The US Is Going Bankrupt?

[Flopper]

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.

 

[Douger]

Bleat that to some Argentines and Iclanders.
You're going down. Sean Hannutsy just hasn't been given the official orders to tell you.

 

[boedicca]

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

 

[Zander]

Pass the duchey on the left hand side.......

 

[rightwinger]

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.

 

[Gadawg73]

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.

U.S. GAO - Fiscal Year 2009 Financial Report of the United States Government

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.

 

[dpwozney]

...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.

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.

 

[Flopper]

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.

U.S. GAO - Fiscal Year 2009 Financial Report of the United States Government

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.

 

[Flopper]

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.

U.S. GAO - Fiscal Year 2009 Financial Report of the United States Government

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.

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.

 

[Toronado3800]

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.

 

[Flopper]

...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.

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.

"The value of the currency is based on the full faith and credit of the United States" otherwise our dollars are worthless. They are not backed by gold or silver. I am certainly glad that the views of most people on this message board are not widely shared. If they were our dollars would be worthless. Think about that the next time you declare that our country is headed for bankruptcy and ruin.

 

[Flopper]

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.

If the gloom and doom predictors are correct, our ratio of debt to GDP will someday reach 90%. It's 53% now. In Japan today it's 192%. They seem to be doing pretty good.

 

[California Girl]

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.

If the gloom and doom predictors are correct, our ratio of debt to GDP will someday reach 90%. It's 53% now. In Japan today it's 192%. They seem to be doing pretty good.

Japan 'seems to be doing pretty good'? OMG, how stupid are you?

 

[editec]

Everything still works.

How can we then be bankrupt?

Macroeconomics a crooked shell game, folks.

We gave control of that game to people who are crooked as the day is long.

 

[Jarhead]

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.

Say what you think and maybe it will come true.

But all I know is we are in debt and currently have nothing concrete that will minimize or eliminate the debt.

Now, according to any economist, this administration, this congress, last administration, former congresses, my mom, my dad, my economics professor, my banker, my accountant, my attorney...if you have a debt with no set plan to elimintae it, you risk going into bankruptcy.

The rhetoric for helathcare reform was all about how many people went into bankruptcy due to unexpected healthcare costs.

Well, With the possibility of a major earthquake, hurricanes, floods, terrorists attacks and such, one or MANY unexpected costs may hit the US.

So that being said, and based on basic economic logic, we very well may be in trouble.

Or we can act partisan and say "this administration has it all under control" and completely turn a deaf ear to it.

Curious: Exactly how did turning a deaf ear to things work for us over the previous 8 year administration?

You folks just wont learn now, will you.

 

[Jarhead]

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.

If the gloom and doom predictors are correct, our ratio of debt to GDP will someday reach 90%. It's 53% now. In Japan today it's 192%. They seem to be doing pretty good.

You should understand economics before making such a claim.
Japan, by no means is doing well right now.
Every move they make economically is from behind the 8 ball.
Every move they make right now is an effort to keep their heads above water.
Sooner or later, that crumbles.
Just ask millions of Americans who have declared bankrupcy.

 

[Flopper]

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.

Say what you think and maybe it will come true.

But all I know is we are in debt and currently have nothing concrete that will minimize or eliminate the debt.

Now, according to any economist, this administration, this congress, last administration, former congresses, my mom, my dad, my economics professor, my banker, my accountant, my attorney...if you have a debt with no set plan to elimintae it, you risk going into bankruptcy.

The rhetoric for helathcare reform was all about how many people went into bankruptcy due to unexpected healthcare costs.

Well, With the possibility of a major earthquake, hurricanes, floods, terrorists attacks and such, one or MANY unexpected costs may hit the US.

So that being said, and based on basic economic logic, we very well may be in trouble.

Or we can act partisan and say "this administration has it all under control" and completely turn a deaf ear to it.

Curious: Exactly how did turning a deaf ear to things work for us over the previous 8 year administration?

You folks just wont learn now, will you.

If you are speaking of your personal finances, I agree. However, if you speaking of the government or most large corporation, you should have a talk with your economics professor. The largest corporation in this US and the world do not pay off their debt and they have no plans to do so. When bonds come due they refinance by issuing more bonds. Granted, they have to control their debt ratios a lot better than the government but the government unlike a corporation or an individual controls their revenue. They just increase taxes. Unlike a corporation or individual they can always borrow more money by just offering more interest.

The Republicans just keep feeding us this ridiculous analogy.

 

[eagleseven]

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

Nothing to worry about, right?

 

[eagleseven]

If the gloom and doom predictors are correct, our ratio of debt to GDP will someday reach 90%. It's 53% now. In Japan today it's 192%. They seem to be doing pretty good.

Japan has never recovered from the Lost Decade.

 

[eagleseven]

Also related:

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

-John Maynard Keynes