Idiot Education Time: What Effect Does Our National Debt Have In The Long Run?

Discussion in 'Economy' started by NATO AIR, Oct 31, 2004.

  1. NATO AIR
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    NATO AIR Senior Member

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    perform community service please. educate an idiot. what effect does our high national debt have on our future? what are the ways we can beat it down? thank you :baby4:
     
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  2. Hobbit
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    Hobbit Senior Member

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    Eventually, someone will want to collect on those debts. Either we'll have to pay them or politely tell them to shove it. Now, there's several ways to fix this, but no politician will try them because it'll cost him votes and he'll be dead by the time we have to pay the debt.

    That's the theory, anyway. Personally, I think it's become an arbitrary number that the other side uses to show how much the president sucks.
     
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  3. Isaac Brock
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    Isaac Brock Active Member

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    Actually that's a very good question.

    Canada has a large debt too. Borrowing money isn't inherintly bad, especially with low interest rates, but there has to be some optimum ratio between debt load, interest rates and economic performance? Anyone know? RWA this seems like your territory.
     
  4. rtwngAvngr
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    rtwngAvngr Guest

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    I don't know when anyone would call this debt in. I guess if america was about to fail, the banks would call this loan in. But if america was about to fall, there were be a lot bigger problems than the debt. The whole concept of money is wild anyway. It's an abstraction of value.
     
  5. Isaac Brock
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    Isaac Brock Active Member

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    While true, debt definitely leverages how much money the government has to spend, or how much the government needs to receive from the population. So it has to have if not an inherint values, certainly a perceived practical value.

    So it just begs the question how much debt is acceptable?
     
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  6. rtwngAvngr
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    rtwngAvngr Guest

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    Man. mark your calendar, but I don't know. I guess it depends on how the debt issue is spun to the people. I guess ultimately it would be up to the banks and bond holders, and the electorate to decide. This is a tough one. Of course, less is better.
     
  7. onedomino
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    onedomino SCE to AUX

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    By the end of 2004, the US National debt will be about $7.5 trillion dollars. The 2005 interest payment on this debt will be more than $320 billion. Behind social welfare and defense, paying the interest on the national debt is the third largest item in the US annual budget. During WW2, national debt was 125 percent of GDP. Today, it is about 65 percent of GDP.

    The relationship between national debt and economic growth: when it borrows to cover national debt influenced budget deficits, the US competes in capital markets and thus drives up interest rates. High interest rates reduce the business investment needed for increased productivity and innovation. Economic growth is thereby curtailed. This suppresses tax income which has an adverse affect on budget deficits.
     
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  8. rtwngAvngr
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    rtwngAvngr Guest

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    yeah. That sounds about right. Thanks one.
     
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  9. White knight
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    I think it ultimately benefits the lenders, then the question would be well who are the lenders?

    Someone mentioned that in the previous administration we had a huge surplus, the administration prior to that we had a big deficit and a War, coincidence or pattern?
     
  10. NATO AIR
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    NATO AIR Senior Member

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    thank you everybody
     

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