Solution to our debt.

[Slyhunter]

Cancel our debt to China as partial payment for the pandemic.

 

[alpine]

it doesnt work like that...

 

[Captain Caveman]

Theoretically, you could but no other country would trade with America again. Countries should workout the cost of Covid and give China the bill.

 

[Andylusion]

Cancel our debt to China as partial payment for the pandemic.

Right.... Um... Ok. Quick math. So as of July 2020, China had roughly $1 Trillion in US bonds.

The US national debt is $28 Trillion.

So, not going to solve our problem, is it?

Further, I learned back when I first moved out, that it didn't matter if I paid off a debt, if I was living in a way that racked up debt.

The only way to not have a debt problem, is to live on less than you make in income. Spend less... than you collect in income.

Similarly, as long as the US public wants to spend more than the government can collect in revenue, canceling debt will cause tons of problems, and we'll end up in debt anyway.

We need to cut spending. Cut welfare, unemployment, SNAP, housing, cut education, cut all entitlements.

If we don't do that, it doesn't matter if you cancel debt. You keep spending more than you collect, you end up with debt. That's how it works.

Lastly, the bond market is critical to borrowing money. The only reason anyone, anywhere, is willing to buy US bonds, is because they believe the US government will pay back the loan.

You cancel those bonds, and everyone everywhere in the world, will stop buying US bonds. They are not going to distinguish US bonds, from other US bonds, because they are all US bonds.

It would be like you and your neighbor both buying a health insurance policy with the same company. You find out the following week, that your neighbor got sick, and the company just decided to not honor the policy. Are you going to keep your policy with that company? Well yeah, that was him, not you... so you are safe? No, you would cancel that policy and buy from someone else.

Same thing in with bonds. No one is going to buy those bonds knowing we won't pay, if we decide to blame you for a virus.

If we can't borrow money, then Social Security or Medicare will be cut dramatically in a month.

Or... we would have to get an international bailout. Do you want to get bailed out by Europe? Because that's what happened with Greece. They went bankrupt, needed an international bailout, and suddenly you had people all over the EU, dictating Greek public policy. You want Europe or others dictating US policy, because we have to have a bailout, because we defaulted on our bonds like Greece did?

Very bad idea. Very bad. Your idea might well actually cause civil war, and a break up of the United States.

 

[KissMy]

Theoretically, you could but no other country would trade with America again. Countries should workout the cost of Covid and give China the bill.

They would trade with gold or bitcoin, just not with US dollars and never lend to US or rates would be much higher.

The biggest problem is interest rates would skyrocket & that will kill our economy plus all our taxes couldn't pay the new high interest on our current debt, so the USA would be bankrupted & all your money, paychecks, bonds, pensions, Social Security, etc. would be useless.

 

[Mac1958]

Maybe we could just be more fiscally responsible.

 

[alpine]

Maybe we could just be more fiscally responsible.

or maybe the opposite...
the way to cheat the liability is to artificially debase the value of the currency...
which means: keep stimulating and pumping like there is no tomorrow...

 

[WinterBorn]

Maybe we could just be more fiscally responsible.

What a novel concept! Pity those in DC can't manage to do that.

 

[Mac1958]

Maybe we could just be more fiscally responsible.

What a novel concept! Pity those in DC can't manage to do that.

Our current system allows them to, and we don't care enough to change the system.

 

[WinterBorn]

Maybe we could just be more fiscally responsible.

What a novel concept! Pity those in DC can't manage to do that.

Our current system allows them to, and we don't care enough to change the system.

And because those who profit from the overspending are the ones who would have to pass laws to stop it.

Its like term limits. It gets lip-service, but to pass legislation to do it, the self-serving politicians would have to pass what is not in their best interests.

 

[Mac1958]

Maybe we could just be more fiscally responsible.

What a novel concept! Pity those in DC can't manage to do that.

Our current system allows them to, and we don't care enough to change the system.

And because those who profit from the overspending are the ones who would have to pass laws to stop it.

Its like term limits. It gets lip-service, but to pass legislation to do it, the self-serving politicians would have to pass what is not in their best interests.

Yep, that's one of the big ones. Do we really think that these people would behave the same way if they were not worried about fundraising, favor-giving and re-election?

Personally, I would add publicly-funded elections and some kind of flexible balanced budget amendment. Then we'd see real change.

This is our own fault.

 

[Tommy Tainant]

Maybe cut the amount you spend on war toys.

 

[Captain Caveman]

A bit of both, cut spending and raise income.

The debt is still lower than what it was just after WWII, I think.

 

[KissMy]

A bit of both, cut spending and raise income.

The debt is still lower than what it was just after WWII, I think.

Not after Trump EXPLODED the Debt during a good economy & then crashed the economy before he allowed Covid-19 to body slam US!

 

[Votto]

it doesnt work like that...

Right, the way it works is, the US continues to sell out to China and keeps mounting debt exponentially, which further deludes the value of your own wealth as the economy continues to tank. Then when it implodes you blame Trump and the lack of a proper socialist dictatorship to stop it.

 

[G.T.]

Cancel our debt to China as partial payment for the pandemic.

China is only a sliver of our Debt.

 

[G.T.]

Maybe we could just be more fiscally responsible.

Are we currently irresponsible? You're in finance, I presume...

How is our Debt to income/asset ratio? How are our debt payments, any delinquencies? At what interest rate are we borrowing and is it below the rate of inflation?

 

[Captain Caveman]

Not after Trump EXPLODED the Debt during a good economy & then crashed the economy before he allowed Covid-19 to body slam US!

Sorry, I forgot to add, "Debt as a percentage of GDP". You need debt to increase the economy. As a percentage of GDP, I think current debt is lower now than just after WWII, but predictions are that debt will increase significantly.

What are Biden's policies and how much will they cost?

 

[G.T.]

Not after Trump EXPLODED the Debt during a good economy & then crashed the economy before he allowed Covid-19 to body slam US!

Sorry, I forgot to add, "Debt as a percentage of GDP". You need debt to increase the economy. As a percentage of GDP, I think current debt is lower now than just after WWII, but predictions are that debt will increase significantly.

What are Biden's policies and how much will they cost?

His initial stimulus is supposed to be over one trillion.

 

[2aguy]

Cancel our debt to China as partial payment for the pandemic.

Yep.....that would make sense.....won't happen with the democrats in charge, they are allies to the Chinese government.