Well color me shocked: USA Today Headline

[BlahBlahYouToo]

Question about National Debt.

What exactly is it? To whom do we owe this money?

What would happen if we suddenly, without printing money, paid it off?

china.

 

[Atreus21]

Sensationalist or not, the debt is only getting worse every year, with no means to pay it off or even reduce it. Eventually, the Chinese will wisen up and stop lending us credit. And then Greek fire comes to the US.

I think it was LK who said that this won't happen. Something about how China's entire future depends on buying our debt.

I can't remember the specifics. Maybe if he shows up he can correct me.

 

[wirednuts]

we need to make things again. period, period, and period end of story

 

[PokerGuy]

Right, but that net liability is about 4x our GDP going forward. If you made $50,000 a year and had a $200,000 debt (total, including interest) to pay off over the next half a century, inflation included, that's really not that big a deal.

Not that big of a deal, until you factor in we spend $75k a year when we make $50k per year, so paying off the $200k in debt starts getting a little tricky. We're talking about unfunded future liabilities, the number is already staggering, but then when you factor in that we're not really even paying down or working on reducing that number, we're dramatically increasing it, every single day.

I'd say that's cause for concern.

 

[Munky]

I think it was LK who said that this won't happen. Something about how China's entire future depends on buying our debt.

I can't remember the specifics. Maybe if he shows up he can correct me.

I can't think of any reason why the lender would need the borrower more than the other way around.

 

[alphatarget1]

Hey, we can just take the stance of the Greek citizenry: "Stop paying our creditors". I'm sure that will work just fine.

Greece should really be kicked out of the EU and NATO. Then Turkey and their creditor nations will invade them for not paying the bills.

 

[nageov3t]

Question about National Debt.

What exactly is it? To whom do we owe this money?

What would happen if we suddenly, without printing money, paid it off?

last I read, something like 11% of our budget goes towards interest payments on debt.

presumably if all our debt were suddenly paid off, the countries that we owe it to (China) would have a one-time cash infusion instead of expecting payments on the interest owed in perpetuity, and the US budgetary pie would have 11% more to play around with.

 

[sactoking]

I can't think of any reason why the lender would need the borrower more than the other way around.

Well, in this case the US has so far not missed an interest payment and since China manipulates its currency relative to the US dollar China actually needs to keep buying (essentially guaranteed) US debt and it needs to keep up its currency manipulation in order to fuel its economy.

Basically, China is relying on increased US debt service payments to increase the supply of yuan without causing inflation in the yuan. It's "free money" to China.

 

[QuantumPion]

Right, but that net liability is about 4x our GDP going forward. If you made $50,000 a year and had a $200,000 debt (total, including interest) to pay off over the next half a century, inflation included, that's really not that big a deal.

You're forgetting a teeny little detail here. We're making $20,000 a year with $140,000 in debt...but we're spending $45,000 a year.

With $140,000 debt, a 4% interest rate costs $5,600 a year. But every year we are spending $25,000 more than we take in, which means our interest payments are going up by $1000 every year. In 14 years, the interest payments will equal 100% of our income.

 

[Throckmorton]

You're forgetting a teeny little detail here. We're making $20,000 a year with $140,000 in debt...but we're spending $45,000 a year.

With $140,000 debt, a 4% interest rate costs $5,600 a year. But every year we are spending $25,000 more than we take in, which means our interest payments are going up by $1000 every year. In 14 years, the interest payments will equal 100% of our income.

What would we be taking in without the Bush and Obama tax cuts?

 

[wuliheron]

CUT, BABY CUT!

It should be "TAKE, BABY TAKE!" How about we just take all the assets of the corporations. Yeah, that sounds pretty good to me. We took our land from the Native Americans and Mexicans, we took our slaves from Africa, we take our oil from the middle east. We need new sources to take money from.

 

[BeauJangles]

Well, in this case the US has so far not missed an interest payment and since China manipulates its currency relative to the US dollar China actually needs to keep buying (essentially guaranteed) US debt and it needs to keep up its currency manipulation in order to fuel its economy.

Basically, China is relying on increased US debt service payments to increase the supply of yuan without causing inflation in the yuan. It's "free money" to China.

This. China is going to have an increasingly more difficult time keeping its currency artificially low compared to the dollar and, when it rises, all hell is going to break loose.

 

[a777pilot]

LOL!

$61 trillion!?

Who cares? It's a meaningless number. That's in the same category of stating that 57,397 Angels can dance on the head of a pin.

Just too funny.

 

[QuantumPion]

Right, but that net liability is about 4x our GDP going forward. If you made $50,000 a year and had a $200,000 debt (total, including interest) to pay off over the next half a century, inflation included, that's really not that big a deal.

You're forgetting a teeny little detail here. We're making $20,000 a year with $140,000 in debt...but we're spending $45,000 a year.

With $140,000 debt, a 4% interest rate costs $5,600 a year. But every year we are spending $25,000 more than we take in, which means our interest payments are going up by $1000 every year. In 14 years, the interest payments will equal 100% of our income.

What would we be taking in without the Bush and Obama tax cuts?

The Bush tax cut would be $3000 per year income which would push the total world economic collapse back about 4 years.

The Obama "tax cut" would be $0.30 for a single year and would push the total world economic collapse back by 3.5 hours.

Note that Obamacare will increase spending by about triple what the Bush tax cut would have brought in ($9000 per year).

 

[WhipperSnapper]

This sounds like one more reason for our government to focus on economic growth and middle and lower class income growth. More people employed at higher wages means less need for government welfare and more tax revenue. In the meantime, of course, we also need to raise taxes on the rich.

 

[Matt1970]

That story is misleading. The $62 Trillion is Total US debt, Household, Business and Government. They are making it out to seem like the Government owes that.

 

[wuliheron]

That story is misleading. The $62 Trillion is Total US debt, Household, Business and Government. They are making it out to seem like the Government owes that.

Any excuse to TAKE, BABY TAKE is a good excuse.

 

[boomerang]

It's high time to intensify the Cakes and Circuses.

 

[SandEagle]

That's low, does not include states and local govt.

doesn't include the cost of wars in Iraq, Afghan, beloved patriot, Syria, Libya, and any other wars against brown people. nor does it include the $27 trillion that we owe because of Wall Street's fraudulent mortgage-backed securities.

 

[Darwin333]

I think it was LK who said that this won't happen. Something about how China's entire future depends on buying our debt.

I can't remember the specifics. Maybe if he shows up he can correct me.

China doesn't buy as much of our debt as people tend to believe.

And it isn't just the new debt that must be sold, all of our existing debt must be rolled over (or resold) approximately every 4 years on average. Obviously not all at once but the point is we must sell absurdly more bonds every year than what is required to finance the deficit.

 

[Darwin333]

What would we be taking in without the Bush and Obama tax cuts?

An additional $300B a year if you are talking about ALL of the cuts. $70B/year if you are talking about the cuts for the rich bastards.

In other words, nowhere close to enough.

 

[Generator]

Remember when 5 billion was a big deal? Turns outs there are bigger financial mines out in the world than this 60 trillion. Banks betting market is up to 700 trillion. 1.4 Quadrillion is another number all of sudden being even fathomed on bankers balance sheets.

I don't even think the fucking Earth's GDP is 60 trillion dollars!

 

[Wreckem]

Question about National Debt.

What exactly is it? To whom do we owe this money?

What would happen if we suddenly, without printing money, paid it off?

The bulk of the unfunded liabilities is from medicare. They keep trying to pinpoint how much medicare is underfunded over the next 30-40 years, its anywhere from as low as $32trillion to as high as $72trillion.

 

[theeedude]

This is a stupid headline. What exactly do we owe? Medicare? Social Security? OK, let's say we don't owe it anymore, are sick and poor seniors going to magically disappear? Maybe in a Republican dream, but in the real world, we are still going to have to take care of them, so you are simply going to transfer a liability from Social Security and Medicare to others.

 

[Wreckem]

china.

Foreign holdings of US debt is around $4.5trillion. China, Japan, and Britain own approx 70% of that, with China holding a few hundred billion more than Japan($1.1trillion to ~$800billion). Most of the US's total debt are unfunded liabilities to US citizens in the form of future non discretionary entitlement payments.