What will happen to the U.S. if the current rate of debt keeps going

[Schadenfroh]

What is the long term effect of our governments debt on the economy and on the nation itself. I mean, are we not going to have an untold ammount of debt in the near future and we already have so much debt that it is nearly unbelievable. How is the government going to react when it finally starts to pay it back if ever?

thanks. i have yet to take economics.

 

[miketheidiot]

Originally posted by: Schadenfroh
What is the long term effect of our governments debt on the economy and on the nation itself. I mean, are we not going to have an untold ammount of debt in the near future and we already have so much debt that it is nearly unbelievable. How is the government going to react when it finally starts to pay it back if ever?

thanks. i have yet to take economics.

People stop loaning us money. Dollar collapses. We can't buy anything. We become poor.

 

[charrison]

Originally posted by: Schadenfroh
What is the long term effect of our governments debt on the economy and on the nation itself. I mean, are we not going to have an untold ammount of debt in the near future and we already have so much debt that it is nearly unbelievable. How is the government going to react when it finally starts to pay it back if ever?

thanks. i have yet to take economics.

or history apparently. we are no where near historical highs of debt:gdp ratios.


Or geography.

Our debt is high, but comparable to many of the countries that complain about our debt load.

 

[yllus]

Considering it's climbing at the same rate it always has been, likely nothing different?

 

[jpeyton]

Reason Number 27 Of Why We Attacked Iraq

Iraq sold their oil for Euros, instead of the Dollar standard that is used by the Saudis and most other oil producing countries. By doing that, Iraq was lowering the reliance on the Dollar that countries normally needed to purchase oil. This also devalued the dollar.

 

[SuperTool]

There is no such thing as a free lunch.
But what exactly will happen is hard to tell. But either we pay the debt off, or the creditors have to forgive it, or some combination of the above.

 

[Jhhnn]

If the debt maintenance, interest payments, go into default, then the Argentine model kicks in. Explosive inflation coupled with massive economic malaise, radical cutbacks in social programs, spectacular erosion of the middle class, expanded disparity in the distribution of wealth. Also higher taxes and forced privatization of assets to meet obligations, mostly interest rather than principal. The latter is definitely counterproductive, except from the perspective of those getting their payments, and those buying assets at fire sale prices... Our only saving grace, so far, is that our debt is in our own currency, somewhat avoiding the double-whammy of currency devaluation. But in a global economy, it still hits hard. Think $2/gal gas is bad? Try $5. Cheap imported goods? Huh-uh.... Inexpensive food? Not when global purchasers raise demand for cheap american ag products...

Yllus' assertions about the debt are, to be kind, unfounded-

http://zfacts.com/p/318.html

At the end of WW2, the debt was huge, but necessary. Had we lost, debt wouldn't have been an issue, and we ended up as the only industrial power left standing, other than the Soviets, whose mismanagement and ideology doomed their system... so the debt could be rapidly paid off...

As federal debt rises, investment capital is soaked up, too, limiting growth in the private sector...

And of course, let's not mention getting less for every tax dollar as interest costs increase as a % of federal expense. Currently that's ~$330B/yr, 12% of revenues, at historically low rates, the third largest non-SS expense behind the military and all of HHS... A 1% interest bump raises the payments on $7.5T by a mere $75B/yr... forever, under the current scenario...

Looting by the financial elite now via tax breaks for the highest incomes and corporate/military pork, payback by the citizenry later- debt maintenance being the single most important govt expense...

It's part and parcel of the "Starve the Beast" Rightwing scenario of how to get govt "off the backs" of America's wealthy... force an end to virtually all of the "evil" social programs, return to a pre-WW1 wealth distribution scenario... except that they'll now have real leverage in the form of the Debt... They'll try to blame it all on social spending, when it's really by design...

 

[Engineer]

Originally posted by: charrison

Originally posted by: Schadenfroh
What is the long term effect of our governments debt on the economy and on the nation itself. I mean, are we not going to have an untold ammount of debt in the near future and we already have so much debt that it is nearly unbelievable. How is the government going to react when it finally starts to pay it back if ever?

thanks. i have yet to take economics.

or history apparently. we are no where near historical highs of debt:gdp ratios.


Or geography.

Our debt is high, but comparable to many of the countries that complain about our debt load.

While I agree that it's not historically high vs GDP, the trend is not a good one.