What will happen once United States of America will go bust?

[mayya555]

The government can borrow money as long as those that are lending have faith that it will be repaid. There is no other limit. In other words, as long as the world has faith in the United States there will be no problem.

If the ratio between our debt and our GDP is high compared to the rest of the world, investors tend to lose faith and want higher interest which is a factor pushing inflation up. Our ratio is somewhere around 60. Japan's is over 300. But debt to GDP is not the only factor investors consider. Growth potential of the country is also a consideration. Government stability and safety are factors. Since the recession started the demand for treasury bills has skyrocketed driving interest to zero. Finally being a world superpower is a plus.

BTW When I say investor, I am referring to individuals, corporations, commercial banks, and government central banks.

This all happens probably due to the fact that the world understands, that the bankruptcy of US will bring a global crisis. But the day will come when there will be no more money to lend, no more leverages to use and it will all collapse within weeks or months.

 

[PatekPhilippe]

China has already begun to divest itself of U.S. debt. They aren't dumping it but slowly they are moving away from the dollar.

 

[Flopper]

The government can borrow money as long as those that are lending have faith that it will be repaid. There is no other limit. In other words, as long as the world has faith in the United States there will be no problem.

If the ratio between our debt and our GDP is high compared to the rest of the world, investors tend to lose faith and want higher interest which is a factor pushing inflation up. Our ratio is somewhere around 60. Japan's is over 300. But debt to GDP is not the only factor investors consider. Growth potential of the country is also a consideration. Government stability and safety are factors. Since the recession started the demand for treasury bills has skyrocketed driving interest to zero. Finally being a world superpower is a plus.

BTW When I say investor, I am referring to individuals, corporations, commercial banks, and government central banks.

This all happens probably due to the fact that the world understands, that the bankruptcy of US will bring a global crisis. But the day will come when there will be no more money to lend, no more leverages to use and it will all collapse within weeks or months.

I understand your point but do not agree.

There is a growing problem of national debt throughout the world. There are many countries whose debt is growing faster than the US. Many of these countries have a rapidly expanding economy and have a huge need for capital. Others such as the US choose to run up debt instead of increasing taxes to pay the bills.

As far as our ability to payoff debt, consider the following.
The US is the 7th wealthiest nation on earth. There are more billionaires in the US than all the rest of the world combined. Our tax rates are one of the lowest of all the developed nations. We certainly have the capability to raise huge sums of money via tax increase but we choose not to do so, as it would damping economic growth. 52% of the national debt is held by the government itself, most of which is in huge accounts such as Social Security and Medicare savings accounts. So there is no reason to expect that the United States will not be able to meet it's obligation now or anytime in the foreseeable future.

Just who owns the U.S. national debt? - Answer Desk- msnbc.com
United States public debt - Wikipedia, the free encyclopedia
Top 10 richest countries of the world | Financial Jesus

 

[Rozman]

Well the first thing that happens before the Communications networks go offline is we will see,MSNBC, the WH press secretary
the President and all the Libs all blame it on Bush.....because that's how it's done.Good luck to us all.
The people in power now blame it all on Bush with the crazy spending so what do they do....They spend like super crazy....and that crazy bastard Krugman says Obamas problem was he hasn't spent nearly enough......YAAAAAA.....I hope this all ends soon because the America that we grew up to love and be proud of is gone.