The US Is Going Bankrupt?

Discussion in 'Politics' started by Flopper, Mar 30, 2010.

  1. Flopper
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    Flopper Gold Member

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    Horse Hockey!!! The United States is not going bankrupt and never will. Just take a look at this chart.

    http://www.optimist123.com/.shared/image.html?/photos/uncategorized/2007/04/09/piechart200701.gif

    It's a few years old. The amounts have increase but the percentages haven't changed that much. You can clearly see that 43.5% of the government debt is owed to itself in the form of inter-government loans.

    Another 30.7% of the debt is owned by the US public. The remaining 25.8% is owed to just about every country on earth. When I say country, I mean not just the government but all the banks, corporations, and individuals in that country.

    We never actually pay off debt, we just refinance each year. So you ask what if China or Japan refuses to loan us any money; in other words they sell all their treasury bonds and US dollars. The US dollar would go down the toilet with respect to that countries currency which will make their goods expensive in the US and our goods a bargain in their country. This would hurt them almost as much as it would hurt us.

    So do we care how high our debt goes up? Of course we do. As the ratio of our debt to the GNP rises faster than other nations, investors demand higher interest on treasury bonds forcing up interest rates and increasing inflation. The dollar looses strength making foreign goods more expensive increasing inflation. This puts a damper on the economy and brings down government revenues forcing the government to borrow even more money. Fortunately when this happens most of the rest of the world has the same problem.

    Many people try to compare their personal finances or their business to government finances. How many times have we heard, "If I ran my business like that....". But there is a big difference. The government has an unlimited line of credit plus it can print as much money as it needs.

    In summary, if the government piles on too much debt too fast it won't go broke, but we will suffer due to high inflation and higher taxes.
     
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  2. Douger
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    Douger BANNED

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    Bleat that to some Argentines and Iclanders.
    You're going down. Sean Hannutsy just hasn't been given the official orders to tell you.
     
  3. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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    That "intragovernment" debt represents borrowings from the Social Security Lockbox. As SS is going negative this year - and present value of the deficit for both SS and Medicare (expected revenues less expected expenditures) is $45T - we meet the reasonable test for financial insolvency.

    Even if we had the money to pay ourselves back, we'd be in the hole by over PV $40T.

    http://www.gao.gov/financial/fy2009financialreport.html
     
    Last edited: Mar 30, 2010
  4. Zander
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    Zander Platinum Member

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    Pass the duchey on the left hand side.......:rolleyes:
     
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  5. rightwinger
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    rightwinger Paid Messageboard Poster Gold Supporting Member Supporting Member

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    The US is the wealthiest nation on earth. We are far from bankrupt. Our debt is due to lazyness and an unwillingness to make sacrifices. Its easier get elected if you add to the debt than to ask people to make do with less.
     
  6. Gadawg73
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    Gadawg73 Gold Member

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    If I kept my corporate books in any of the corporations I own similar to these charts the government produces the FBI would raid my businesses yesterday at the latest.

    One gigantic PONZI scheme.
     
  7. dpwozney
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    dpwozney Rookie

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    If the stated value, of “Federal” Reserve notes, declines enough with respect to copper and nickel, the 1946-2009 nickels, composed of cupronickel alloy, could completely disappear from mass circulation.

    According to the “United States Circulating Coinage Intrinsic Value Table” available at Coinflation.com , the March 30th metal value of these nickels is “$0.0595636” or 119.12% of face value.
     
  8. Flopper
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    Flopper Gold Member

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    No, it really doesn't work that way. If Social Security does not have sufficient funds, their will be an inter-government loan, such as the Treasury transfer funds to Social Security. Since the Treasury has in effect, an unlimited line of credit, we don't have be concerned with the Treasury not have sufficient funds. Declaring that Social Security is solvent would be like declaring one branch of a corporation insolvent. So Social Security could not really be declared insolvent without declaring that the entire federal government it insolvent.
     
  9. Flopper
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    Flopper Gold Member

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    Your are probably right. However, you can't compare the finances of your corporation with the finances of the federal government. It's like comparing football to water polo. You can't print money, unless you want the Secret Service and the FBI after you. You don't have an unlimited line of credit. You don't have 556 politicians deciding how you will spend your money. The amount of debt you can carry is based on your collateral. When the feds borrow money, collateral means nothing. The ability of the feds to borrow money is determined by the interest they offer and the borrowers faith in the United States government. So far the US has a pretty good track record. To my knowledge the US has never defaulted on a single loan in over a hundred years of borrowing trillions of dollars. I would say they are a pretty good credit risk. The government can always borrow money cheaper than your corporation. So there is no comparison between your finances and the feds.
     
  10. Toronado3800
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    Toronado3800 VIP Member

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    I'll say the debt as a percentage of GDP is the number that's important. And there is a somewhat delayed effect we must pay attention to.

    To use a ridiculous example no party followers can possibly get mad at:

    Let's say President Jeb Bush listens to First Lady Hillary and builds a rail line to the moon costing $xxx trillion. While its being built our economy suffers greatly, the debt raises as a percentage of GDP. After its built if because of the rail line GDP raises faster than the interest its a winner.
     

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