keeps going down and you start over at the top of this paragraph.

Thats simplistic, but that's how it works.

 

[Oddball]

Technically paying down the borrowed debt would be foolish, as all money borrowed from the FED is free and we never have to pay it back. A lot of really stupid people do not understand that, but it is the current reality. The FED takes our interest payments and sends them to the Treasury.

No Interest = Free borrowing.

But the interest payments for this "free money", which come from taxes on the peasants, keep a-rolling in to the Fed banksters.

Nice little scam they have, ain't it?

 

[Two Thumbs]

Here's an interesting chart

Madness

$4.3 Trillion owed.

And some of those countries get money from us. How do we owe Egypt when we give them $1.3 Billion a year?

 

[Article 15]

Technically paying down the borrowed debt would be foolish, as all money borrowed from the FED is free and we never have to pay it back. A lot of really stupid people do not understand that, but it is the current reality. The FED takes our interest payments and sends them to the Treasury.

No Interest = Free borrowing.

But the interest payments for this "free money", which come from taxes on the peasants, keep a-rolling in to the Fed banksters.

Nice little scam they have, ain't it?

Say we are in the black, realize that, and just stop paying the money to the Fed and erase the books. Good thing? Bad thing? Surprise?

 

[Article 15]

Here's an interesting chart

Madness

$4.3 Trillion owed.

And some of those countries get money from us. How do we owe Egypt when we give them $1.3 Billion a year?

lol, right?

We give money or protection to a bulk of that list.

I found it interesting that we owe China less than we did a year ago and instead Japan and the UK picked up the slack.

We tripled our debt to the UK.

 

[Oddball]

Technically paying down the borrowed debt would be foolish, as all money borrowed from the FED is free and we never have to pay it back. A lot of really stupid people do not understand that, but it is the current reality. The FED takes our interest payments and sends them to the Treasury.

No Interest = Free borrowing.

But the interest payments for this "free money", which come from taxes on the peasants, keep a-rolling in to the Fed banksters.

Nice little scam they have, ain't it?

Say we are in the black, realize that, and just stop paying the money to the Fed and erase the books. Good thing? Bad thing? Surprise?

Good thing and certainly a surprise to the bankster parasites at the Fed.

That would be an defacto admission that the Fed has been a big fat scam all along...But that's just a little more honesty than I expect from the average politician.

 

[Article 15]

But the interest payments for this "free money", which come from taxes on the peasants, keep a-rolling in to the Fed banksters.

Nice little scam they have, ain't it?

Say we are in the black, realize that, and just stop paying the money to the Fed and erase the books. Good thing? Bad thing? Surprise?

Good thing and certainly a surprise to the bankster parasites at the Fed.

That would be an defacto admission that the Fed has been a big fat scam all along...But that's just a little more honesty than I expect from the average politician.

Such a change would surely ripple across the entire global economy. What do you think might happen both here in the US and globally as a result? What significant changes, if any, do you foresee?

 

[Oddball]

Well, you did say in the black, which would presume all outstanding debts were paid off.

That not being so, I'd think that you'd find a way to make good on those holding American debt beforehand.

I was merely speaking in terms of telling the Fed to shove it...Which desperately needs to happen.

 

[Article 15]

Well, you did say in the black, which would presume all outstanding debts were paid off.

That not being so, I'd think that you'd find a way to make good on those holding American debt beforehand.

I was merely speaking in terms of telling the Fed to shove it...Which desperately needs to happen.

Ah, I didn't articulate what I meant well enough then. When I said in the black I meant the annual budget.

I have no idea what would happen if we told the Fed to shove it under either scenario but whatever it is I suspect it would be big.

 

[Mad Scientist]

Say we are in the black, realize that, and just stop paying the money to the Fed and erase the books. Good thing? Bad thing? Surprise?

Good thing and certainly a surprise to the bankster parasites at the Fed.

That would be an defacto admission that the Fed has been a big fat scam all along...But that's just a little more honesty than I expect from the average politician.

Such a change would surely ripple across the entire global economy. What do you think might happen both here in the US and globally as a result? What significant changes, if any, do you foresee?

I read an article yesterday about Iceland defaulting on their debt. What they experienced was 20% inflation. For one year.

Then their economy then stabilized and now they have 2-3% growth unencumbered by all that debt.

Let me look for that article.

EDIT: Here it is:
http://www.guardian.co.uk/business/2010/dec/07/iceland-exits-recession-third-quarter

Decision to force bondholders to pay for banking system's collapse appears to pay off as economy grows 1.2% in third quarter.
Iceland famously agreed in a referendum to reject a scheme to repay most of its debts that were once worth 11 times its total national income.
In contrast to Ireland, Iceland's taxpayers refused to foot the bill for the debts accumulated by the banking sector. Bondholders were told to accept dramatic reductions in the value of repayments on bank debt after the sector borrowed beyond its means to fund ambitious investments abroad.
Iceland's currency has fallen by around a quarter (inflation?), helping its exports.

Iceland rejected the Banker debt and it didn't destroy them.

 

[Two Thumbs]

Here's an interesting chart

Madness

$4.3 Trillion owed.

And some of those countries get money from us. How do we owe Egypt when we give them $1.3 Billion a year?

lol, right?

We give money or protection to a bulk of that list.

I found it interesting that we owe China less than we did a year ago and instead Japan and the UK picked up the slack.

We tripled our debt to the UK.

I'd rather shuffle the debt to an actual ally than owe somebody that would love to see me on my knees.

well

I'd rather not owe anyone.

I didn't look at the money shuffle, I was too godsmacked with the first column.

 

[Oddball]

Well, you did say in the black, which would presume all outstanding debts were paid off.

That not being so, I'd think that you'd find a way to make good on those holding American debt beforehand.

I was merely speaking in terms of telling the Fed to shove it...Which desperately needs to happen.

Ah, I didn't articulate what I meant well enough then. When I said in the black I meant the annual budget.

I have no idea what would happen if we told the Fed to shove it under either scenario but whatever it is I suspect it would be big.

No less big than the eventual economic collapse that will ensue, when the mathematics can no longer support paying American debts, a massive domestic welfare state and the interest on the FRN funny money Ponzi scheme.

 

[Article 15]

Well, you did say in the black, which would presume all outstanding debts were paid off.

That not being so, I'd think that you'd find a way to make good on those holding American debt beforehand.

I was merely speaking in terms of telling the Fed to shove it...Which desperately needs to happen.

Ah, I didn't articulate what I meant well enough then. When I said in the black I meant the annual budget.

I have no idea what would happen if we told the Fed to shove it under either scenario but whatever it is I suspect it would be big.

No less big than the eventual economic collapse that will ensue, when the mathematics can no longer support paying American debts, a massive domestic welfare state and the interest on the FRN funny money Ponzi scheme.

I can agree with that but would it resemble that kind of a collapse?

 

[Sallow]

Technically paying down the borrowed debt would be foolish, as all money borrowed from the FED is free and we never have to pay it back. A lot of really stupid people do not understand that, but it is the current reality. The FED takes our interest payments and sends them to the Treasury.

No Interest = Free borrowing.

What's stupid is that Conservative administrations (With a couple of exceptions) are the ones that grow the debt..then use it as a wedge issue when out of power.

Paying down the debt is not a bad idea and good for T-Bills. But as long as it is servicable it isn't a problem.