National debt: $18T and counting

[Ame®icano]

Our national debt surpasses $18 trillion. Debt Clock

Almost one third of the debt is held in Intragovernmental Holdings, around $5 trillion.
Remaining two thirds are held by public, and that's around $13 trillion.

US debt is rising regardless who is in power. The only difference is who cries about it. When D's are in power, R's are decrying the national debt, while D's saying it doesn't matter. And vice versa. It's hilarious.

Since 1933 when begin the end of gold standard, US government operates in fiat currency back only by the full faith and credit of the U.S. government. It's generally accepted that the U.S. government will "never" default on its loan obligations. Since our monetary system is created out of debt, not all debt is considered a bad thing.

So, how good or bad is our national debt?

 

[MeBelle]

Here's a thought...If all countries operate in debt, debt is the new currency!

Srsly...I need to do a bit of research and find out what countries don't have debt.

 

[Ame®icano]

Here's a thought...If all countries operate in debt, debt is the new currency!

Srsly...I need to do a bit of research and find out what countries don't have debt.

Yes, debt is today's currency. Also, our external debt to other countries tends to be mostly with countries who owe us a lot back too, so the ledger after being balanced is a lot lower. I'm not saying that's not an issue here, because we still have the largest external debt of any country. What's keeping us afloat is the USD as world's reserve currency and time value of money.

 

[Dekster]

The economy will grow to match the debt services as money becomes gradually more worthless.

 

[Ame®icano]

The economy will grow to match the debt services as money becomes gradually more worthless.

It worked in 50's, but it can hardly work today. Betting that we will grow our way out of debt is very risky gamble.

Inflation is a big problem and according to feds for now is under control. Currently the US is borrowing at interest rates so low that long term treasury bonds are expected to lose out to inflation over the long run.

Economy tend to grow, but when debt is increasing faster then economy that's not a good thing.

 

[Dekster]

The economy will grow to match the debt services as money becomes gradually more worthless.

It worked in 50's, but it can hardly work today. Betting that we will grow our way out of debt is very risky gamble.

Inflation is a big problem and according to feds for now is under control. Currently the US is borrowing at interest rates so low that long term treasury bonds are expected to lose out to inflation over the long run.

Economy tend to grow, but when debt is increasing faster then economy that's not a good thing.

What do you think would have happened if the US had not bailed out the financial institutions? I know people get upset about GM, but motor financing is wrapped into the financial system. How do you believe we would have been better off without taking on much of this debt?

 

[Freemason9]

The economy will grow to match the debt services as money becomes gradually more worthless.

And yet, monetary inflation is as low as it's ever been.

 

[Dekster]

The economy will grow to match the debt services as money becomes gradually more worthless.

And yet, monetary inflation is as low as it's ever been.

Because all the newly printed money is tied up in capital markets, not reaching the street.

 

[Ame®icano]

The economy will grow to match the debt services as money becomes gradually more worthless.

It worked in 50's, but it can hardly work today. Betting that we will grow our way out of debt is very risky gamble.

Inflation is a big problem and according to feds for now is under control. Currently the US is borrowing at interest rates so low that long term treasury bonds are expected to lose out to inflation over the long run.

Economy tend to grow, but when debt is increasing faster then economy that's not a good thing.

What do you think would have happened if the US had not bailed out the financial institutions? I know people get upset about GM, but motor financing is wrapped into the financial system. How do you believe we would have been better off without taking on much of this debt?

Fear drive people to do unimaginable. If there was no bailouts, in the short run, many banks would crash and burn, however in the long run there would be the people to go pick up the pieces and the economy would have continued to tag along. Remember, some banks were let to bankrupt and probably that was only a test how market and other banks would react. After Lehman and Bear went bankrupt, shit hits the fan and people started to panic a run for only safe haven left, short term treasuries. That was the reason why government stepped in to restore confidence in the system. Not every bank needed bailout, but they were forced into it.

Now to answer your question, would we be better off? Yes and no. I'll explain.

I believe that banks should have been let to collapse. Recession would probably last about the same period if not shorter, but in the long run, it would have been better for us all. We would have healthy financial system and equally important, those who survived would get strong message that bad behavior wont be rewarded. What government did was worse combination, they let Lehman and Bear fail as a message to others and then then try to prevent the panic by bailing out others. If Lehman was supported, the crisis wouldn't have been so bad, but that would have been rewarding their poor management and on a long run we would be worse off.

About GM, they got bailout then bankrupted anyways. We were let to believe they were saved by government, and whole that thing was one big lie.

 

[EdwardBaiamonte]

So, how good or bad is our national debt?

in fact it depreciates at the rate of inflation which is about 2%

 

[ScienceRocks]

Please prove to me that infrastructure, science, r&d or education has played a large role in this debt. All you're doing by attacking this is hurting the American people and probably for no reason.

 

[Ame®icano]

Please prove to me that infrastructure, science, r&d or education has played a large role in this debt. All you're doing by attacking this is hurting the American people and probably for no reason.

What are you talking about?

Where have I mentioned infrastructure, science, R&D and education?

Attacking whom/what?

 

[ScienceRocks]

Please prove to me that infrastructure, science, r&d or education has played a large role in this debt. All you're doing by attacking this is hurting the American people and probably for no reason.

What are you talking about?

Where have I mentioned infrastructure, science, R&D and education?

Attacking whom/what?

You libertrians want to cut across the board, which includes that. The debate should be about what is causing the debt??? It isn't those 4 areas as we were spending more on our selfs in those areas 30 years ago than today.

 

[saveliberty]

The economy will grow to match the debt services as money becomes gradually more worthless.

False supposition, as industrial expansion and two wage families made that possible in the past. You don't have either of those possibilities today.

 

[Ame®icano]

So, how good or bad is our national debt?

in fact it depreciates at the rate of inflation which is about 2%

The latest annual inflation rate for the United States is 1.3% through the 12 months ended November 2014, as published by the US government on December 17, 2014. Inflation

Also, due to low interest, the US can borrow money at an average rate of 2.3%.

Given that debt service takes up about 6.3% of all federal spending, although the interest payments are huge, they are still affordable. Conservative, including myself would like to see debt and interest to go down, but that would be hard to achieve with no just politicians we have today in both parties, but with whole financial system in place.

 

[Debunker]

So, how good or bad is our national debt?

in fact it depreciates at the rate of inflation which is about 2%

Until interest rates go up as the credit rating goes down, then won't you have such a sad face.

 

[Rozman]

Liberals should be screaming about entitlement spending instead of their rant about how we don't spend enough on infrastructure,R&D and science....
At some point and it will be here soon....More people will be getting SS benefits then are funding it...

But I guess they will blame it all on Bush....
Or the problem is we don't spend enough on.....

Infrastructure.
R&D
Science....
Tacos
Burritos
Infrastructure
Infrastructure......Infrastrastructure......Infrastructurrrrrrrrrrrreeeeeeeerrrrrreeeee

 

[Ame®icano]

Please prove to me that infrastructure, science, r&d or education has played a large role in this debt. All you're doing by attacking this is hurting the American people and probably for no reason.

What are you talking about?

Where have I mentioned infrastructure, science, R&D and education?

Attacking whom/what?

You libertrians want to cut across the board, which includes that. The debate should be about what is causing the debt??? It isn't those 4 areas as we were spending more on our selfs in those areas 30 years than today.

I did not talk about cutting anything. I did not talk about what's causing the debt. I opened this thread to talk about function of debt, relationship in between debt and economy and differences between left and right ideology towards debt. My intention is not to debate whether one is right or wrong, just explain the logic behind it. If i wanted to talk politics, I would open it in Politics forum. If you wanna talk about something else and think I should talk about what you wanna talk about, open another thread and fuck off from this one. Politely.

 

[Ame®icano]

Liberals should be screaming about entitlement spending instead of their rant about how we don't spend enough on infrastructure,R&D and science....
At some point and it will be here soon....More people will be getting SS benefits then are funding it...

But I guess they will blame it all on Bush....
Or the problem is we don't spend enough on.....

Infrastructure.
R&D
Science....
Tacos
Burritos
Infrastructure
Infrastructure......Infrastrastructure......Infrastructurrrrrrrrrrrreeeeeeeerrrrrreeeee

Please stay on the topic. Leave politics outta here.

 

[Ame®icano]

The economy will grow to match the debt services as money becomes gradually more worthless.

False supposition, as industrial expansion and two wage families made that possible in the past. You don't have either of those possibilities today.

Actually, Dekster is on something here. Reminder, we did grow out of debt from WWII, although we never paid it off. As of now, if we're talking just about numbers, US debt interest rate is lower than our yearly GDP growth, so theoretically we could grow out of our debt without having to actually pay it off. If we're talking how our GDP got higher, we will get different picture. As I said earlier, betting that we will grow our way out of debt as we did in the 50s is quite a risky gamble. If growth does not meet those expectations, the money will have to come from somewhere. QE, perhaps?