The US Is Going Bankrupt?

f 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

I can agree on the ridiculousness of it. Check out the back of your 1040 instruction booklet. Someplace in there it tells you the percentage of government outlays which go to pay interest on the debt. To some extent this is lost money, 7% that could have been paid towards giving everyone in America a solar panel or bigger tanks for the army, whatever.

There is an opportunity cost/benefit analysis. Something like "Deficit spending on them Sherman tanks in the 40's sure did save us money in the long run" type an affair.
 
What happens when other countries don't want to lend us any more money?


The USA is a nation, not an individual.

It won't go bankrupt. The word doesn't really apply to nations.

All other things being equal (in other words if nothing else changes):

The cost to our government to borrow will go up.

Eventually, we'll start cutting social services, pull back on military expenditures, and probably raise taxes to start repaying the national debt.

As our money will likely be worth less, our imports will decline, as will the quality of life for the majority of Amerians.

Assuming we can find the money to invest in industry in the USA, we'll start making stuff here, again.

It isn't the end of the world, it's merely the end of an era.
 
What happens when other countries don't want to lend us any more money?


The USA is a nation, not an individual.

It won't go bankrupt. The word doesn't really apply to nations.

All other things being equal (in other words if nothing else changes):

The cost to our government to borrow will go up.

Eventually, we'll start cutting social services, pull back on military expenditures, and probably raise taxes to start repaying the national debt.

As our money will likely be worth less, our imports will decline, as will the quality of life for the majority of Amerians.

Assuming we can find the money to invest in industry in the USA, we'll start making stuff here, again.

It isn't the end of the world, it's merely the end of an era.

Tell that to Chile, Argentina, France, and a host of other countries that survived by repudiating their debt.
Argentina at one time was one of the most prosperous counties in the world. With bad economic policies it sank into a socialist morass of third rate power and has not emerged. The same could easily happen here.
 
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.

You contradicted yourself.

Corporations have plans for their debt; refinance the debt.
When their debt becomes too large, they lose their rating and they are unable to refiannce it.
The US debt is reaching a point where our rating is going to drop.
OR
We could play the game you wish to play and assume such will never happen.
How easy was it for GM to refinance their debt?
Pan AM?
Lehman?
Bear Sterns?
Shall I continue?

My economics professor was quite liberal in his views and even he said back in early 2000's that this spending can not continue.

I would call him and ask him about your theory and he would probably ask that I return my transcript so he can change my grade to an F as I obviously learned nothing from him.
 
What happens when other countries don't want to lend us any more money?

BINGO!
Already the dollar is deflated. How about Gramps that is 86 and wants his $ in safe liquid assets at his age? He could have 1 million dollars in the bank and receive 20K interest of his short term CD because the demand for our currency is at 2%. If that does not tell the story then you folks need a econ lesson quick. As soon as developing countries outpace us, coming QUICKLY FOLKS, $ will be borrowed ELSEWHERE.
And guess what else sports fans? As soon as interest rates rise to 8% again, and they will, guess how that affects the debt and future $ we borrow?
Do the math. We pay 2% now for the debt we borrow. 8% is FOUR TIMES MORE!
Damn, how much simpler does it have to be shown? No wonder we are losing educational ground as I post to most other countries. Americans do not know shit about how money works.
 
What happens when other countries don't want to lend us any more money?

BINGO!
Already the dollar is deflated. How about Gramps that is 86 and wants his $ in safe liquid assets at his age? He could have 1 million dollars in the bank and receive 20K interest of his short term CD because the demand for our currency is at 2%. If that does not tell the story then you folks need a econ lesson quick. As soon as developing countries outpace us, coming QUICKLY FOLKS, $ will be borrowed ELSEWHERE.
And guess what else sports fans? As soon as interest rates rise to 8% again, and they will, guess how that affects the debt and future $ we borrow?
Do the math. We pay 2% now for the debt we borrow. 8% is FOUR TIMES MORE!
Damn, how much simpler does it have to be shown? No wonder we are losing educational ground as I post to most other countries. Americans do not know shit about how money works.
There is little relationship between interest rates and value of the dollar. The major factor that determines interest rates is supply and demand. When the economy is weak the demand for loans are less and interest falls. The Fed influences rates but it is market that really determines the rates in long run.

A declining dollar is good for exports because it makes our goods cheaper overseas but also makes imports more expensive. Our major trade partners such as China and Japan have a vested interest in a strong dollar. That's why China holds so many dollars.

You are absolutely right about interest rates. If interest rises the feds will pay more to refinance the national debt. But you are going to extremes, like most people do on this board, to suggest that treasuries are going to 8%. We haven't seen treasury bills at 8% in nearly 30 years. For treasury bills to go to 8% we would have to have a booming economy which no one expects anytime soon.

I think taxes will rise probably to the level we had during the Clinton years unless Congress extends the Bush tax cuts which seems unlikely.
 
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.

You contradicted yourself.

Corporations have plans for their debt; refinance the debt.
When their debt becomes too large, they lose their rating and they are unable to refiannce it.
The US debt is reaching a point where our rating is going to drop.
OR
We could play the game you wish to play and assume such will never happen.
How easy was it for GM to refinance their debt?
Pan AM?
Lehman?
Bear Sterns?
Shall I continue?

My economics professor was quite liberal in his views and even he said back in early 2000's that this spending can not continue.

I would call him and ask him about your theory and he would probably ask that I return my transcript so he can change my grade to an F as I obviously learned nothing from him.
Yes we can keep adding to the national debt, we just need to control it. It should not rise faster than the GNP which it is at this time. If Congress allows the Bush tax cuts to expire then it will put us on a much sounder financial footing. However, if the economy has not recovered sufficiently, then it could pushed us back into recession. My guess is they will extend most of the tax cuts and let a few expire. Once our economy recovers they should raise taxes.
 
What happens when other countries don't want to lend us any more money?

BINGO!
Already the dollar is deflated. How about Gramps that is 86 and wants his $ in safe liquid assets at his age? He could have 1 million dollars in the bank and receive 20K interest of his short term CD because the demand for our currency is at 2%. If that does not tell the story then you folks need a econ lesson quick. As soon as developing countries outpace us, coming QUICKLY FOLKS, $ will be borrowed ELSEWHERE.
And guess what else sports fans? As soon as interest rates rise to 8% again, and they will, guess how that affects the debt and future $ we borrow?
Do the math. We pay 2% now for the debt we borrow. 8% is FOUR TIMES MORE!
Damn, how much simpler does it have to be shown? No wonder we are losing educational ground as I post to most other countries. Americans do not know shit about how money works.
There is little relationship between interest rates and value of the dollar. The major factor that determines interest rates is supply and demand. When the economy is weak the demand for loans are less and interest falls. The Fed influences rates but it is market that really determines the rates in long run.

A declining dollar is good for exports because it makes our goods cheaper overseas but also makes imports more expensive. Our major trade partners such as China and Japan have a vested interest in a strong dollar. That's why China holds so many dollars.

You are absolutely right about interest rates. If interest rises the feds will pay more to refinance the national debt. But you are going to extremes, like most people do on this board, to suggest that treasuries are going to 8%. We haven't seen treasury bills at 8% in nearly 30 years. For treasury bills to go to 8% we would have to have a booming economy which no one expects anytime soon.

I think taxes will rise probably to the level we had during the Clinton years unless Congress extends the Bush tax cuts which seems unlikely.

Virtually everything here is either contradictory or plain wrong. SOrry.
INterest rates play a major role in currency value. Why do you think the dollar declined so much as the Fed eased rates to zero?
Just because we have not seen high rates in 30 years does not mean we will not again. We hadn't seen gold prices at $1000/oz in 30 years either. Until we did.
 
Well according to our President we would have gone bankrupt without his brilliant plan to force everyone to buy health insurance or face his wrath.

Obama: US would go bankrupt without health changes - Yahoo! Finance

WASHINGTON (AP) -- President Barack Obama says he did a full court press for a health care system remake because "this country was going to go bankrupt."

I happen to think he is a liar, but then he is a politician.

I fail to see how this massive social program and intrusion against American liberties could possibly have saved America. Unless of course we find out that they plan on taking over the health insurance industry in its entirety, requiring us to pay into a "Social Security" type fund that they get to mix in with the general fund and tell doctors they will work for what the government wants to pay them -- meaning room and board.

Besides that, how the hell is this plan supposed to have saved America from bankruptcy?

Immie
 
Obama thinks Americans are idiots. He has good reason, since they elected him. But he thinks if he repeats the line about the health care bill paying for itself and being deficit neutral and reducing health care costs often enough people will fall for it.
And he's right. Look at some of the posters here. They have swallowed it hook line and stinker.
 
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.

according to obama, the US would have gone bankrupt without h/c.....

:eusa_whistle:
 
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.

Bush did it to Texas and America.
 
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

There is no such thing as a social security lockbox. Excess social security receipts are invested in Special T-Bills and these are what are in the Social Security Trust Fund (what you are erroneously calling a lock box).
 

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