If the US govt paid off the debt tomorrow..

[Bird222]

What would happen besides inflation? Realistically how much would inflation go up? What benefits will we reap by being debt free?

 

[Ham n' Eggs]

What would happen besides inflation? Realistically how much would inflation go up? What benefits will we reap by being debt free?

take a look at this: http://www.usdebtclock.org/

One very concrete benefit would be all the money that would be saved by no longer having to service the debt (pay the interest). All that money that currently goes towards servicing the debt could be used for other things.
http://www.usdebtclock.org/

 

[cubby1223]

The estimate on all the holdings in U.S. dollars in the world is ~$10 trillion. The U.S. debt is $18 trillion. Basically, you're about tripling the dollar total to pay off the debt. What costs $100 today might cost $300 tomorrow if the debt were paid off.

Of course that estimate has no solid basis in economics. But, printing the U.S. out of debt overnight will crash the faith in the dollar, and probably skyrocket inflation far beyond that above number. It's not going to happen, so the whole discussion is purely theoretical.

 

[Bird222]

The estimate on all the holdings in U.S. dollars in the world is ~$10 trillion. The U.S. debt is $18 trillion. Basically, you're about tripling the dollar total to pay off the debt. What costs $100 today might cost $300 tomorrow if the debt were paid off.

Of course that estimate has no solid basis in economics. But, printing the U.S. out of debt overnight will crash the faith in the dollar, and probably skyrocket inflation far beyond that above number. It's not going to happen, so the whole discussion is purely theoretical.

So the $10 trillion you mention above is not included in the $18 trillion?

 

[fskimospy]

Quick question: why would the US paying off the national debt be beneficial?

 

[cubby1223]

So the $10 trillion you mention above is not included in the $18 trillion?

$10 trillion is the estimated value of all currency in circulation plus bank accounts and other monetary funds valued in US dollars. Basically there is $10 trillion U.S. dollars in the world. Printing us out of debt would add $18 trillion for a new total of $28 trillion U.S. dollars in the world.

The bottom line simply is, printing $18 trillion overnight, you would crash the U.S. dollar into oblivion. We have no monetary system anymore.

 

[Bird222]

$10 trillion is the estimated value of all currency in circulation plus bank accounts and other monetary funds valued in US dollars. Basically there is $10 trillion U.S. dollars in the world. Printing us out of debt would add $18 trillion for a new total of $28 trillion U.S. dollars in the world.

The bottom line simply is, printing $18 trillion overnight, you would crash the U.S. dollar into oblivion. We have no monetary system anymore.

Thanks for the clarification. I am still looking for the effects of this. What would happen? What would inflation rise to and how fast? Would it really be close to 300%? What would be the cascading effects of high inflation? Surely there are some armchair economists here.

 

[alcoholbob]

What would happen besides inflation? Realistically how much would inflation go up? What benefits will we reap by being debt free?

Nothing because unfunded liabilities of the federal government are in the hundreds of trillions. The headline debt number is meaningless and paying it off doesn't let the government off the hook for everything it's promised in the future.

 

[Humpy]

$10 trillion is the estimated value of all currency in circulation plus bank accounts and other monetary funds valued in US dollars. Basically there is $10 trillion U.S. dollars in the world. Printing us out of debt would add $18 trillion for a new total of $28 trillion U.S. dollars in the world.

The bottom line simply is, printing $18 trillion overnight, you would crash the U.S. dollar into oblivion. We have no monetary system anymore.

I'm not sure why the total value of circulating currency is important?

What is our net worth? What would happen if we wanted to sell something that was worth more than $10 trillion to cover the debt?

 

[glenn1]

I'm not sure why the total value of circulating currency is important?

What is our net worth? What would happen if we wanted to sell something that was worth more than $10 trillion to cover the debt?

Who has $10T or more lying around to be on the other side of that sale?

 

[Humpy]

Nothing because unfunded liabilities of the federal government are in the hundreds of trillions. The headline debt number is meaningless and paying it off doesn't let the government off the hook for everything it's promised in the future.

How far in the future?

 

[Humpy]

Who has $10T or more lying around to be on the other side of that sale?

I don't know.

 

[Brian Stirling]

Who has $10T or more lying around to be on the other side of that sale?

Not sure about $10T, but there's talk that it won't be very long before we have the first trillionaire!


Brian

 

[Genx87]

No problem when we print these.

 

[ivwshane]

Quick question: why would the US paying off the national debt be beneficial?

Oops! Maybe you should ask your question again, I don't think anyone saw it

 

[TheGardener]

How much could we get for selling Alaska back to the Russians? What would selling off California bring? I suppose China could out bid Mexico. Sell off all the fracking rights in the country to Kuwait or Saudi Arabia. Sell off the Hawaiian Islands, perhaps to China or Japan. Maybe it is possible. Maybe we'd have a surplus to squander off by investing in 4K TV's for everyone.

 

[Darwin333]

What would happen besides inflation? Realistically how much would inflation go up? What benefits will we reap by being debt free?

How are we theoretically paying off this debt?

 

[Darwin333]

Quick question: why would the US paying off the national debt be beneficial?

We wouldn't have to pay to service that debt anymore which currently is around $400B a year IIRC. That's $400B a year that we wouldn't have to extract from the taxpayers or could be used for other things.

My question to you, why is paying $400B a year to service our debt beneficial?

 

[Vic]

We wouldn't have to pay to service that debt anymore which currently is around $400B a year IIRC. That's $400B a year that we wouldn't have to extract from the taxpayers or could be used for other things.

My question to you, why is paying $400B a year to service our debt beneficial?

How much would it cost the taxpayers to balance the budget every year?

 

[DCal430]

First of all the U.S can't just pay off its debt. Around 30% is owed to other departments in the U.S government, so it makes no sense to pay off that portion. Second the vast majority of the rest is non callable debt. The government can't pay it back unless it pays the actual market value of the debt, which for most debt is significantly higher than just outstanding principal. This is on top of the nightmare flooding the market with so much cash would cause.

So much ignorance.

 

[fskimospy]

We wouldn't have to pay to service that debt anymore which currently is around $400B a year IIRC. That's $400B a year that we wouldn't have to extract from the taxpayers or could be used for other things.

My question to you, why is paying $400B a year to service our debt beneficial?

It's mostly money we pay to ourselves, so getting rid of it isn't really that helpful. Also, government debt plays an important part in our financial system.

 

[werepossum]

Thanks for the clarification. I am still looking for the effects of this. What would happen? What would inflation rise to and how fast? Would it really be close to 300%? What would be the cascading effects of high inflation? Surely there are some armchair economists here.

No one can give an educated answer unless you posit how the debt is paid off. As Cubby points out, it can't be by monetizing it, or else we no longer have a viable currency, and there seems to be no other realistic method for any time frame likely to have significant side effects. Therefore to have a viable question, you must propose some method of doing so. Otherwise people can only give opinions as to how it can't be done or what could be done wit the money freed up.

 

[cubby1223]

Thanks for the clarification. I am still looking for the effects of this. What would happen? What would inflation rise to and how fast? Would it really be close to 300%? What would be the cascading effects of high inflation? Surely there are some armchair economists here.

There is no example to point to. We can see glimpses in Germany of the early 1920's or Zimbabwe of recent years. But here we are talking about the U.S. Dollar, the currency that keeps all other currencies in the world stable. Helps keep economies around the world stable.

Think about it. Say you want to go to the grocery store tomorrow, because you need food to live. How are you going to obtain food from them if there were no currency to exchange?

 

[DCal430]

As I stated nearly all U.S debt isn't callable. The government agreed it wouldn't pay the debt off early. The people have to be willing to sell it to the feds, and at the price they want. Even if they printed money they can't just pay the debt off, because the debt holders have rights.

 

[Atreus21]

Frankly, I'd be impressed just to run a true surplus. Just once.