The National Debt: Why Fret Over Something That Doesn't Exist?

National Debt matters to banks, to credit rating agencies, etc.
https://en.wikipedia.org/wiki/United_States_federal_government_credit-rating_downgrades

I also have long noted that Democrats blast only Ronald Reagan and GW Bush for increased public debt.

Funny how that ten trillion more by Obama simply gets whitewashed away.

 

Global warming won't either, yet it's funny how you guys on the left are so worried about that.

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What happens when the interest is 1 trillion per year? That's a lot of wealth you could redistribute to Democrat voting blocs.

 

Nope, we will have to pay it again next year. And we cant even afford to pay our bills. That's why we now have a $20 trillion debt.

 

All we pay is the interest...ever. The principal gets rolled over each year. In order to pay the principal we would have to have a budget surplus.

 

And when might that be?

 

It was kind of a rhetorical question to his comment.

 

Won't be very long at all.




It may be even quicker too, if progressives obtain more power in Government by promising more free (*)(*)(*)(*) we can't pay for in exchange for votes.

 

Obama called Bush's increasing of the debt unpatriotic. How funny is that?

 

It's really this simple:

If you have two people, each with two million dollars, everything is OK.

But if one lends one million to the other, what is the total amount of wealth now? Not 4 million but 5.

The borrower has 3 million in cash. The lender has 1 million in cash, plus 1 million in an IOU that is assumed to pay up.

After a while, the economy is dependent on there being 5, not 4 million dollars floating around.

If the borrower then announces they can't repay, the lender is suddenly much poorer, and there will be economic pain as the lender cuts back spending.

Even if the borrower (being the government) prints the money to pay back the loan, they have just taken advantage of the lender by repaying with the now inflated dollars. The lender still feels somewhat poorer for this reason. Even worse, the lender will demand a higher interest in future loans to compensate for a higher chance of being repaid with inflated dollars, and this will have a downward effect on the economy too.

That was why the Fed wanted to limit inflation as much as possible by phasing out their emergency money printing ('quantitative easing,') as well as raise interest rates as soon as possible (i.e. stop allowing banks to create so much money.) But this only prolongs what is essentially a bubble for the time being. Looking forward, the debt bubble is going to burst, one way or another. And there will be pain as a result.

 

Yes it needs to be paid back by default, that's why its debt. But what's going to happen if we don't pay it back? Will China declare war?

The issue with a nation and its funds is that, even if a nation declares bankruptcy, the nation itself exists because its government exists. To truly destroy a nation you have to destroy its economy and its government. So as long as the US Constitution exists, the US will exist. And because we have a country capable of achieving near-autarky and we aren't socialists, our national debt isn't really that concerning. Because anything we need from foreign countries is taken care of by businesses. Essentially, private people not hindered by the US national debt.

And the fact that the dollar isn't tied to anything anymore is a big issue too. Because foreign transactions usually used to actually be dealt in gold or silver or trade of some kind. Nowadays, it's just a bunch of 0s and 1s; its electronic. And the value of the dollar isn't determined by the amount of gold the US has. So its a bit more complicated