USA Debt Repayable

[xavier]

Hi guys

Is USA debt repayable? Or are governments just hiding the truth - that infact western governments can never repay their debts, and that eventually sovereign bonds will collapse.

Does anyone actually have an answer to this? Is USA government heading down a road of responsible payback of its debt, or a road of full-on Keynesianism that will eventually lead to financial catastrophe.

I know that it would be in government's interest to hide the fact that debt was , at current economic growth rates , unrepayable. But I just want to know the truth. Lets assume USA economy continues to grow at current rate and deficit continues to grow/shrink at current rate. Where are we in 10 years? Is the debt repaid, halved or has it grown more?

Side question - If the debt is repayable, panic over. If it's not, how long will it take for markets to reflect this. Also - If anyone has some numbers, all the better.

Cheers

 

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[meh32123]

It will never be payed back, they'll just print some more of it.

[zeroday]

It will never be payed back, they'll just print some more of it.

There is no need to repay any debt as, with coming The Great Economic Collapse, the whole world will become single global corporation controlled by the US.

[agentbluescreen]

It will never be payed back, they'll just print some more of it.

There is no need to repay any debt as, with coming The Great Economic Collapse, the whole former supposedly "free" world will become single global corporation controlled by the US IMF/World Bank.

The US?  LOL

The private owner-shareholders of the private Federal Reserve Printing Corporation are mostly Tory Bilderberg Rothschild-surrogate foreigners who "tax-reside" in Liechtenstein, Cayman Islands, Belize, Bermuda, the City of London etc. and "live" elsewhere, beyond national and international laws. Those Federal Reserve "They-Owe-Us Debt-Notes" belong to that private corporation, not the US Treasury. All the US Treasury (Union of ZioNazi Socialist Republics) "owns" are it's great, great, great grandchildren's debt-bonds to the Federal Reserve Printing Corporation. If/When FedResCo goes into receivership (because of defaulted bond-interest servicing payments) it's sole asset is the US Treasury who's bonds (save any others that have been sold to others) it owns. Every "They-Owe-Us Debt-Note - dollar" Uncle Ben prints-up for his pals (who own the politicians) is backed by a US Treasury bond-debt pledged either to FedResCo or some other schmucks. (Red China, Saudi Arabia, Japan or your Granny etc)

A FedResCo bankruptcy does not affect it's private owners private booty, only the value of their shares in it's bankruptcy settlement.

By the time Rubin got to Treasury the Fed owners had already cleaned out Ft Knox, so when "it" all finally and inevitably now hits the fan, the US (UZSR) will be selling off islands, highways, military bases, ports, tourist zones and parks like Greece is to keep up with the interest payments with IMF acting as the FedResCo's receiver.

If they put even +1 percent of interest back into the Prime Rate, it will all collapse now, since Washingwhoreland can no longer afford to pay that amount on it's debt plus what it's criminally squandering on supporting both sides of it's (owner's favourite) ZioNazi war-communisms at home and all over the planet.

[1bettor.com]

Hi guys

Is USA debt repayable? Or are governments just hiding the truth - that infact western governments can never repay their debts, and that eventually sovereign bonds will collapse.

Does anyone actually have an answer to this? Is USA government heading down a road of responsible payback of its debt, or a road of full-on Keynesianism that will eventually lead to financial catastrophe.

I know that it would be in government's interest to hide the fact that debt was , at current economic growth rates , unrepayable. But I just want to know the truth. Lets assume USA economy continues to grow at current rate and deficit continues to grow/shrink at current rate. Where are we in 10 years? Is the debt repaid, halved or has it grown more?

Side question - If the debt is repayable, panic over. If it's not, how long will it take for markets to reflect this. Also - If anyone has some numbers, all the better.

Cheers

 

How could they pay it back? They are printing 85 million a month just to keep things afloat. Student loans are now the 2nd largest debt (1st is mortgages). The house of cards that is will soon, maybe a year, maybe 2, come tumbling down. First though, you will see major events unfold in the USA, this will be their way of shifting the blame.

Impossible to pay it all back unless they just wipe away A LOT OF DEBT---POOF.......

[1bettor.com]

Watch this for about 2 minutes and you tell me.

http://www.usdebtclock.org/

[1bettor.com]

Shit, I just watched it for a few minutes, absolutely stunning!

[1bettor.com]

Unfunded liabilities, 123 TRILLION!!!! WTF

So, how long can they keep this ship afloat with the gaping wound and seawater rushing in?

[wolongong]

Sure it is possible. If they stop borrowing now and start funding deficits by printing money the debt should be gone in about 30 years.

[pekv2]

Imo, debt should be completely wiped. You know how big the economy would boom if debt was wiped?

[1bettor.com]

Imo, debt should be completely wiped. You know how big the economy would boom if debt was wiped?

I agree but we both know that the FED controls things, not the Gov't, not the president of the US. The fed wont wipe away shit. Greed will ultimately be the demise of the USA. Time is ticking. tick, tick-tock, tick, tick-tock........

[wolongong]

Imo, debt should be completely wiped. You know how big the economy would boom if debt was wiped?

You realise this wipes out an equal amount of savings?

[townf]

It appears that money is being created at very high rate in order to ultimately make the debt more repayable by making it's real value smaller. It also gives the banks some money. They were broke.

This isn't going to work because people's wages and GDP can't grow exponentially like the debt grows, due to the compound usury. The money lenders (printers) probably know this. They see the same insane hyperbolic graph that we see.

However, this money printing gives them a little more time to fleece off the collateral, privatize public assets, squeeze blood from the public stone.

This debt was created with money loaned out of thin air by private, broke, mere publishers of pieces of paper, computer keyboard strokers.

It can't be repaid. I'm pretty sure just the interest payment alone is now more than the entire federal income tax revenue. Everybody who has a job now works about 3-4 months out of the year for free in order to pay usury which is growing exponentially.

Somebody tell me if I didn't get this right.

[jhansen858]

Watch this for about 2 minutes and you tell me.

http://www.usdebtclock.org/

That's a cool link.  I have to say, at least some of the numbers are going down.  I have to say that as bad as they made the sequester sound, it doesn't really seem likes its doing enough.  I think they should probably rock the sequester up a bit more.

But I have learned that holding no debt is actually a bad thing for a business.  Its important to have a low debt to equity ratio but having 0 debt can negatively affect your cash flow. 

[DeathAndTaxes]

Countries which are in control of their own printing press never face a default risk. 
Why would the US default?  Nothing in the bonds guarantees the PURCHASING POWER just the nominal amount.

US owes $15T which is a lot today?  Well ramp up 5% inflation a year for 30 years and that $15T nominal is more like $4T in todays dollars.  See $4T on a $20T economy is nothing.  

That doesn't mean buying t-bonds is a good idea as while you may get every penny the price of everything will have quadrupled by the time your 30yr bond was repaid (putting you behind in real terms).

I mean why default, when you can "honor" the letter of the contract, break the spriting of it and repay bondholders in increasingly worthless pieces of paper.

[jhansen858]

Yea, I wish the debt clock would account for inflation.  I think it would look very much different.

[mcgravier]

All debts in current economy cannot be paid, because it would cause deflation that would make debts unpayable. BAM!

[ManBearPig]

It will never be payed back, they'll just print some more of it.

There is no need to repay any debt as, with coming The Great Economic Collapse, the whole world will become single global corporation controlled by the US China.

[melvster]

Hi guys

Is USA debt repayable? Or are governments just hiding the truth - that infact western governments can never repay their debts, and that eventually sovereign bonds will collapse.

Does anyone actually have an answer to this? Is USA government heading down a road of responsible payback of its debt, or a road of full-on Keynesianism that will eventually lead to financial catastrophe.

I know that it would be in government's interest to hide the fact that debt was , at current economic growth rates , unrepayable. But I just want to know the truth. Lets assume USA economy continues to grow at current rate and deficit continues to grow/shrink at current rate. Where are we in 10 years? Is the debt repaid, halved or has it grown more?

Side question - If the debt is repayable, panic over. If it's not, how long will it take for markets to reflect this. Also - If anyone has some numbers, all the better.

Cheers

 

Of course it's repayable.

But it requires printing which is going to be politically and socially unacceptable.  Not least because then confidence will be lost in the currency, and top down printing is rarely well distributed.

Debts that cant be paid wont be paid.  There will be haircuts ... the only question is who will be left standing when the music stops .... sadly, it's often the weakest in society ...

[FNG]

Money is debt.

It is not possible under the current system.

[wolongong]

Money is debt.

It is not possible under the current system.

Yes it is possible, there are no systemic obstacles, only self imposed limitations.

[johnyj]

In fact, FED could wipe out the debt partially, they are actually doing this now by printing money to buy Agent MBS, these securities would worth much less if they don't print money to buy

But for the government, their debt is a severe problem, because they do not own FED, and they can not create money

If a country's government own its central bank, then the national debt will never be a problem

[SonofBits]

This ties into political ideology also. "Wealth" requires at least the illusion of privilege. The good news is that your average American Middle Class person today lives better than any king of a few generations ago ever did.

Think about it. Here's just s short list of things that the secular new Princes of The Empire that The Fed built get to enjoy today at all ranges of the social and class(less) strata. Most every  Proletariat (via free vote-Democrat EBT virtual money) and the rising two-car divorced with children Bourgeoisie wanna-be have:

Air-conditioned/heated "castles", court-jesters (the talking heads on CNN, ABC, CBS et-al of the MSM politburo) and entertainment on-demand (HDTV with hundreds of channels of pump-up-your-hormone with feel-good pleasure/excitement [testosterone/endomorphins aka "endogenous morphine"/adrenaline]),  legions of available contracepting-females for easy buddy-sex-partners (bitcoin-wenches ),  mobility options (horseless carriages ranging from eco-fraud-electric to high-performance-gas-guzzlers), passenger-jets and cruise ships [with options for cattle-class to pretend-to class], weekend gladiator games in the football and sports stadiums, travel-adventures to exotic-places (that all have the same ubiquitous same Western Empire style franchises and strip-malls [once you have cleared the TSA Obergruppenführers]), pick-your-own-religion de-jur from the smorgasbord of Franchise Religious offings that are "close enough for government work (and We Trust in God too)" , communication (Snail-mail, Internet, Phone, smartphone, ever new hand gestures and emoticons [secure or not]) etc. etc. etc.

So this means that those who set up the structure "that is", whoever they really are , NEED BILLIONS of schmucks willing to trade their mortal lives to sharecrop on the plantations and give back a vig to the enabling and designated "rulers" who claim rights to the the arbitrary geo-political boundaries that said schmucks reside in (whether its the USA, Russia, China or virtual-land). They NEED servants and they need to have a down-line to sell to in order to have a master-slave relationship. There's an inherent co-dependency and if you're smart enough and good enough they invite you higher up into the food chain to your own indifference level depending on how much control and leverage over you that you give them and how much you are willing to sell one's soul (that fewer these days even believe exists so are indifferent to - spurning the notion of Pascal's Wager that there's might be a DEBT owed to the Creator come post-death-cashout).

NO THE DEBT CAN'T BE PAID. They will continue to inflate it away and let the natural mortality retire the old debt as people age and die off and keep progressing it on the youth. THE BIG PROBLEM is that the demographics are busted. The West at large is aborting its youth and being outbirthed by its ideological enemies all at the same time it is mortgaging ever more of the future on the backs of the youth yet unborn (and why the sudden rush by the ideological leaders to embrace non-traditional religions such as Islam to cover their bets and to import massive numbers of foreign "out of status" immigrants to replace or dillute the existing governed subjects here in America).

From a pure risk-reward analysis - the youth ALWAYS rebel once they figure out they are the stuckee's and all they have to look forward to is inheriting a lot of "wealth" that is under the perpetual assault of inflation from the prior generations to spend in a context that was ordained to bear the brunt of it all. And this too is another reason why "they" want to keep the population of the youth diminished to keep it below the critical mass of ideological flash point. At any rate, there are other uncontrollable external risks as well - natural "acts of god", disease (the cost of promiscuity in using one's own sex hormones to keep everyone on the reservation and sharecropping), generalized APATHY (no more response to Gov's glass-trinkets), and of course just insane rulers who start unsanctioned herd-thinning wars for ideological reasons (e.g. ref. the 100s of millions slaughtered in the last century by the atheist-Marxist ideologues Pol Pot, Stalin, Mayo).

There's two kinds of treasure folks - that treasure with fluctuating value (that always trends DOWN to increase entropy) that is tradeable and fungible for tangible things here and now in time-and-space;  and that other treasure who many are betting-on-the-come on the other side of Pascal's Wager beyond time-and-space who see the opportunity for a wide open pot with absolutely zero downside (status quo) if they're wrong.

The other mitigating thing here is that every other country is now in the same game. No one can really profit by the world's federal reserve currency getting taken out. In essence the USA is in a position to extort the rest of the world to do pretty much anything it wants "or else". Everyone should want to help the USA. The really bad news is there's NOT ENOUGH AVAILABLE FREE FIAT CURRENCY on the planet to PURCHASE US DEBT nor enough printing bandwidth to even print the currency fast enough to BUY BACK our own bonds to MONETIZE our own debt with the circular debts of promissory notes. It's comical when you think about it. And those in control are as incompetent as you and I or worse...  

Choose your bets and your treasures wisely,

[glendall]

^^ welcome to the forum Sonofbits. I concur with much of what you are saying but alas my coffee has not hit my bloodstream yet, so am unable to add any worthwhile, cogent points...

Watch this for about 2 minutes and you tell me.

http://www.usdebtclock.org/

Wow that is a neat site. It's like a car crash and I can't look away.

Funny as well, it looks like the student debt loan is going to reach 1 trillion (it's at 980 bill right now). But there isn't enough room for the 1 trillion decimal place, so I wonder it'll just roll back to '0' like an analog odometer.

[justusranvier]

The debt is a trivial problem compared to the unfunded liabilities.

Politicians have made a lot of promises that can not be kept, both to their own retired employees and the public at large. They promises are not notational - they are promises for real good and services such as medical care and inflation-adjusted pensions. The inability of those promises to be kept can not be corrected by devaluation.

It's almost as bad as if they promised every person over 65 their own private moon base. It's just not possible to produce that many of them, so the promises will not be kept.

[Adrian-x]

It appears that money is being created at very high rate in order to ultimately make the debt more repayable by making it's real value smaller. It also gives the banks some money. They were broke.

This isn't going to work because people's wages and GDP can't grow exponentially like the debt grows, due to the compound usury. The money lenders (printers) probably know this. They see the same insane hyperbolic graph that we see.

However, this money printing gives them a little more time to fleece off the collateral, privatize public assets, squeeze blood from the public stone.

This debt was created with money loaned out of thin air by private, broke, mere publishers of pieces of paper, computer keyboard strokers.

It can't be repaid. I'm pretty sure just the interest payment alone is now more than the entire federal income tax revenue. Everybody who has a job now works about 3-4 months out of the year for free in order to pay usury which is growing exponentially.

Somebody tell me if I didn't get this right.

This sounds about right.
Japan is definitely in this stage (this inflation is the primary weapon in the currency war)

The winners are projected to be the capital / influences behind the IMF and World Bank who will save the day with an SDR type world currency used as a reserve currency for the world.

Ultimately they will pick the winner and loser nations and possibly enforce militant rule through a peace keeping UN program.

The EU also made an unpredictable move in this currency war instead of inflating they prescribed a hair cut.

Bitcoin to me are like the rodents at the end of the dinosaur era 10 years before the asteroid, not able to compete but the ultimate winners.

Our finite one world global ecology is another under estimate player, in this situation it too can't lose, it's just a question of allegiance. Who will ally with the law of nature and freedom, sustainability, and who will ally with the laws of men and tyranny and economic growth?

Tyranny has the upper hand and will up until it can't hold on any more. I think an environmental correction will be the first shift in a power in favor of global freedom and sustainability.

[Adrian-x]

The debt is a trivial problem compared to the unfunded liabilities.

Politicians have made a lot of promises that can not be kept, both to their own retired employees and the public at large. They promises are not notational - they are promises for real good and services such as medical care and inflation-adjusted pensions. The inability of those promises to be kept can not be corrected by devaluation.

It's almost as bad as if they promised every person over 65 their own private moon base. It's just not possible to produce that many of them, so the promises will not be kept.

The irony is they will default on this, but protect the banks and wealth stewards.

[DeathAndTaxes]

Hi guys

Is USA debt repayable? Or are governments just hiding the truth - that infact western governments can never repay their debts, and that eventually sovereign bonds will collapse.

Does anyone actually have an answer to this? Is USA government heading down a road of responsible payback of its debt, or a road of full-on Keynesianism that will eventually lead to financial catastrophe.

I know that it would be in government's interest to hide the fact that debt was , at current economic growth rates , unrepayable. But I just want to know the truth. Lets assume USA economy continues to grow at current rate and deficit continues to grow/shrink at current rate. Where are we in 10 years? Is the debt repaid, halved or has it grown more?

Side question - If the debt is repayable, panic over. If it's not, how long will it take for markets to reflect this. Also - If anyone has some numbers, all the better.

Cheers

 

Of course it's repayable.

But it requires printing which is going to be politically and socially unacceptable.  Not least because then confidence will be lost in the currency, and top down printing is rarely well distributed.

Debts that cant be paid wont be paid.  There will be haircuts ... the only question is who will be left standing when the music stops .... sadly, it's often the weakest in society ...

Printing is the easiest haircut possible.  A default would mean:
a) The biggest losers would be Americans.  Most debt is owned by Americans and a huge chunk of that is private pension funds.
b) New debt would be essentially impossible.  That would force a "balanced budget" by defacto.
c) Simply cutoff social security (no reduction in payments, no adjusting eligibility, the checks just stop forever) or raise real taxes massively (something on the order of doubling taxes for all brackets with no exemptions).

A haircut would be an instant implosion of the government as we know it today.  A devaluation means robbing people slowly over time.   The difference between a car out of control at 100 mph and no brakes coasting to a stop once it runs out of gas or smashing into a wall with throttle wide open.

So if a country like the US can't pay its debt in "good faith" (i.e. no honoring the letter of the contract and devaluing the value of the returned payments given the choice of a default or a devaluation the choice is clear.  If you think the US government will "default" on its debts the more likely scenario is above average inflation over the next couple decades as money supply growth makes that dollar denominated debt worth less and less until it can pay it.  Make sure your financial choices reflect that scenario.

[KeyserSoze]

100s of millions slaughtered in the last century by the atheist-Marxist ideologues Pol Pot, Stalin, Mayo

Wow, you must be unsufferable at parties.

None of the totalitarian characters trotted out in the "atheists have killed more people" fallacy, whether they were atheist or not, killed in the name of a lack of belief in a god. Some of them suppressed religion as a tool to further the goal of totalitarian control.

<b>"State-imposed atheism" is a misnomer; there can be no such thing. Imposed irreligion is not atheism. Atheism is only the lack of belief in a god; one can't force people to not believe in a god.</b>

The actions of Mao, Pol and Joe (who attended seminary) were totalitarian opportunists. They sought total authority and banned religion which would compete with that authority. The pursuit of control over a people was the cause for the bloodshed.

Although Stalin initially sought to rid Russia of religion, once firmly in office he re-instîtuted the Russian Orthodox Church and re-opened theological schools. Suppression of religion was a tool not a reason.

Pol Pot is said to have practiced some Theravada Buddhism (and his Khmer Rouge were radical Buddhists). He studied at a Catholic school in Phnom Pen for 8 years. This mad man targeted not only religion but science, medicine and education. Political dissent was not permitted, with torture a common sentence.

http://wiki.ironchariots.org/index.php?title=20th_century_atrocities

[justusranvier]

None of the totalitarian characters trotted out in the "atheists have killed more people" fallacy, whether they were atheist or not, killed in the name of a lack of belief in a god.

None of those characters are atheists, because the belief in government is a theistic belief. Believing in government is believing in a god, so by definition it's not possible to be an atheist who believes in government.

[Adrian-x]

... the more likely scenario is above average inflation over the next couple decades as money supply growth makes that dollar denominated debt worth less and less until it can pay it.  Make sure your financial choices reflect that scenario.

So I agree this is the most likely scenario, one of the effects of this scenario is the polarisation of wealth, the first spenders of the new money attract the wealth through the Cantillon Effect, at the expense of the productive people who produce the wealth in the economy.

So the scenario is very stressful for people just getting buy, the ones who can't afford property today but good for the people in power.

What type of things should Joe average invest in, obviously taking on debt is relative to how close you are to the new money. look at an average university grad working in Starbucks taking on debt, they are one of the last earners of the inflation causing new money and it is going to be much harder to pay off that dept as they earn less relative to the inflation, in contrast a graduate from Yale working in law, an accounting firm, government or a large corporation, is well positioned to take advantage of inflation by acquiring assets.

PM's aside what are mechanisms for preserving or saving wealth in this scenario? (Bitcoin is the only one I have found but there must be more, any ideas?)

[SonofBits]

100s of millions slaughtered in the last century by the atheist-Marxist ideologues Pol Pot, Stalin, Mayo

Wow, you must be unsufferable at parties.

We're getting off topic here... but I'll dance for a moment.

I must be? Why categorize in terns of comfort as if suffering is a vice? I don't particularly seek to conform myself to other's mandates nor to over-confident oracles (but will take a lucky hash guess in a millisecond). Only those who's narrow world view precludes them seeing the value of suffering as a virtuous means to gain a-greater-good for themselves and their fellows (even as they reflexively suffer the boorish hum-drum venality of each other's ill humor to no profit) would find me unsufferable. I'd just depart a party if everyone appeared too comfortable - that's not my idea of a party - that's a assembly of social drones that's dressed in the same straight-jack uniform of conformity. Party's should be fun.

None of the totalitarian characters trotted out in the "atheists have killed more people" fallacy, whether they were atheist or not, killed in the name of a lack of belief in a god. Some of them suppressed religion as a tool to further the goal of totalitarian control.

<b>"State-imposed atheism" is a misnomer; there can be no such thing. Imposed irreligion is not atheism. Atheism is only the lack of belief in a god; one can't force people to not believe in a god.</b>

The actions of Mao, Pol and Joe (who attended seminary) were totalitarian opportunists. They sought total authority and banned religion which would compete with that authority. The pursuit of control over a people was the cause for the bloodshed.

Although Stalin initially sought to rid Russia of religion, once firmly in office he re-instîtuted the Russian Orthodox Church and re-opened theological schools. Suppression of religion was a tool not a reason.

Pol Pot is said to have practiced some Theravada Buddhism (and his Khmer Rouge were radical Buddhists). He studied at a Catholic school in Phnom Pen for 8 years. This mad man targeted not only religion but science, medicine and education. Political dissent was not permitted, with torture a common sentence.

http://wiki.ironchariots.org/index.php?title=20th_century_atrocities

But this is just "the other" fallacy or more precisely the atheistic apologist strawman. The State imposing a philosophy of skepticism is not any different to some religions - except most of the latter are voluntary subscriptions and the prior inflict a sacrifice of life or time for not going with the intellectual-light (so to speak). Our very identity is based on what we believe not on what we don't believe. Making oneself the object of one's own contemplation that there can be no greater is to enter into the realm of vanity, cast off the benefit of the doubt and embrace the pallium of infallibility to make oneself God. I always wondered how atheists who find themselves in court feel about submitting their future oblivion to a trial of one's own infallible peers when their only hope for an acquittal rests in the notion of a reasonable doubt they don't extend to the possibility of God?  

The original common motive in these monstrous men's regimes (but terrible by what moral standard if there is none?) was really academic altruism more so than it was an organic desire for totalitarianism or fascism.  These desired THEIR particular vision for UTOPIA - at any price of blood and cleansing of wrong thoughts/beliefs necessary to gain it. I don't believe that any of these men started off with any maniacal desire to make themselves a supreme ruler or despotic monarch. Men want to be esteemed and loved and revered. That is an aspect of common human nature - from wherever it springs from. What good is esteem if there's no one left alive to hold that esteem or to impress - not even God? As GK Chesterton said "if there were no God there would be no atheists" - and I doubt that any believer or unbeliever would disagree with that.

You are being somewhat sly here by trying to blame the atrocities of Pol Pot, Mao and Stalin on the taints of some religious influence in their lives. Shame on you. I suppose you are intimating that these infamous men were not quite pure enough atheists in their orthodoxy of supreme skepticism (a philosophy of negativism that is not unlike religion in a strange counter-faith aspect). The truth is they were men who caved into malefic actions (evil) and let it consume them -- and everyone around them. If there were no concept of evil there would be no outrage or concern over anything - not even a motive to hate God or religion or even for believers to scorn the warp-speed reach of the FlyingHawkinSpaghettiWheelchair  (Stephen Hawking, that warp-speed traveling tower-of-genus who boldly-goes-to-where-no-man-cared-to-go-before to insist that the laws-of-nature existed without a law giver before time and space even existed).  

Opportunity can be good or bad - the devil of course is in the details, the motives and the ability of takers to wield power to productive and good ends. But if it's all for naught beyond the here-and-now then as the scarecrow of Oz said "Of course, some people do go both ways" and as someone else most recently said "what difference does it really make at this point?". Choices mean nothing in that case and there's not even a principal of causality that would make "yes" and "no" or "right" and "wrong" mean the same thing from one day to the next.


Thanks for suffering the read. Hopefully fun...

<<--- back to topic

[Hawker]

Hi guys

Is USA debt repayable? Or are governments just hiding the truth - that infact western governments can never repay their debts, and that eventually sovereign bonds will collapse.

Does anyone actually have an answer to this? Is USA government heading down a road of responsible payback of its debt, or a road of full-on Keynesianism that will eventually lead to financial catastrophe.

I know that it would be in government's interest to hide the fact that debt was , at current economic growth rates , unrepayable. But I just want to know the truth. Lets assume USA economy continues to grow at current rate and deficit continues to grow/shrink at current rate. Where are we in 10 years? Is the debt repaid, halved or has it grown more?

Side question - If the debt is repayable, panic over. If it's not, how long will it take for markets to reflect this. Also - If anyone has some numbers, all the better.

Cheers

 

Of course its repayable.  Look at the US bond rates - if there were a risk of default, the rate would rise.  Right now, the US bond rate is less than inflation - in other words the rich are paying the US government to accept the money!

[bbulker]

If I had infinite credit I wouldn't pay it back either.

[townf]

Funny as well, it looks like the student debt loan is going to reach 1 trillion (it's at 980 bill right now). But there isn't enough room for the 1 trillion decimal place, so I wonder it'll just roll back to '0' like an analog odometer.

It probably did this already lol

[shawshankinmate37927]

How could they pay it back? They are printing 85 million billion a month just to keep things afloat. Student loans are now the 2nd largest debt (1st is mortgages). The house of cards that is will soon, maybe a year, maybe 2, come tumbling down. First though, you will see major events unfold in the USA, this will be their way of shifting the blame.

Impossible to pay it all back unless they just wipe away A LOT OF DEBT---POOF.......

FTFY

[1bettor.com]

How could they pay it back? They are printing 85 million billion a month just to keep things afloat. Student loans are now the 2nd largest debt (1st is mortgages). The house of cards that is will soon, maybe a year, maybe 2, come tumbling down. First though, you will see major events unfold in the USA, this will be their way of shifting the blame.

Impossible to pay it all back unless they just wipe away A LOT OF DEBT---POOF.......

FTFY

ty!!!!

[Hawker]

How could they pay it back? They are printing 85 million billion a month just to keep things afloat. Student loans are now the 2nd largest debt (1st is mortgages). The house of cards that is will soon, maybe a year, maybe 2, come tumbling down. First though, you will see major events unfold in the USA, this will be their way of shifting the blame.

Impossible to pay it all back unless they just wipe away A LOT OF DEBT---POOF.......

FTFY

Do remember that government debt is generally the savings of the public.  To "wipe away" government debt is to confiscate people's savings.  That's politically impossible in most democracies.

The US debt is being evaluated by fund managers who look after people's savings.  They are so sure it will be paid back that they lend to the government at a rate below inflation.  So US debt is comfortably repayable.

[Schrankwand]

Money is debt.

It is not possible under the current system.

It is actually doable.

You decrease lending and borrowing (force austerity everywhere), increase inflation by a landslide (see where we are at?).

Then, once your money is readily inflating and value is dropping, you invent forced labour  laws with minimum wages (See what I did there?) and increase taxes a little.

What is happening here? Basically, we are creating a war on the value of the currency. We blow the currency as hard as we can, reduce its value enormously and KEEP INFLATION HIGHER THAN THE INTEREST RATE ON DEBT. (See now, what they are doing?!=

This, in turn, will solve the debt crisis. Now, it will also fuck the economy big time, it will hurt the people and make their life miserable for many years to come until the whole scheme went through and it will heavily relocate money into other countries, with offshore accounts. Oh wait, that stuff is still taxed as hell, and since the Franken and other currencies are getting STRONGER against our currencies, the governments win again, by fucking their own currency through the use of offshore tax havens.

Which have to be regulated, of course. (See what is happening now with the offshore people?)

I created a well thought out plan some years ago when I was still in a university, when the debt crisis first hit. Up till today, governments around the world have followed this plan by the latter. I am seriously surprised no one in a shadow society has called me up yet :D:D

[melvster]

Money is debt.

It is not possible under the current system.

Coins are not debt

Debt is repayable so long as the interest gets spent back

[caveden]

Countries which are in control of their own printing press never face a default risk. 
[..] repay bondholders in increasingly worthless pieces of paper.

For all practical matters that is a partial default. Actually, it's economically worse than a default.

Watch this for about 2 minutes and you tell me.

http://www.usdebtclock.org/

Awesome site.

[Hawker]

Countries which are in control of their own printing press never face a default risk.  
[..] repay bondholders in increasingly worthless pieces of paper.

For all practical matters that is a partial default. Actually, it's economically worse than a default.

...snip...

If I offer you the chance to lend me money for inflation less 1% interest, and you take that offer, that's you and me freely entering an agreement.

So it is with the major Western governments.  They offer bonds at less than the inflation rate; the rich buy those bonds.  To say that this is "a partial default" or "economically worse than a default" is to inject yourself in other people's business.

Right now, the rich are queuing up to lend more money at rates lower than inflation.  Doesn't that tell you that government debt is not a problem?  The real issue is lack of decent places to invest your money.

[caveden]

To say that this is "a partial default" or "economically worse than a default" is to inject yourself in other people's business.

Inflation is worse than default, that's not just a matter of opinion.

Inflation draws purchasing power from money owners, which is the equivalent of taxing them to pay government debt, with the difference that inflation is the worst tax possible, as it affects proportionally more strongly the poorer and the more ignorant, and worse still, as it's practiced today, it causes economic cycles that destroy capital.

If I offer you the chance to lend me money for inflation less 1% interest, and you take that offer, that's you and me freely entering an agreement.

So it is with the major Western governments.

No. Government debt is not a voluntary contract as you claim, because those who are left with the burden to pay did not consent with it. The equivalent analogy is I lend you money and then you force others to repay the debt for you.

Forcing innocent taxvictims to pay government debt is not only unethical, but economically unwise too, as with every non-voluntary trade/agreement. As government itself cannot repay its debt out of its own resources since it does not produce anything, there's no better solution than a default, in spite of all the chaos it would cause in the short term.

[Hawker]

To say that this is "a partial default" or "economically worse than a default" is to inject yourself in other people's business.

Inflation is worse than default, that's not just a matter of opinion.

Inflation draws purchasing power from money owners, which is the equivalent of taxing them to pay government debt, with the difference that inflation is the worst tax possible, as it affects proportionally more strongly the poorer and the more ignorant, and worse still, as it's practiced today, it causes economic cycles that destroy capital.

If I offer you the chance to lend me money for inflation less 1% interest, and you take that offer, that's you and me freely entering an agreement.

So it is with the major Western governments.

No. Government debt is not a voluntary contract as you claim, because those who are left with the burden to pay did not consent with it. The equivalent analogy is I lend you money and then you force others to repay the debt for you.

Forcing innocent taxvictims to pay government debt is not only unethical, but economically unwise too, as with every non-voluntary trade/agreement. As government itself cannot repay its debt out of its own resources since it does not produce anything, there's no better solution than a default, in spite of all the chaos it would cause in the short term.

You've confused yourself.  The question is not whether its moral for the government to borrow on behalf of "innocent tax victims" but whether the government can repay its debts in full.  And the fact is that government is offering its debt at ridiculously low returns and the rich are lining up to lend to it. 

So the answer to the question is that USA debt is repayable. 

On the morality of debt question, feel free to vent your grievance at https://bitcointalk.org/index.php?board=34.0 where you will find many kindred spirits.

[Hawker]

http://www.ft.com/cms/s/0/440b78b6-bcb8-11e2-9519-00144feab7de.html#axzz2THSnFrpA

Deficit falling like a stone.  Talk of debt repayments in 2015.  This is a country that has no debt repayment problems.

[redemptor]

Trying to lower the outstanding debt by increasing taxes,would be deflationary,those dollars would be removed from circulation.
 
Printing money is inflationary.

Possibly/probably the two could be combined in such a way that they could "zero-out" each of their negative effects,while effectively lowering the total debt.

Past beltway behavior indicates it would be hard to attempt, let alone accomplish in the U.S.

 

[No 1]

not repayable. end of discussion

[Kazu]

Of course its repayable, they just borrow some more from themselves and spend it and force people to deposit it back to themselves so they can borrow it again. They can't repay ALL of it at the same time (well, even then they could, by printing more) but they can repay the part that they must.

Also what is this nonsense of debt being wiped. If it was, there would first be massive deflation as everybody realized they don't have the money that they thought they had, then they'd all try to withdraw at the same time on the offchance they might lose more, then there'd be massive INFLATION as everybody realized that they are being paid in paper that just got printed causing a huge increase in money supply, and yea that'd be bad.

[caveden]

And the fact is that government is offering its debt at ridiculously low returns and the rich are lining up to lend to it. 

I wouldn't be so sure about "riches lining up to lend it".

According to business insider, US households + private pension funds together barely sum up 10% of the total amount. And even if you add mutual funds and commercial banks, that's still less than what the social security alone lends to US federal gov. That article is of 2011 btw. I wonder if the Fed share hasn't increased since then.
Also, remember that many of these funds are contractually obliged to invest their clients money in "officially safe" investments. Lots of people put money in these funds without even knowing where it's going.

[Hawker]

And the fact is that government is offering its debt at ridiculously low returns and the rich are lining up to lend to it. 

I wouldn't be so sure about "riches lining up to lend it".

According to business insider, US households + private pension funds together barely sum up 10% of the total amount. And even if you add mutual funds and commercial banks, that's still less than what the social security alone lends to US federal gov. That article is of 2011 btw. I wonder if the Fed share hasn't increased since then.
Also, remember that many of these funds are contractually obliged to invest their clients money in "officially safe" investments. Lots of people put money in these funds without even knowing where it's going.

You don't need to be guessing or theorycrafting.  The bond market is public and the rates are available here: http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

Notice the 10 year ones are all below the inflation rate.  And they are the big sellers.  They buyers are happy to lend that money at a loss and they are happy to assume that inflation is not going to be a problem in the next 10 years.

How much clearer can this be?  The USA has no problems at all repaying its debt. 

[caveden]

Who are most of these buyers?
The Social Security? The Fed? Foreign governments/central banks?

None of these use their own money to buy these bonds.

[Hawker]

Who are most of these buyers?
The Social Security? The Fed? Foreign governments/central banks?

None of these use their own money to buy these bonds.

The question asked was whether USA debt was repayable.  Changing the subject to "are these really people we want to lend money to?" is fine provided we agree that the question itself is settled and there is no reason to worry about US debt repayment.

Are we in agreement on that?

[caveden]

If you note my quote above, I was answering to your comment of "riches lining up to lend it".

[Kluge]

Countries which are in control of their own printing press never face a default risk. 
Why would the US default?  Nothing in the bonds guarantees the PURCHASING POWER just the nominal amount.

US owes $15T which is a lot today?  Well ramp up 5% inflation a year for 30 years and that $15T nominal is more like $4T in todays dollars.  See $4T on a $20T economy is nothing. 

That doesn't mean buying t-bonds is a good idea as while you may get every penny the price of everything will have quadrupled by the time your 30yr bond was repaid (putting you behind in real terms).

I mean why default, when you can "honor" the letter of the contract, break the spriting of it and repay bondholders in increasingly worthless pieces of paper.

It happened, it's happening, it will happen. -But maybe it's not enough. Can the Fed prevent hyperinflation without compromising the US credit rating until the USG's paying an unsustainable amount in interest?

USG Debt:GDP in WW2 was ~110%. At peak of crisis in Greece, their government had a debt:GDP ratio of ~1.25 - 125%. In 2010, USG was @ ~95%.  Currently, USG debt:GDP is ~1.07, or ~107%. So, right now, the USG's economic situation is about what it was at during WW2.... except there's nothing even remotely like WWII occurring, and debt:GDP is getting increasingly worse. When the interest rates start to climb due to downgrades, is there anywhere to go less hyperinflation?

[Hawker]

Countries which are in control of their own printing press never face a default risk. 
Why would the US default?  Nothing in the bonds guarantees the PURCHASING POWER just the nominal amount.

US owes $15T which is a lot today?  Well ramp up 5% inflation a year for 30 years and that $15T nominal is more like $4T in todays dollars.  See $4T on a $20T economy is nothing. 

That doesn't mean buying t-bonds is a good idea as while you may get every penny the price of everything will have quadrupled by the time your 30yr bond was repaid (putting you behind in real terms).

I mean why default, when you can "honor" the letter of the contract, break the spriting of it and repay bondholders in increasingly worthless pieces of paper.

It happened, it's happening, it will happen. -But maybe it's not enough. Can the Fed prevent hyperinflation without compromising the US credit rating until the USG's paying an unsustainable amount in interest?

USG Debt:GDP in WW2 was ~110%. At peak of crisis in Greece, their government had a debt:GDP ratio of ~1.25 - 125%. In 2010, USG was @ ~95%.  Currently, USG debt:GDP is ~1.07, or ~107%. So, right now, the USG's economic situation is about what it was at during WW2.... except there's nothing even remotely like WWII occurring, and debt:GDP is getting increasingly worse. When the interest rates start to climb due to downgrades, is there anywhere to go less hyperinflation?

Sigh.

OK I dealt with all that earlier in the thread.

The interesting question is this - why do so many people want to believe that the US is facing a debt crisis?  Is good news really so hard to take?

[Kluge]

Countries which are in control of their own printing press never face a default risk. 
Why would the US default?  Nothing in the bonds guarantees the PURCHASING POWER just the nominal amount.

US owes $15T which is a lot today?  Well ramp up 5% inflation a year for 30 years and that $15T nominal is more like $4T in todays dollars.  See $4T on a $20T economy is nothing. 

That doesn't mean buying t-bonds is a good idea as while you may get every penny the price of everything will have quadrupled by the time your 30yr bond was repaid (putting you behind in real terms).

I mean why default, when you can "honor" the letter of the contract, break the spriting of it and repay bondholders in increasingly worthless pieces of paper.

It happened, it's happening, it will happen. -But maybe it's not enough. Can the Fed prevent hyperinflation without compromising the US credit rating until the USG's paying an unsustainable amount in interest?

USG Debt:GDP in WW2 was ~110%. At peak of crisis in Greece, their government had a debt:GDP ratio of ~1.25 - 125%. In 2010, USG was @ ~95%.  Currently, USG debt:GDP is ~1.07, or ~107%. So, right now, the USG's economic situation is about what it was at during WW2.... except there's nothing even remotely like WWII occurring, and debt:GDP is getting increasingly worse. When the interest rates start to climb due to downgrades, is there anywhere to go less hyperinflation?

Sigh.

OK I dealt with all that earlier in the thread.

The interesting question is this - why do so many people want to believe that the US is facing a debt crisis?  Is good news really so hard to take?

Actually, before I went back and edited, I was just going to post "It happened, it's happening, it will happen." with some charts showing the USG isn't in a particularly bad spot. -And then I looked at the data and didn't want to look like a fool. (seriously - true story)

[Hawker]

Countries which are in control of their own printing press never face a default risk. 
Why would the US default?  Nothing in the bonds guarantees the PURCHASING POWER just the nominal amount.

US owes $15T which is a lot today?  Well ramp up 5% inflation a year for 30 years and that $15T nominal is more like $4T in todays dollars.  See $4T on a $20T economy is nothing. 

That doesn't mean buying t-bonds is a good idea as while you may get every penny the price of everything will have quadrupled by the time your 30yr bond was repaid (putting you behind in real terms).

I mean why default, when you can "honor" the letter of the contract, break the spriting of it and repay bondholders in increasingly worthless pieces of paper.

It happened, it's happening, it will happen. -But maybe it's not enough. Can the Fed prevent hyperinflation without compromising the US credit rating until the USG's paying an unsustainable amount in interest?

USG Debt:GDP in WW2 was ~110%. At peak of crisis in Greece, their government had a debt:GDP ratio of ~1.25 - 125%. In 2010, USG was @ ~95%.  Currently, USG debt:GDP is ~1.07, or ~107%. So, right now, the USG's economic situation is about what it was at during WW2.... except there's nothing even remotely like WWII occurring, and debt:GDP is getting increasingly worse. When the interest rates start to climb due to downgrades, is there anywhere to go less hyperinflation?

Sigh.

OK I dealt with all that earlier in the thread.

The interesting question is this - why do so many people want to believe that the US is facing a debt crisis?  Is good news really so hard to take?

Actually, before I went back and edited, I was just going to post "It happened, it's happening, it will happen." with some charts showing the USG isn't in a particularly bad spot. -And then I looked at the data and didn't want to look like a fool. (seriously - true story)

I know - I've always liked your posts.

US debt is a market.  Bonds are auctioned off and the interest rate reflects the risk that they debt won't be paid back in full.  Right now, the debt is selling so cheaply that inflation will eat into the principal.  People are paying the US government to accept loans.

Even if you assume that these people are all idiots, US debt is better than almost all other countries debt.  Long before the US defaults, you would see China, France, India and the like going bust. 

[Schrankwand]

US debt is a market.  Bonds are auctioned off and the interest rate reflects the risk that they debt won't be paid back in full.  Right now, the debt is selling so cheaply that inflation will eat into the principal.  People are paying the US government to accept loans.

Actually, THAT is exactly how a government reduces its debt


It will also eat into every single savings account of other, smaller people. Because that is what inflation is there for if it is directly forced upon us: Reducing the worth of money in an attempt to reduce the amount of money spent and change the worth of debt.

[Operatr]

Money  =  Debt

It is mathematically impossible for the debt to ever be repaid with a fractional reserve system, as the debt is always more than the current money in circulation. An odd fact this was built right into the system.

Essentially when the debt supernovas known as bank derivatives go down in flames after the first quiver of our bullish can-do-no-wrong stock market, the debt of the world effectively goes to infinity. These risky derivatives clock in to the tune of something around $1 Quadrillion...the GDP of the entire world is about $70 Trillion. Literally not enough available money on Earth to bail out the banking system when it happens. Lehman Brothers failure was just a single bank, and look what that did. What happens when it is all banks crumbling all at once. We can't put off the inevitable forever, though Bernake is sure trying his hardest.

[Hawker]

Money  =  Debt

It is mathematically impossible for the debt to ever be repaid with a fractional reserve system, as the debt is always more than the current money in circulation. An odd fact this was built right into the system.

Essentially when the debt supernovas known as bank derivatives go down in flames after the first quiver of our bullish can-do-no-wrong stock market, the debt of the world effectively goes to infinity. These risky derivatives clock in to the tune of something around $1 Quadrillion...the GDP of the entire world is about $70 Trillion. Literally not enough available money on Earth to bail out the banking system when it happens. Lehman Brothers failure was just a single bank, and look what that did. What happens when it is all banks crumbling all at once. We can't put off the inevitable forever, though Bernake is sure trying his hardest.

You are confusing repayment of all debt at the same time, which is of course impossible, with repayments of loans as they fall due, which is what happens.  If you buy a 10 year bond, you get repaid in 10 years.  Its not a default if you ask to be repaid early and the borrower refuses.  If you really want that money, you should sell the bond.

Meanwhile: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/14/cbo-says-deficit-problem-is-solved-for-the-next-10-years/

This is all good news - the world is not coming to an end - be happy

[Operatr]

Money  =  Debt

It is mathematically impossible for the debt to ever be repaid with a fractional reserve system, as the debt is always more than the current money in circulation. An odd fact this was built right into the system.

Essentially when the debt supernovas known as bank derivatives go down in flames after the first quiver of our bullish can-do-no-wrong stock market, the debt of the world effectively goes to infinity. These risky derivatives clock in to the tune of something around $1 Quadrillion...the GDP of the entire world is about $70 Trillion. Literally not enough available money on Earth to bail out the banking system when it happens. Lehman Brothers failure was just a single bank, and look what that did. What happens when it is all banks crumbling all at once. We can't put off the inevitable forever, though Bernake is sure trying his hardest.

You are confusing repayment of all debt at the same time, which is of course impossible, with repayments of loans as they fall due, which is what happens.  If you buy a 10 year bond, you get repaid in 10 years.  Its not a default if you ask to be repaid early and the borrower refuses.  If you really want that money, you should sell the bond.

Meanwhile: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/14/cbo-says-deficit-problem-is-solved-for-the-next-10-years/

This is all good news - the world is not coming to an end - be happy

The bond market is not safe either

http://seekingalpha.com/article/1378751-the-coming-bond-market-collapse-3-ways-to-escape-the-damage

http://finance.yahoo.com/blogs/daily-ticker/most-overpriced-oversupplied-over-owned-market-history-125751538.html

Nothing is safe in our current economic system. Fiat is failing, and anything attached to it will fail with it. The world may not end in a biblical sense, but the world as we know it will be very different I think by the end of this year. The bankers and government didn't change a damn thing after 2008, they just went back to their old tricks fueled by Bernake's magic moneybin and more relaxed policy on Capitol Hill. The economy is right now a set of dominoes, the fall of one market could rapidly become a contagion through the entire financial sector as it is already so weak from the 2008 market crash. It is all on life support by continuous pumping more and more money into the system to keep growth alive, even though PMI numbers tell a very different story. China is just building entire ghost cities to keep their production up.

Lehman Brothers failed in 2 days, it is not unfeasible several could fail as rapidly at the same time in another crash. One bank caused the 2008 recession, several would be unthinkable.

This article poses a rosey picture but leaves out a lot of factors that directly affect the economic health of the US that their policies can't control. Everything we see is a giant debt bubble driven by rapid inflation and increasing debt. It won't end well, and no amount of soon to be worthless bonds will save you from it. I hope it wont be but it seems there is only one way this all stops as a mathematical certainty. If you want the currency of the future, I would hedge my bet on Bitcoin, or bullets.

I don't like being Mr. Doomsayer, but I have studied this a lot in past months, the magic 8 ball hasn't said anything good to me yet..

[Hawker]

...snip... Everything we see is a giant debt bubble driven by rapid inflation and increasing debt. ...snip...

What you have said is 100% true in that everything you see is a"giant debt bubble."  But that only tells us about you.  The real world has things in it that are not giant debt bubbles.

Try to take a step back and imagine yourself being mistaken.  It might help then to consider that the billionaires that are happy lending their money to the USA could be something other than deluded fools.  They might even be smart investors.

Think about it...

[Razick]

It will never be payed back, they'll just print some more of it.

There is no need to repay any debt as, with coming The Great Economic Collapse, the whole world will become single global corporation controlled by the US.

Tinfoil hats! Quick!

[Operatr]

...snip... Everything we see is a giant debt bubble driven by rapid inflation and increasing debt. ...snip...

What you have said is 100% true in that everything you see is a"giant debt bubble."  But that only tells us about you.  The real world has things in it that are not giant debt bubbles.

Try to take a step back and imagine yourself being mistaken.  It might help then to consider that the billionaires that are happy lending their money to the USA could be something other than deluded fools.  They might even be smart investors.

Think about it...

I'm not entirely clear on what you're saying. I really hope my perception is 100% false but a lot of prominent economists would agree with my assessment. A lot of the billionaires (there are some benevolent ones in private industry to be sure) ones are the same banking scumbags that rigged the system in their favor, and got off scott free when they tanked the market a few years ago, causing unprecedented levels of misery for millions. They don't loan money to the US, the US simply prints more.

The world does have things that are not bubbles, but the impact of a massive collapse would affect everything

It will never be payed back, they'll just print some more of it.

There is no need to repay any debt as, with coming The Great Economic Collapse, the whole world will become single global corporation controlled by the US.

Tinfoil hats! Quick!

Considering corporations and banks already control all of money including creating it, it's more likely than you think. The only thing that separates the US government from a corporation anymore is that we still call it a government. Remember the last time you had a direct say on how they are running things? Me either

[ktttn]

None of the totalitarian characters trotted out in the "atheists have killed more people" fallacy, whether they were atheist or not, killed in the name of a lack of belief in a god.

None of those characters are atheists, because the belief in government is a theistic belief. Believing in government is believing in a god, so by definition it's not possible to be an atheist who believes in government.

THIS.
Also, the bigger they are the harder they fall. I abandoned ship on federal reserve notes years ago. They seem like slimy little unmoney debtmachines that you can only ever owe somebody in exchange for something you can either get for free or dont really need. Affluence creates a vaccumm around the affluent, preventing tech advances from benefeiting all living people. I would like to indulge my naiivety by imagining that the obsolescence of fiat will result of the obsolescence of its debts too.

[Operatr]

None of the totalitarian characters trotted out in the "atheists have killed more people" fallacy, whether they were atheist or not, killed in the name of a lack of belief in a god.

None of those characters are atheists, because the belief in government is a theistic belief. Believing in government is believing in a god, so by definition it's not possible to be an atheist who believes in government.

THIS.
Also, the bigger they are the harder they fall. I abandoned ship on federal reserve notes years ago. They seem like slimy little unmoney debtmachines that you can only ever owe somebody in exchange for something you can either get for free or dont really need. Affluence creates a vaccumm around the affluent, preventing tech advances from benefeiting all living people. I would like to indulge my naiivety by imagining that the obsolescence of fiat will result of the obsolescence of its debts too.

As money is quite literally created by generating more debt, the failure of fiat will take the debt with it.

I can see a scenario as the institutions continue to fail and public mistrust continues to increase, and crypto-currencies soak up that damage by overwriting the bad sectors and the fiat debt as the damage occurs while people put what wealth they have left into crypto leaving their old debt behind to rot. We already got a taste of this scenario with the Cyprus bailout (or as I call it, grand theft) as account holders shifted into Bitcoin where their bank couldn't get to their money. Argentinians are not far behind to get out of the Peso before inflation makes them completely worthless. Who knows what happens next really, but it should be quite a spectacle.

Profitism kills innovation. If an innovation is not profitable, no one will advance it further or implement it. We've already solved a lot of our problems with technology, but is stiffed by lack of profit incentive.  Big corporations don't want us to implement technology that they don't profit from in some way. If not for Big Energy lobbying government to squeeze green-energy for example, our houses would not be on any common electrical grid. Our cars would not run on gas. Our power would not come from burning coal and other environmental destructive methods. Permanent geo-thermal solutions could power our whole society 4000x over. But unless someone is making a buck off of you forever, they won't let that happen. The good of humanity hurts their bottom line. Imagine a world where self-sufficiency is the norm, I would like to live in that place.

It is sad our intelligence and engineering prowess has to be back seat to the greedy few.

[Hawker]

...snip...

It is sad our intelligence and engineering prowess has to be back seat to the greedy few.

You are not really hoping for a happy ending are you?  I know you aren't alone - a lot of people really struggle with the idea that everything is OK, the global economy will tick along just fine and its better to go out for a nice meal than to eat grits in the fallout shelter.

[Operatr]

...snip...

It is sad our intelligence and engineering prowess has to be back seat to the greedy few.

You are not really hoping for a happy ending are you?  I know you aren't alone - a lot of people really struggle with the idea that everything is OK, the global economy will tick along just fine and its better to go out for a nice meal than to eat grits in the fallout shelter.

It is not a matter of hope, just realism based on what I know. I've simply accepted the inevitable outcome of the events that have occurred over the last 100 years or so. I think those that don't wake up to the world around them may find themselves blindsided. I know I sound pessimistic, but actually I am hopeful for the future.

The 2008 crash was real and felt by everyone, it surprises me how quickly everyone just forgot because our government said "don't worry we got it!". They just kept doing the same thing they did before after that, and nothing good will come of it as it didn't before. There is plenty of recent economic evidence to support a simple truth that we are not headed for a nice and happy world soon. I refuse to simply watch American Idol and pretend the world is OK like other people knowing such things are going on this very second that caused a global recession last time. Our governments and banks are all liars and thieves, I look after me and mine. I hope I'm wrong, but the consequences are too great if I am right to ignore.

[Hawker]

...snip...

It is sad our intelligence and engineering prowess has to be back seat to the greedy few.

You are not really hoping for a happy ending are you?  I know you aren't alone - a lot of people really struggle with the idea that everything is OK, the global economy will tick along just fine and its better to go out for a nice meal than to eat grits in the fallout shelter.

It is not a matter of hope, just realism based on what I know. I've simply accepted the inevitable outcome of the events that have occurred over the last 100 years or so. I think those that don't wake up to the world around them may find themselves blindsided. I know I sound pessimistic, but actually I am hopeful for the future.

The 2008 crash was real and felt by everyone, it surprises me how quickly everyone just forgot because our government said "don't worry we got it!". They just kept doing the same thing they did before after that, and nothing good will come of it as it didn't before. There is plenty of recent economic evidence to support a simple truth that we are not headed for a nice and happy world soon. I refuse to simply watch American Idol and pretend the world is OK like other people knowing such things are going on this very second that caused a global recession last time. Our governments and banks are all liars and thieves, I look after me and mine. I hope I'm wrong, but the consequences are too great if I am right to ignore.

The 2008 crash was real and it did indeed make life harder for poor people than it was in 2007.  But apart from that, no real harm was done.  The big economies of 2007 are still the same big economies today.  Yes - I can see that GDP growth slowed down in the US.  But that isn't the same as saying the the USA can't repay its debts.  It can - it is doing so comfortably.

http://www.reuters.com/article/2013/05/15/us-investment-bond-scarcity-analysis-idUSBRE94E07P20130515

and

http://www.ft.com/cms/s/0/a1fd88c0-bd52-11e2-890a-00144feab7de.html#axzz2THSnFrpA

Here you have people desperate to lend to the USA making PR pitches to the financial press imploring the government to borrow their money. Hardly the behaviour of creditors that fear being stiffed is it?

[ibminer]

It is not a matter of hope, just realism based on what I know. I've simply accepted the inevitable outcome of the events that have occurred over the last 100 years or so. I think those that don't wake up to the world around them may find themselves blindsided. I know I sound pessimistic, but actually I am hopeful for the future.

The 2008 crash was real and felt by everyone, it surprises me how quickly everyone just forgot because our government said "don't worry we got it!". They just kept doing the same thing they did before after that, and nothing good will come of it as it didn't before. There is plenty of recent economic evidence to support a simple truth that we are not headed for a nice and happy world soon. I refuse to simply watch American Idol and pretend the world is OK like other people knowing such things are going on this very second that caused a global recession last time. Our governments and banks are all liars and thieves, I look after me and mine. I hope I'm wrong, but the consequences are too great if I am right to ignore.

^ This
... Although I do tend to be pessimistic as well. I do not care much about the financials in this situation, as I don't believe there is much hope from this end.

Politicians have lost their way in the US. Greed, corruption, evil - yes they have all existed for a long time, but they are out of control and in an elevated state. Maybe due to increased population, increased communication/understanding of the world (internet), maybe due to just natural progression - if your not caught or stopped (they usually aren't) - you are going to keep getting worse. Think about how many studies have been done on humans and human behavior... not to mention the numerous studies we probably don't know about. They know how people think, how they act, what they respond to... they know what to say, when to say it, how to say it, where to say it, etc. They are our 'physical' Gods. They have people down to a science.

All people are 'different' and have uniquenesses about them, but IMO there are several classifications of humans, potentially tens of thousands or more. You can call it stereotyping or whatever you want, you can call them democrats, republicans, communists, socialists, etc. This is not how I personally would be naming the classifications... but the fact is that there are people who act/think alike and follow the same ideologies that contribute to who we are as humans and a society and can coincide with how we act, what we do, who we talk to, etc. Albeit, these are human taught classifications and not really something we were born with.

They know what each classification responds to, what they want to hear, what they like/don't like, what they forget, what their interests are, what they buy into, etc. For federal-level politicians, the trick is how to say what you need to say or do what you need to do to a particular group or figure out a way to say something that appeals to multiple classifications, and do it without the other group(s) knowing/hearing about it (assume we would call this being politically correct? - no clue why political correctness even exists)... and this is not very easily done anymore with the creation of the internet and technology in general (mobile phones, video cameras, etc) that catch everything anyone is saying about anything...but its not entirely impossible. Assuming they were not able to bribe there way out of the situation, the strategy right now when you get caught in a situation like this seems to be to apologize, disappear for a while, then come back. (because they know we typically 'forget', based on the aforementioned studies) I assume they will ultimately achieve some type of internet regulations or government oversight to control what information goes 'viral' and what information may be deemed a threat to national security.

For me, if you believe they have knowledge about people and have ways of accessing it... it is scary to think what government developers/hackers could do with a dataset of information like this. Does a database like this exist would be the question (or is it being created)... and where would you put that much information? Who knows... maybe in the new 'spy center' complex that has been established by the NSA to house data/information/servers that will be linked to all of the intelligence 'listening posts' around the world. With four 25,000 sq. feet halls with wall-to-wall rows/racks of servers, you don't really think they are only listening and data mining stuff that is related to terrorism or national security, do you?  

So, is the USA debt repayable?   It doesn't matter... we are all doomed  


I feel like I have slipped passed the line of a rational individual to a conspiracy theorist. I am going to go crawl into a cave now...    

[Hawker]

It is not a matter of hope, just realism based on what I know. I've simply accepted the inevitable outcome of the events that have occurred over the last 100 years or so. I think those that don't wake up to the world around them may find themselves blindsided. I know I sound pessimistic, but actually I am hopeful for the future.

The 2008 crash was real and felt by everyone, it surprises me how quickly everyone just forgot because our government said "don't worry we got it!". They just kept doing the same thing they did before after that, and nothing good will come of it as it didn't before. There is plenty of recent economic evidence to support a simple truth that we are not headed for a nice and happy world soon. I refuse to simply watch American Idol and pretend the world is OK like other people knowing such things are going on this very second that caused a global recession last time. Our governments and banks are all liars and thieves, I look after me and mine. I hope I'm wrong, but the consequences are too great if I am right to ignore.

^ This
... Although I do tend to be pessimistic as well. I do not care much about the financials in this situation, as I don't believe there is much hope from this end.

...snip...

Another person who when faced with facts that say all is well says "I don't care about facts - there must be a crisis."

Why do so many people find it hard to accept that things are fine?

[myrkul]

Why do so many people find it hard to accept that things are fine?

How much are you paid per post, Hawker?

[Hawker]

Why do so many people find it hard to accept that things are fine?

How much are you paid per post, Hawker?

Not as much as you Mr. 10k posts

[myrkul]

Why do so many people find it hard to accept that things are fine?

How much are you paid per post, Hawker?

Not as much as you Mr. 10k posts

This is a labor of love. I don't get paid.

[deadweasel]

Why do so many people find it hard to accept that things are fine?

How much are you paid per post, Hawker?

Not as much as you Mr. 10k posts

This is a labor of love. I don't get paid.

There is no good or bad, but thinking makes it so.

[sangaman]

There's tons of false information and incorrect claims in this thread.

All US federal "debt" can be trivially repaid, even the entirety of it right now. The United States has an infinite supply of US dollars. Treasury bonds, which are considered "debt," are tools for controlling interest rates and are not at all necessary for funding government spending, even deficit spending. Physically printing money is not even necessary for spending, as merely increasing the balance of the checking account of a government worker or contractor is usually sufficient. I don't know about you guys, but I don't touch 98% of the USD that I spend.

The federal government can never be like Greece because it can never run out of the currency it uses to spend. State governments, on the other hand, do have the capacity to run out of USD and default.

It's illogical for any entity to ever be in shortage of something which it has unlimited access to.

The fact is, the government could stop issuing treasury bonds altogether. The federal debt would plummet and maybe people will realize that it's not all about the debt.

It's not exactly a fair system and it's an easy one for a government to exploit or abuse and wind up demolishing its currency. That's why there's bitcoin.

[myrkul]

All US federal "debt" can be trivially repaid, even the entirety of it right now. The United States has an infinite supply of US dollars.

Theoretically. They could, did they want to go the way of Zimbabwe, Wiemar Germany, and so many others, just lean on that "0" key until the "debt" is gone.

There's lots of reasons why they don't do that, though.

[Nite69]

https://en.wikipedia.org/wiki/Trillion_dollar_coin

[farfiman]

Why do so many people find it hard to accept that things are fine?

The one and only reason "things are fine" is because the US dollar is still ( for now) the world reserve currency.
But that fact is changing slowly but surely. How long can the US pull this off? Could be a year, 5 , maybe even 10.
But after that the US is doomed to sink out of their world power status.

[Hawker]

Why do so many people find it hard to accept that things are fine?

The one and only reason "things are fine" is because the US dollar is still ( for now) the world reserve currency.
But that fact is changing slowly but surely. How long can the US pull this off? Could be a year, 5 , maybe even 10.
But after that the US is doomed to sink out of their world power status.

The dollar will be a world reserve currency until something better, that is acceptable to central bankers, comes along.  Same for sterling and the yen and perhaps the euro.  And there really isn't any fiat currency around with better fundamentals than the dollar.

[Schrankwand]

Why do so many people find it hard to accept that things are fine?

The one and only reason "things are fine" is because the US dollar is still ( for now) the world reserve currency.
But that fact is changing slowly but surely. How long can the US pull this off? Could be a year, 5 , maybe even 10.
But after that the US is doomed to sink out of their world power status.

The dollar will be a world reserve currency until something better, that is acceptable to central bankers, comes along.  Same for sterling and the yen and perhaps the euro.  And there really isn't any fiat currency around with better fundamentals than the dollar.

Reminds me how someone wanted to change the valuation of oil from Dollar to Euro and got executed by his own people after an invasion

[myrkul]

Why do so many people find it hard to accept that things are fine?

The one and only reason "things are fine" is because the US dollar is still ( for now) the world reserve currency.
But that fact is changing slowly but surely. How long can the US pull this off? Could be a year, 5 , maybe even 10.
But after that the US is doomed to sink out of their world power status.

The dollar will be a world reserve currency until something better, that is acceptable to central bankers, comes along.  Same for sterling and the yen and perhaps the euro.  And there really isn't any fiat currency around with better fundamentals than the dollar.

Reminds me how someone wanted to change the valuation of oil from Dollar to Euro and got executed by his own people after an invasion

Yup. "Fundamentals" of the dollar: The most powerful military in the world (and the will to use it).

[WhatsUpFreak]

I thought this would be interesting and maybe could place the USA national debt into perspective.

USA National Debt / USA population

$17 trillion / 314 million = $54140.12

Meaning each American would have to pay $54140.12 to pay off the national debt. Obviously, impossible.

Inflation or default are the only ways to repay it.

[sangaman]

All US federal "debt" can be trivially repaid, even the entirety of it right now. The United States has an infinite supply of US dollars.

Theoretically. They could, did they want to go the way of Zimbabwe, Wiemar Germany, and so many others, just lean on that "0" key until the "debt" is gone.

There's lots of reasons why they don't do that, though.

Outstanding treasury bonds have already had their inflationary effect, converting them to dollars would mostly just affect interest rates. We'd see greater inflation with excessive deficit spending.

[AMuppInTime]

This ties into political ideology also. "Wealth" requires at least the illusion of privilege. The good news is that your average American Middle Class person today lives better than any king of a few generations ago ever did.

Think about it. Here's just s short list of things that the secular new Princes of The Empire that The Fed built get to enjoy today at all ranges of the social and class(less) strata. Most every  Proletariat (via free vote-Democrat EBT virtual money) and the rising two-car divorced with children Bourgeoisie wanna-be have:

Air-conditioned/heated "castles", court-jesters (the talking heads on CNN, ABC, CBS et-al of the MSM politburo) and entertainment on-demand (HDTV with hundreds of channels of pump-up-your-hormone with feel-good pleasure/excitement [testosterone/endomorphins aka "endogenous morphine"/adrenaline]),  legions of available contracepting-females for easy buddy-sex-partners (bitcoin-wenches ),  mobility options (horseless carriages ranging from eco-fraud-electric to high-performance-gas-guzzlers), passenger-jets and cruise ships [with options for cattle-class to pretend-to class], weekend gladiator games in the football and sports stadiums, travel-adventures to exotic-places (that all have the same ubiquitous same Western Empire style franchises and strip-malls [once you have cleared the TSA Obergruppenführers]), pick-your-own-religion de-jur from the smorgasbord of Franchise Religious offings that are "close enough for government work (and We Trust in God too)" , communication (Snail-mail, Internet, Phone, smartphone, ever new hand gestures and emoticons [secure or not]) etc. etc. etc.

So this means that those who set up the structure "that is", whoever they really are , NEED BILLIONS of schmucks willing to trade their mortal lives to sharecrop on the plantations and give back a vig to the enabling and designated "rulers" who claim rights to the the arbitrary geo-political boundaries that said schmucks reside in (whether its the USA, Russia, China or virtual-land). They NEED servants and they need to have a down-line to sell to in order to have a master-slave relationship. There's an inherent co-dependency and if you're smart enough and good enough they invite you higher up into the food chain to your own indifference level depending on how much control and leverage over you that you give them and how much you are willing to sell one's soul (that fewer these days even believe exists so are indifferent to - spurning the notion of Pascal's Wager that there's might be a DEBT owed to the Creator come post-death-cashout).

NO THE DEBT CAN'T BE PAID. They will continue to inflate it away and let the natural mortality retire the old debt as people age and die off and keep progressing it on the youth. THE BIG PROBLEM is that the demographics are busted. The West at large is aborting its youth and being outbirthed by its ideological enemies all at the same time it is mortgaging ever more of the future on the backs of the youth yet unborn (and why the sudden rush by the ideological leaders to embrace non-traditional religions such as Islam to cover their bets and to import massive numbers of foreign "out of status" immigrants to replace or dillute the existing governed subjects here in America).

From a pure risk-reward analysis - the youth ALWAYS rebel once they figure out they are the stuckee's and all they have to look forward to is inheriting a lot of "wealth" that is under the perpetual assault of inflation from the prior generations to spend in a context that was ordained to bear the brunt of it all. And this too is another reason why "they" want to keep the population of the youth diminished to keep it below the critical mass of ideological flash point. At any rate, there are other uncontrollable external risks as well - natural "acts of god", disease (the cost of promiscuity in using one's own sex hormones to keep everyone on the reservation and sharecropping), generalized APATHY (no more response to Gov's glass-trinkets), and of course just insane rulers who start unsanctioned herd-thinning wars for ideological reasons (e.g. ref. the 100s of millions slaughtered in the last century by the atheist-Marxist ideologues Pol Pot, Stalin, Mayo).

There's two kinds of treasure folks - that treasure with fluctuating value (that always trends DOWN to increase entropy) that is tradeable and fungible for tangible things here and now in time-and-space;  and that other treasure who many are betting-on-the-come on the other side of Pascal's Wager beyond time-and-space who see the opportunity for a wide open pot with absolutely zero downside (status quo) if they're wrong.

The other mitigating thing here is that every other country is now in the same game. No one can really profit by the world's federal reserve currency getting taken out. In essence the USA is in a position to extort the rest of the world to do pretty much anything it wants "or else". Everyone should want to help the USA. The really bad news is there's NOT ENOUGH AVAILABLE FREE FIAT CURRENCY on the planet to PURCHASE US DEBT nor enough printing bandwidth to even print the currency fast enough to BUY BACK our own bonds to MONETIZE our own debt with the circular debts of promissory notes. It's comical when you think about it. And those in control are as incompetent as you and I or worse...  

Choose your bets and your treasures wisely,

I greatly appreciated this - thank you.

[sangaman]

I thought this would be interesting and maybe could place the USA national debt into perspective.

USA National Debt / USA population

$17 trillion / 314 million = $54140.12

Meaning each American would have to pay $54140.12 to pay off the national debt. Obviously, impossible.

Inflation or default are the only ways to repay it.

The federal govt could just stop issuing treasury bonds, then there would be no "debt" in the sense you're using it. There's something illogical about an entity borrowing something that it has an unlimited supply of. Or it can just keep this debt around since there's clearly a demand for USD and US treasury bonds.

I highly recommend this book, which is very relevant to this discussion, particularly part 1 starting on page 13:

http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf

[WhatsUpFreak]

Or it can just keep this debt around since there's clearly a demand for USD and US treasury bonds.

This is the part I do not understand. If I am another country, why would I ever purchase US bonds? Obviously economists throughout the world involved in the sales/purchasing of bonds know that US bonds are worthless to a point. Why aren't they demanding that the US pay in the form of a commodity? Food, gold silver, fresh water, BTC???

If someone can give me an article to help understand this I would appreciate it. I am new to the subject of economics.

[farfiman]

Or it can just keep this debt around since there's clearly a demand for USD and US treasury bonds.

This is the part I do not understand. If I am another country, why would I ever purchase US bonds? Obviously economists throughout the world involved in the sales/purchasing of bonds know that US bonds are worthless to a point. Why aren't they demanding that the US pay in the form of a commodity? Food, gold silver, fresh water, BTC???

If someone can give me an article to help understand this I would appreciate it. I am new to the subject of economics.

My educated guess would be that they know that  if they don't the whole thing collapses. Something like throwing good money after bad. Maybe there is some expectation they EVENTUALLY something will be worked out.

Or maybe they are all in on it and will have the last laugh went it collapses and the "elites" have all the wealth.

[Hawker]

Or it can just keep this debt around since there's clearly a demand for USD and US treasury bonds.

This is the part I do not understand. If I am another country, why would I ever purchase US bonds? Obviously economists throughout the world involved in the sales/purchasing of bonds know that US bonds are worthless to a point. Why aren't they demanding that the US pay in the form of a commodity? Food, gold silver, fresh water, BTC???

If someone can give me an article to help understand this I would appreciate it. I am new to the subject of economics.

If you are another country, say Taiwan, and you have huge amounts of dollars from your export industries, you can't just stuff them under the mattress, you have to invest them.  And once you go over a billion dollars per month, its hard to find places to invest them.  The big countries are among the few places you can put the money and be sure of getting it back in 10 or 30 years.

As such, countries like the US, UK and Japan are guaranteed that they will have massive amounts of credit available provided they don't do anything stupid.  Thats why they are all able to borrow money for less than their inflation rates.  Investors who want zero risk are paying the countries to take the loans because there really is nowhere else to put the money.

[farfiman]

If you are another country, say Taiwan, and you have huge amounts of dollars from your export industries, you can't just stuff them under the mattress, you have to invest them.  And once you go over a billion dollars per month, its hard to find places to invest them.  The big countries are among the few places you can put the money and be sure hope of getting it back in 10 or 30 years.

As such, countries like the US, UK and Japan are guaranteed that they will have massive amounts of credit available provided they don't do anything stupid.  Thats why they are all able to borrow money for less than their inflation rates.  Investors who want zero risk are paying the countries to take the loans because there really is nowhere else to put the money.

Good explanaton as well although I would change the bolded. I have heard  somewhere that  German bonds have even 0 interest ( or minus) and still they are bought.

[sangaman]

Or it can just keep this debt around since there's clearly a demand for USD and US treasury bonds.

This is the part I do not understand. If I am another country, why would I ever purchase US bonds? Obviously economists throughout the world involved in the sales/purchasing of bonds know that US bonds are worthless to a point. Why aren't they demanding that the US pay in the form of a commodity? Food, gold silver, fresh water, BTC???

If someone can give me an article to help understand this I would appreciate it. I am new to the subject of economics.

I don't really have an article on hand (although the link I posted above is a great read) but there's demand for treasury bonds the same reason there's demand for USD. Treasury bonds are basically as good as cash, they rarely ever lose much (nominal) value, you can easily convert them to cash by selling them, and when they mature you're guaranteed to get face value. It's the safest thing you can do with cash (safer than savings accounts which are subject to bank failures for deposits beyond FDIC limits) and it pays some interest. It's also worth noting that plenty of treasury bonds are held domestically.

Perhaps the real question should be, why do so many people want USD? All treasury bonds are is USD that pays a little bit of interest...

It's interesting that you ask why foreign countries often demand USD treasury bonds instead of commodities or real goods/services. The USA runs a trade deficit with countries like China year after year. China sends us tons of clothes, electronics, appliances, etc... and in exchange we send back a lot of USD which our federal govt has an infinite supply of. If China turns around and buys treasury bonds with their USD, the only "debt" that we owe them is more USD - there's still no obligation to deliver any real goods.

It sounds like a great deal for the USA, we shell out credits for USD (the same way an airline hands out miles for its frequent flyer program) and in return we get real goods and services. However, the Chinese go out of their way to keep the trade deficit going while Americans bitch and moan that the trade deficit is "stealing" our jobs. Where's the logic in that?

[sangaman]

Or it can just keep this debt around since there's clearly a demand for USD and US treasury bonds.

This is the part I do not understand. If I am another country, why would I ever purchase US bonds? Obviously economists throughout the world involved in the sales/purchasing of bonds know that US bonds are worthless to a point. Why aren't they demanding that the US pay in the form of a commodity? Food, gold silver, fresh water, BTC???

If someone can give me an article to help understand this I would appreciate it. I am new to the subject of economics.

If you are another country, say Taiwan, and you have huge amounts of dollars from your export industries, you can't just stuff them under the mattress, you have to invest them.  And once you go over a billion dollars per month, its hard to find places to invest them.  The big countries are among the few places you can put the money and be sure of getting it back in 10 or 30 years.

As such, countries like the US, UK and Japan are guaranteed that they will have massive amounts of credit available provided they don't do anything stupid.  Thats why they are all able to borrow money for less than their inflation rates.  Investors who want zero risk are paying the countries to take the loans because there really is nowhere else to put the money.

Yeah this is pretty accurate, and it doesn't just apply to Taiwan or other countries. It also applies to 65 year olds with lots of savings entering retirement, trust funds or endowments with lots of cash, etc... If you have a lot of USD that you want to spend later, it's safest/easiest and pays some interest to put it in treasury bonds.

Of course, I think holding fiat is pretty crappy in general, whether they're in cash or treasury bonds, and I think bitcoin is the answer to that. I can understand why other countries with shakier currencies would rather hold USD than their local currency - the lesser of two crappy situations - but bitcoin would make more sense as the global reserve currency.

If you are another country, say Taiwan, and you have huge amounts of dollars from your export industries, you can't just stuff them under the mattress, you have to invest them.  And once you go over a billion dollars per month, its hard to find places to invest them.  The big countries are among the few places you can put the money and be sure hope of getting it back in 10 or 30 years.

As such, countries like the US, UK and Japan are guaranteed that they will have massive amounts of credit available provided they don't do anything stupid.  Thats why they are all able to borrow money for less than their inflation rates.  Investors who want zero risk are paying the countries to take the loans because there really is nowhere else to put the money.

Good explanaton as well although I would change the bolded. I have heard  somewhere that  German bonds have even 0 interest ( or minus) and still they are bought.

Are those inflation-adjusted bonds perhaps? I know that inflation-adjusted treasury bonds in the USA often have negative returns, although they're still always nominally positive.

[Hawker]

...snip...

Are those inflation-adjusted bonds perhaps? I know that inflation-adjusted treasury bonds in the USA often have negative returns, although they're still always nominally positive.

No.  If you want the security that lending to Germany, the UK, US or any of the big economies with their own currency, you have to accept that part of the principal will be lost to inflation.

[sangaman]

...snip...

Are those inflation-adjusted bonds perhaps? I know that inflation-adjusted treasury bonds in the USA often have negative returns, although they're still always nominally positive.

No.  If you want the security that lending to Germany, the UK, US or any of the big economies with their own currency, you have to accept that part of the principal will be lost to inflation.

Yes, the real value of investments in t-bonds generally goes down but the nominal value always goes up, at least in the US.

[Ekaros]

I never undestood why there can't be just banks that take a fee to hold your currency. No lending, just store it as bits or cash...

Ofc this kind of bank would be at risk with goverments, but so are bonds...

[Hawker]

I never undestood why there can't be just banks that take a fee to hold your currency. No lending, just store it as bits or cash...

Ofc this kind of bank would be at risk with goverments, but so are bonds...

There are.  Its called a safety deposit box.

[farfiman]

I never undestood why there can't be just banks that take a fee to hold your currency. No lending, just store it as bits or cash...

Ofc this kind of bank would be at risk with goverments, but so are bonds...

There are.  Its called a safety deposit box.

not always safe as you think:

http://www.dailymail.co.uk/news/article-1362561/Bank-gangsters-Police-open-7k-safety-deposit-boxes-discover-50m.html

[crumbcake]

US national debt is something i don't understand no matter how i think about it.
First, while it's debt, i can't see it in the same sense as i see *my* debt.  If i default on my mortgage, my house will be taken away.  Bad thing.  If US defaults on its loans,  What happens?  China isn't going to repossess Texas, unless it wants war, and it doesn't want war [yadda yadda yadda].  The mere act of trying to call in the loan would likely negatively impact both Chinese & US economies, in other words benefit neither China or US.  So the debt of a behemoth like US is nothing like my debt, it can't be modeled on debt people like me understand.  ("China" here is just a standin for "foreign creditor," not as provocation to Chinese people on this forum.)
If i look at it from a (probably very broken or at least skewed) perspective, it seems that US national debt is a good thing.  If China wishes to continue commerce with US and expects to be repaid without needless drama like full-on war, it's in China's best interest to see US economy thrive, amirite?  More, if US was indebted to a potential aggressor (I think i'll have to reach back to USSR to not sound foolish), that aggressor would be *less* likely to attack if US was in its debt.  (if you were a thief, would you steal from the a man who's in your debt, thereby assuring that he won't repay you, or from a man who has no financial obligations to you?  Assuming you are a thief & all other things are equal.)  I know my logic's flawed, but where  And if someone explains this to me, there are layers upon layers of things i don't get.  Turtles all the way down.

[myrkul]

US national debt is something i don't understand no matter how i think about it.
First, while it's debt, i can't see it in the same sense as i see *my* debt.  If i default on my mortgage, my house will be taken away.  Bad thing.  If US defaults on its loans,  What happens?  

China (or any other nation with enough of our debt) dumps the dollar en masse, the economy tanks, and we're all boiling shoes - or each other - to eat.

[crumbcake]

US national debt is something i don't understand no matter how i think about it.
First, while it's debt, i can't see it in the same sense as i see *my* debt.  If i default on my mortgage, my house will be taken away.  Bad thing.  If US defaults on its loans,  What happens?  

China (or any other nation with enough of our debt) dumps the dollar en masse, the economy tanks, and we're all boiling shoes - or each other - to eat.

Why would China want to do that?  It'll lose a valuable trading partner & the money it is owed, plus risk what's politely called "armed conflict"?  They crazy?

Edit:  If you have bought into a pyramid scheme, and you're guided by greed alone (euphemism: "invisible hand"), would you yell "scam" & out the perpetrator, or keep quiet for a chance to get out with your $$$?

[Hawker]

US national debt is something i don't understand no matter how i think about it.
First, while it's debt, i can't see it in the same sense as i see *my* debt.  If i default on my mortgage, my house will be taken away.  Bad thing.  If US defaults on its loans,  What happens?  

China (or any other nation with enough of our debt) dumps the dollar en masse, the economy tanks, and we're all boiling shoes - or each other - to eat.

lol no.  China makes stuff that it can only sell to Americans and it is owed billions.  The US has China by the throat and it would have squeezed it good and hard long before considering a default itself.

If the US were to default, the immediate consequence would be rioting grannies.  The majority of US debt is the savings of American citizens and default would be an arbitrary and unfair tax on those citizens.  It would lead to violence as people, especially the elderly, realise that their savings have been confiscated.  Expect mayhem in Florida!

No-one would dump the dollar.  I have no idea how you could even think that likely - people would be scrabbling for dollars as a default would mean the government is no longer printing them.

[myrkul]

US national debt is something i don't understand no matter how i think about it.
First, while it's debt, i can't see it in the same sense as i see *my* debt.  If i default on my mortgage, my house will be taken away.  Bad thing.  If US defaults on its loans,  What happens?  

China (or any other nation with enough of our debt) dumps the dollar en masse, the economy tanks, and we're all boiling shoes - or each other - to eat.

Why would China want to do that?  It'll lose a valuable trading partner & the money it is owed, plus risk what's politely called "armed conflict"?  They crazy?

Edit:  If you have bought into a pyramid scheme, and you're guided by greed alone (euphemism: "invisible hand"), would you yell "scam" & out the perpetrator, or keep quiet for a chance to get out with your $$$?

No, they wouldn't (probably) do that. But the threat of doing that is usually enough to keep the US on nice terms with China.

To compare it to your analogy, It would be like blackmailing the scammer with the threat of outing him, to ensure that you're one of the first ones cashed out.

[Hawker]

US national debt is something i don't understand no matter how i think about it.
First, while it's debt, i can't see it in the same sense as i see *my* debt.  If i default on my mortgage, my house will be taken away.  Bad thing.  If US defaults on its loans,  What happens?  

China (or any other nation with enough of our debt) dumps the dollar en masse, the economy tanks, and we're all boiling shoes - or each other - to eat.

Why would China want to do that?  It'll lose a valuable trading partner & the money it is owed, plus risk what's politely called "armed conflict"?  They crazy?

Edit:  If you have bought into a pyramid scheme, and you're guided by greed alone (euphemism: "invisible hand"), would you yell "scam" & out the perpetrator, or keep quiet for a chance to get out with your $$$?

No, they wouldn't (probably) do that. But the threat of doing that is usually enough to keep the US on nice terms with China.

To compare it to your analogy, It would be like blackmailing the scammer with the threat of outing him, to ensure that you're one of the first ones cashed out.

Someone wise said if you owe someone $1000, they have you by the throat.  If you owe someone a few billion dollars, you have them by the throat.  China is the weaker party in the US China relationship as the US can walk away - China can't.  IT needs to reach the US markets in order to survive while the US can import consumer goods from anywhere it wants.

[crumbcake]

US national debt is something i don't understand no matter how i think about it.
First, while it's debt, i can't see it in the same sense as i see *my* debt.  If i default on my mortgage, my house will be taken away.  Bad thing.  If US defaults on its loans,  What happens?  

China (or any other nation with enough of our debt) dumps the dollar en masse, the economy tanks, and we're all boiling shoes - or each other - to eat.

Why would China want to do that?  It'll lose a valuable trading partner & the money it is owed, plus risk what's politely called "armed conflict"?  They crazy?

Edit:  If you have bought into a pyramid scheme, and you're guided by greed alone (euphemism: "invisible hand"), would you yell "scam" & out the perpetrator, or keep quiet for a chance to get out with your $$$?

No, they wouldn't (probably) do that. But the threat of doing that is usually enough to keep the US on nice terms with China.

To compare it to your analogy, It would be like blackmailing the scammer with the threat of outing him, to ensure that you're one of the first ones cashed out.

Hate being the contrarian (we actually almost agreed on something in some other thread), but still don't get what you mean.  By "threat," do you mean similar to obviously empty interwebz threats on Scam Accusation board?  Those simply don't work.  As far as blackmailing a scammer who has your money?  If he's a smart guy, and knows you're guided by self-interest and not some hippy ethic, what do you suppose he'd do?

[crumbcake]

US national debt is something i don't understand no matter how i think about it.
First, while it's debt, i can't see it in the same sense as i see *my* debt.  If i default on my mortgage, my house will be taken away.  Bad thing.  If US defaults on its loans,  What happens?  

China (or any other nation with enough of our debt) dumps the dollar en masse, the economy tanks, and we're all boiling shoes - or each other - to eat.

Why would China want to do that?  It'll lose a valuable trading partner & the money it is owed, plus risk what's politely called "armed conflict"?  They crazy?

Edit:  If you have bought into a pyramid scheme, and you're guided by greed alone (euphemism: "invisible hand"), would you yell "scam" & out the perpetrator, or keep quiet for a chance to get out with your $$$?

No, they wouldn't (probably) do that. But the threat of doing that is usually enough to keep the US on nice terms with China.

To compare it to your analogy, It would be like blackmailing the scammer with the threat of outing him, to ensure that you're one of the first ones cashed out.

Someone wise said if you owe someone $1000, they have you by the throat.  If you owe someone a few billion dollars, you have them by the throat.  China is the weaker party in the US China relationship as the US can walk away - China can't.  IT needs to reach the US markets in order to survive while the US can import consumer goods from anywhere it wants.

You're a really clear writer.  Enjoy reading your posts.

[Hawker]

...snip...

You're a really clear writer.  Enjoy reading your posts.

Thank you!  I love these forums.

[Schrankwand]

US national debt is something i don't understand no matter how i think about it.
First, while it's debt, i can't see it in the same sense as i see *my* debt.  If i default on my mortgage, my house will be taken away.  Bad thing.  If US defaults on its loans,  What happens?  

China (or any other nation with enough of our debt) dumps the dollar en masse, the economy tanks, and we're all boiling shoes - or each other - to eat.

Why would China want to do that?  It'll lose a valuable trading partner & the money it is owed, plus risk what's politely called "armed conflict"?  They crazy?

Edit:  If you have bought into a pyramid scheme, and you're guided by greed alone (euphemism: "invisible hand"), would you yell "scam" & out the perpetrator, or keep quiet for a chance to get out with your $$$?

No, they wouldn't (probably) do that. But the threat of doing that is usually enough to keep the US on nice terms with China.

To compare it to your analogy, It would be like blackmailing the scammer with the threat of outing him, to ensure that you're one of the first ones cashed out.

Someone wise said if you owe someone $1000, they have you by the throat.  If you owe someone a few billion dollars, you have them by the throat.  China is the weaker party in the US China relationship as the US can walk away - China can't.  IT needs to reach the US markets in order to survive while the US can import consumer goods from anywhere it wants.

Well, let me argue this one: Look at CHina's dollar debts in the last ten years. And then see who has anyone at some throat here. China understood this problem in 2000 already. And acted. Do not underestimate this country. They are not playing short term. Having lived there, let me say this: They are preparing for world domination. They don't want it, but they are preparing to react to the utmost catastrophy. Only this makes sense of some of their seemingly insane programs coming from the capital.

[Borisz]

Do not confuse making money with printing money. Only a (negligible) fraction of money exists in form of notes and coins.
Money does not represent wealth any more, but debt. Debt as such is not repayable, the system creates and (unfortunately) needs it.

Spot the differences
Before:


Now:


(The difference is that now there is no more value/cover behind money. Simply the promise that it will be accepted. It's "value" is arbitrary.)

This video shows some interesting facts: https://www.youtube.com/watch?v=vm3DixfL9o0

[farfiman]

US national debt is something i don't understand no matter how i think about it.
First, while it's debt, i can't see it in the same sense as i see *my* debt.  If i default on my mortgage, my house will be taken away.  Bad thing.  If US defaults on its loans,  What happens?  

China (or any other nation with enough of our debt) dumps the dollar en masse, the economy tanks, and we're all boiling shoes - or each other - to eat.

Why would China want to do that?  It'll lose a valuable trading partner & the money it is owed, plus risk what's politely called "armed conflict"?  They crazy?

Edit:  If you have bought into a pyramid scheme, and you're guided by greed alone (euphemism: "invisible hand"), would you yell "scam" & out the perpetrator, or keep quiet for a chance to get out with your $$$?

China's US debt holdings have been growing year by year ( with a few small dips). (http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/shlhistdat.html).

 Using your analogy ("keep quiet for a chance to get out with your $$$") , how would they do that?

If they stop buying debt and start selling it(even slowly)  that in itself could trigger a domino effect. At some point in time somebody ( doesnt have to be china) will be willing to admit that repayment is impossible and will do it anyway to try to get back something.

[crumbcake]

US national debt is something i don't understand no matter how i think about it.
First, while it's debt, i can't see it in the same sense as i see *my* debt.  If i default on my mortgage, my house will be taken away.  Bad thing.  If US defaults on its loans,  What happens?  

China (or any other nation with enough of our debt) dumps the dollar en masse, the economy tanks, and we're all boiling shoes - or each other - to eat.

Why would China want to do that?  It'll lose a valuable trading partner & the money it is owed, plus risk what's politely called "armed conflict"?  They crazy?

Edit:  If you have bought into a pyramid scheme, and you're guided by greed alone (euphemism: "invisible hand"), would you yell "scam" & out the perpetrator, or keep quiet for a chance to get out with your $$$?

China's US debt holdings have been growing year by year ( with a few small dips). (http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/shlhistdat.html).

 Using your analogy ("keep quiet for a chance to get out with your $$$") , how would they do that?

By simply doing what they're doing now?  Again, I see no advantages for China in destabilizing US economy.  If there are some obvious ones I'm missing, please point them out.

If they stop buying debt and start selling it(even slowly)  that in itself could trigger a domino effect. At some point in time somebody ( doesnt have to be china) will be willing to admit that repayment is impossible and will do it anyway to try to get back something.

China trying to dump US debt or claiming repayment impossible is no different than crying foul; see my response above.  If there are scenarios where dumping US debt is in China's best interest, point them out. 

[farfiman]

US national debt is something i don't understand no matter how i think about it.
First, while it's debt, i can't see it in the same sense as i see *my* debt.  If i default on my mortgage, my house will be taken away.  Bad thing.  If US defaults on its loans,  What happens?  

China (or any other nation with enough of our debt) dumps the dollar en masse, the economy tanks, and we're all boiling shoes - or each other - to eat.

Why would China want to do that?  It'll lose a valuable trading partner & the money it is owed, plus risk what's politely called "armed conflict"?  They crazy?

Edit:  If you have bought into a pyramid scheme, and you're guided by greed alone (euphemism: "invisible hand"), would you yell "scam" & out the perpetrator, or keep quiet for a chance to get out with your $$$?

China's US debt holdings have been growing year by year ( with a few small dips). (http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/shlhistdat.html).

 Using your analogy ("keep quiet for a chance to get out with your $$$") , how would they do that?

By simply doing what they're doing now?  Again, I see no advantages for China in destabilizing US economy.  If there are some obvious ones I'm missing, please point them out.

If they stop buying debt and start selling it(even slowly)  that in itself could trigger a domino effect. At some point in time somebody ( doesn't have to be china) will be willing to admit that repayment is impossible and will do it anyway to try to get back something.

China trying to dump US debt or claiming repayment impossible is no different than crying foul; see my response above.  If there are scenarios where dumping US debt is in China's best interest, point them out. 

How is that an answer ?- If they continue to buy more debt than the get repaid ( older debt) then they basically aren't getting paid back.  Currently it isn't in their best interest apparently so the game continues. BUT...  there are scenarios ( some wild) that might change their mind. 

1) "War".- The world is a crazy place.  So many unimaginable things have happened in the last 100 years. A world war could happen (  although slim ) that put china and the US on opposite sides.

2) "Collapse in sight "- Economic situation of the US turns towards critical.  Payback of debt seems close to impossible and the US import market ( main reason for them to hold back)  turns sour.

3) "Hot Potato"-  They get wind that some other big debt holder could be thinking of the same thing and want to try to get out before they are last with the hot potato

4) "Insanity"  - again a slim chance in this global economy but a crazy leader could do it just because.

[crumbcake]

US national debt is something i don't understand no matter how i think about it.
First, while it's debt, i can't see it in the same sense as i see *my* debt.  If i default on my mortgage, my house will be taken away.  Bad thing.  If US defaults on its loans,  What happens?  

China (or any other nation with enough of our debt) dumps the dollar en masse, the economy tanks, and we're all boiling shoes - or each other - to eat.

Why would China want to do that?  It'll lose a valuable trading partner & the money it is owed, plus risk what's politely called "armed conflict"?  They crazy?

Edit:  If you have bought into a pyramid scheme, and you're guided by greed alone (euphemism: "invisible hand"), would you yell "scam" & out the perpetrator, or keep quiet for a chance to get out with your $$$?

China's US debt holdings have been growing year by year ( with a few small dips). (http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/shlhistdat.html).

 Using your analogy ("keep quiet for a chance to get out with your $$$") , how would they do that?

By simply doing what they're doing now?  Again, I see no advantages for China in destabilizing US economy.  If there are some obvious ones I'm missing, please point them out.

If they stop buying debt and start selling it(even slowly)  that in itself could trigger a domino effect. At some point in time somebody ( doesn't have to be china) will be willing to admit that repayment is impossible and will do it anyway to try to get back something.

China trying to dump US debt or claiming repayment impossible is no different than crying foul; see my response above.  If there are scenarios where dumping US debt is in China's best interest, point them out.  

How is that an answer ?- If they continue to buy more debt than the get repaid ( older debt) then they basically aren't getting paid back.  Currently it isn't in their best interest apparently so the game continues. BUT...  there are scenarios ( some wild) that might change their mind.  

1) "War".- The world is a crazy place.  So many unimaginable things have happened in the last 100 years. A world war could happen (  although slim ) that put china and the US on opposite sides.

2) "Collapse in sight "- Economic situation of the US turns towards critical.  Payback of debt seems close to impossible and the US import market ( main reason for them to hold back)  turns sour.

3) "Hot Potato"-  They get wind that some other big debt holder could be thinking of the same thing and want to try to get out before they are last with the hot potato

4) "Insanity"  - again a slim chance in this global economy but a crazy leader could do it just because.

I thought i made it clear that i was addressing only rational possibilities for China.  So I'll make that clear now.  Considering irrational scenarios like your #4 (Insanity) is pointless.  If we concede the guy with his finger on the trigger is not governed by reason & self-interest, why muddy the waters with irrelevancies like US debt?

This also applies to your #1 (war).  Sure, wars happen.  Though I'm not sure how national debt plays into them.  Stick with me here, this is both funny & important:
In WW2, picture an imaginary land next to Poland uncreatively named Poland2.  Poland2 is identical to Poland in all respects but one:  It's in debt to Germany up to its eyeballs!  And the history's following the same path, with one notable difference:  Germany has to choose who to attack first:  Poland or Poland2? (Hint: Poland2 is making payments on its debt to Germany, which pays for gas, food & out-of-pocket expenses of the blitzkrieg.)
So war=craziness, just like #4.  Forget it.  If national debt factors into it, it's safer to have a whopping big one.

#2. (US economic collapse).  How would US debt to china affect China's  position (unless WAR, in which case go to #1)?
#3 (dumping US debt):  Already addressed.  See my previous replies.

TL;DR:  If China is irrational and chooses war, it's in USA's best interest to max out their credit with China.  If we ignore craziness, it's still better to owe than to pay -- international bonds of cooperation & friendship

[farfiman]

I thought i made it clear that i was addressing only rational possibilities for China.  So I'll make that clear now.  Considering irrational scenarios like your #4 (Insanity) is pointless.  If we concede the guy with his finger on the trigger is not governed by reason & self-interest, why muddy the waters with irrelevancies like US debt?

This also applies to your #1 (war).  Sure, wars happen.  Though I'm not sure how national debt plays into them.  Stick with me here, this is both funny & important:
In WW2, picture an imaginary land next to Poland uncreatively named Poland2.  Poland2 is identical to Poland in all respects but one:  It's in debt to Germany up to its eyeballs!  And the history's following the same path, with one notable difference:  Germany has to choose who to attack first:  Poland or Poland2? (Hint: Poland2 is making payments on its debt to Germany, which pays for gas, food & out-of-pocket expenses of the blitzkrieg.)
So war=craziness, just like #4.  Forget it.  If national debt factors into it, it's safer to have a whopping big one.

#2. (US economic collapse).  How would US debt to china affect China's  position (unless WAR, in which case go to #1)?
#3 (dumping US debt):  Already addressed.  See my previous replies.

TL;DR:  If China is irrational and chooses war, it's in USA's best interest to max out their credit with China.  If we ignore craziness, it's still better to owe than to pay -- international bonds of cooperation & friendship

Ok , lets take out the insane scenarios.    As far as #2 and #3  goes-  I still don't see any reason why China wouldn't start (very slowly and quietly as much as possible) to get rid of US bonds if they felt there wasn't a chance in hell they would get paid back because of the 2 reasons I stated.  Very bad US economic state is possible  ( some would say inevitable) and then It would be a matter of who got rid of as much debt as possible before it was too late.

[hayek]

I ran the numbers for America a while ago.

If America gave it's ENTIRE GDP - not taxes GDP - it would take > 16 months to pay off.

That's every person, business and corporation giving 100% of its earnings to pay off debt. That's also assuming government does not increase it's spending. That would do nothing to curb current spending either. That's why spending cuts are required. However, government never rescinds power so.....

[farfiman]

I ran the numbers for America a while ago.

If America gave it's ENTIRE GDP - not taxes GDP - it would take > 16 months to pay off.

That's every person, business and corporation giving 100% of its earnings to pay off debt. That's also assuming government does not increase it's spending. That would do nothing to curb current spending either. That's why spending cuts are required. However, government never rescinds power so.....

Well, the majority of the debt is to its own people so no real point in taking it  and giving it back-might as well just default on that...but ..oh, you can't. That's why some say the collapse is inevitable .Only question is when and how it will play out.

[crumbcake]

I ran the numbers for America a while ago.

If America gave it's ENTIRE GDP - not taxes GDP - it would take > 16 months to pay off.

That's every person, business and corporation giving 100% of its earnings to pay off debt. That's also assuming government does not increase it's spending. That would do nothing to curb current spending either. That's why spending cuts are required. However, government never rescinds power so.....

Just a bit of perspective:
http://b-i.forbesimg.com/jamesgruber/files/2013/03/Euro-debt-Mar132.png

[ashaw596]

I mean, the debt isn't a real problem as in we can't pay it back. Usually with the interest rates they set on their bonds (I think it was like .00000001% a while back or something) its not too far ahead of inflation or GDP growth. It would be easy to pay it back if we wanted to (if we just balanced the budget, inflation and interest payments would slowly get rid of it and the US is going to be around for a long time so the bond holders aren't in much of a hurry) but theres no real reason they want to. The real problem with US debt is that it raises lowers demand for other investments (like stocks and bonds) so businesses have less money available and it wastes a good bit of our tax dollars on paying interest. We're not in any risk of defaulting on our debts unless we go into a depression for like 20 years and none of the rest of the world does. People still buy the government's bonds because they are actually the safest place for money that gives interest. Europe has those pesky countries going bankrupt and Asia's using up their cash building up their capital and infrastructure and the rest of the world doesn't have enough money or isn't stable.

So basically, its repayable, but no ones ever going to care enough to repay it. My guess is that if it ever goes down, its going to be because of inflation (or not depending on government spending).
The government goes for cyclically balanced budget during recessions and then just never realize they made it out.

[crumbcake]

I thought i made it clear that i was addressing only rational possibilities for China.  So I'll make that clear now.  Considering irrational scenarios like your #4 (Insanity) is pointless.  If we concede the guy with his finger on the trigger is not governed by reason & self-interest, why muddy the waters with irrelevancies like US debt?

This also applies to your #1 (war).  Sure, wars happen.  Though I'm not sure how national debt plays into them.  Stick with me here, this is both funny & important:
In WW2, picture an imaginary land next to Poland uncreatively named Poland2.  Poland2 is identical to Poland in all respects but one:  It's in debt to Germany up to its eyeballs!  And the history's following the same path, with one notable difference:  Germany has to choose who to attack first:  Poland or Poland2? (Hint: Poland2 is making payments on its debt to Germany, which pays for gas, food & out-of-pocket expenses of the blitzkrieg.)
So war=craziness, just like #4.  Forget it.  If national debt factors into it, it's safer to have a whopping big one.

#2. (US economic collapse).  How would US debt to china affect China's  position (unless WAR, in which case go to #1)?
#3 (dumping US debt):  Already addressed.  See my previous replies.

TL;DR:  If China is irrational and chooses war, it's in USA's best interest to max out their credit with China.  If we ignore craziness, it's still better to owe than to pay -- international bonds of cooperation & friendship

Ok , lets take out the insane scenarios.    As far as #2 and #3  goes-  I still don't see any reason why China wouldn't start (very slowly and quietly as much as possible) to get rid of US bonds if they felt there wasn't a chance in hell they would get paid back because of the 2 reasons I stated.  Very bad US economic state is possible  ( some would say inevitable) and then It would be a matter of who got rid of as much debt as possible before it was too late.

But if China's "very slowly and quietly" shifting US debt, why should US care, unless you're implying that US should improve its credit rating so it could borrow more?

[farfiman]

But if China's "very slowly and quietly" shifting US debt, why should US care, unless you're implying that US should improve its credit rating so it could borrow more?

Because the cat would get out of the bag. Once it is a known fact ( and it would be eventually) the Dollar would be toast.

[Hawker]

But if China's "very slowly and quietly" shifting US debt, why should US care, unless you're implying that US should improve its credit rating so it could borrow more?

Because the cat would get out of the bag. Once it is a known fact ( and it would be eventually) the Dollar would be toast.

How come?  US bonds are among the safest place to put a few trillion.  If China doesn't take them, someone else will because there are very few places where you can put a trillion dollars and count on getting it back.

[crumbcake]

But if China's "very slowly and quietly" shifting US debt, why should US care, unless you're implying that US should improve its credit rating so it could borrow more?

Because the cat would get out of the bag. Once it is a known fact ( and it would be eventually) the Dollar would be toast.

Let me try another angle, maybe this sounds more convincing:

The cat is already out of the bag. 
This particular cat was never *in* the bag. 
Are you privy to insider knowledge inaccessible to every economist in every land in the world?  Or have you discovered a way to restructure data in a way that, once revealed, will lead one and all to your inevitable conclusion, with the certainty & elegance of a mathematical proof? 
no.
The cat is not in the bag, no one ever felt the need to stuff him in the bag much less keep him there.  It's one of the few cats who have never seen the inside of a bag, but otherwise a damn fine feline -- a yard cat who scraps with other cats when he's not sunning his ass with them.  On the stoop, for everyone to see.
[/torturing the cat metaphor]
[/fragments]
Everyone who cares knows, and things are exactly ... as they are now. 
There's nothing to see here.

[farfiman]

But if China's "very slowly and quietly" shifting US debt, why should US care, unless you're implying that US should improve its credit rating so it could borrow more?

Because the cat would get out of the bag. Once it is a known fact ( and it would be eventually) the Dollar would be toast.

How come?  US bonds are among the safest place to put a few trillion.  If China doesn't take them, someone else will because there are very few places where you can put a trillion dollars and count on getting it back.

If today china just hints that it will stop buying US T-bills( not even sell what they have) then the dollar is toast.
Why would anyone else buy it if the biggest debtor (not sure maybe it's japan today) wants out?

This whole discussion revolves on the fact that that US bonds are still considered safe but might not be in the future for reasons that were stated somewhere  up the thread. Although its a far comparison - bitcoins price is determined also buy how safe one perceives it is. Hints of a crackdown on bitcoin would make the price drop. When pirateat40 started to show 1st signs of his default his debt was sold at anything from 50% ( to believers ) and eventually down to 1 percent and less towards the end . US isnt  pirateat40 but the basic principle is the same.

One of the main reasons US bonds are still considered a safe haven is because of the situation in the EU and Japan. Basically everything is bad. Best of the bad situation.  Probably also one of the reasons China and others are buying large amounts of gold and other tangible assets.

[crumbcake]

If today china just hints that it will stop buying US T-bills( not even sell what they have) then the dollar is toast.

To paraphrase Voltaire, "compared to what?"

[farfiman]

But if China's "very slowly and quietly" shifting US debt, why should US care, unless you're implying that US should improve its credit rating so it could borrow more?

Because the cat would get out of the bag. Once it is a known fact ( and it would be eventually) the Dollar would be toast.

Let me try another angle, maybe this sounds more convincing:

The cat is already out of the bag. 
This particular cat was never *in* the bag. 
Are you privy to insider knowledge inaccessible to every economist in every land in the world?  Or have you discovered a way to restructure data in a way that, once revealed, will lead one and all to your inevitable conclusion, with the certainty & elegance of a mathematical proof? 
no.
The cat is not in the bag, no one ever felt the need to stuff him in the bag much less keep him there.  It's one of the few cats who have never seen the inside of a bag, but otherwise a damn fine feline -- a yard cat who scraps with other cats when he's not sunning his ass with them.  On the stoop, for everyone to see.
[/torturing the cat metaphor]
[/fragments]
Everyone who cares knows, and things are exactly ... as they are now. 
There's nothing to see here.

I wish I could have your "everything's OK " attitude towards this situation.  I can't say I am privy to information that isn't accessible to you or anyone that wants to look and learn. I admit I tend to go to the less mainstream channels for information and they are - to say the least- a bit extreme. I don't believe everything they say but try to cross sources and get to my own conclusions.  Of course I may be wrong  but if we are both here in a  few years I might just put in an "I told you so"- or you might do just the same.

[farfiman]

If today china just hints that it will stop buying US T-bills( not even sell what they have) then the dollar is toast.

To paraphrase Voltaire, "compared to what?"

Hmmm good question. I think If and when the chinese ( or others) will dump the dollar it will be after they make sure that they have an alternative. There are different possibilities . Some fiat currencies will be backed by "stuff" ( gold..) more than others.

[crumbcake]

I wish I could have your "everything's OK " attitude towards this situation.  I can't say I am privy to information that isn't accessible to you or anyone that wants to look and learn. I admit I tend to go to the less mainstream channels for information and they are - to say the least- a bit extreme. I don't believe everything they say but try to cross sources and get to my own conclusions.  Of course I may be wrong  but if we are both here in a  few years I might just put in an "I told you so"- or you might do just the same.

No, no, what you take for "everything's OK " attitude is just latent East European gallows humor not coming across

[farfiman]

I wish I could have your "everything's OK " attitude towards this situation.  

No, no, what you take for "everything's OK " attitude is just latent East European gallows humor not coming across

Had to look that up..  


“So this is it," said Arthur, "We are going to die."
"Yes," said Ford, "except... no! Wait a minute!" He suddenly lunged across the chamber at something behind Arthur's line of vision.
 "What's this switch?" he cried.
"What? Where?" cried Arthur, twisting round.
"No, I was only fooling," said Ford, "we are going to die after all.”

― Douglas Adams, The Hitchhiker's Guide to the Galaxy

[crumbcake]

I wish I could have your "everything's OK " attitude towards this situation.  

No, no, what you take for "everything's OK " attitude is just latent East European gallows humor not coming across

Had to look that up..  


“So this is it," said Arthur, "We are going to die."
"Yes," said Ford, "except... no! Wait a minute!" He suddenly lunged across the chamber at something behind Arthur's line of vision.
 "What's this switch?" he cried.
"What? Where?" cried Arthur, twisting round.
"No, I was only fooling," said Ford, "we are going to die after all.”

― Douglas Adams, The Hitchhiker's Guide to the Galaxy

Yep.  Still have a hardcover & a paperback of that book kicking around, and it's still hilarious. 

[sangaman]

At some point in time somebody ( doesnt have to be china) will be willing to admit that repayment is impossible and will do it anyway to try to get back something.

This is wrong. The US Govt can't default on USD the same way Blizzard can't default on WoW gold.

I ran the numbers for America a while ago.

If America gave it's ENTIRE GDP - not taxes GDP - it would take > 16 months to pay off.

That's every person, business and corporation giving 100% of its earnings to pay off debt. That's also assuming government does not increase it's spending. That would do nothing to curb current spending either. That's why spending cuts are required. However, government never rescinds power so.....

There's a problem with this line of thinking. GDP is the total goods and services produced by a nation. It's measured in USD but it's not like any USD are actually being created. It's a measure of real goods - production of things that people want and need. Treasury bonds, on the other hand, are strictly nominal and consist of only dollars. The only debt that is owed is dollars, but the country produces goods and services. Most of the debt is owned domestically anyway.

Cutting spending when a large portion of the willing workforce is sitting at home unemployed makes no sense. If anything we should be cutting taxes.

[crumbcake]

Cutting spending when a large portion of the willing workforce is sitting at home unemployed makes no sense. If anything we should be cutting taxes.

But Bullwinkle, that trick NEVER works!
http://www.cashandjoy.com/wp-content/uploads/2012/08/Bullwinkle.bmp

[Hawker]

If today china just hints that it will stop buying US T-bills( not even sell what they have) then the dollar is toast.

To paraphrase Voltaire, "compared to what?"

Hmmm good question. I think If and when the chinese ( or others) will dump the dollar it will be after they make sure that they have an alternative. There are different possibilities . Some fiat currencies will be backed by "stuff" ( gold..) more than others.

I don't believe that will ever happen.  Every government will always want to retain the capacity to print money.  I'd like to think that Bitcoin will be an alternative one day.  But that puts us in a terrible perspective.  We fuss over $265 per Bitcoin when if the Chinese were to invest a trillion, it would push the value into the $10s of 1000s each.

[farfiman]

If today china just hints that it will stop buying US T-bills( not even sell what they have) then the dollar is toast.

To paraphrase Voltaire, "compared to what?"

Hmmm good question. I think If and when the Chinese ( or others) will dump the dollar it will be after they make sure that they have an alternative. There are different possibilities . Some fiat currencies will be backed by "stuff" ( gold..) more than others.

I don't believe that will ever happen.  Every government will always want to retain the capacity to print money.  I'd like to think that Bitcoin will be an alternative one day.  But that puts us in a terrible perspective.  We fuss over $265 per Bitcoin when if the Chinese were to invest a trillion, it would push the value into the $10s of 1000s each.

Of course they will want to but in the long term it isn't viable because it is abused. Eventually it collapses and after a period of time it starts over. I don't' think Bitcoin could become THE currency but it could be a one of the ones used. A value of 10,000 and up each works for me

[Stampbit]

USA debt is measured in nuclear warheads.

[farfiman]

USA debt is measured in nuclear warheads.

A bit extreme but not that far from the truth.

[mvrak]

The US debt is clearly repayable with ChinaCoin.

[xavier]

Btw, sorry to bump up old post, but anyone thinking about US deficit should check out this article by Warren Buffet from Fortune in 2003

http://www.berkshirehathaway.com/letters/growing.pdf

It's for sure an old article but still relevant to the current situation. The pundits who keep talking about a 'recovery' are incredibly irritating. The reality is, there is no recovery - just a slow and painful repayment of the extra hours the US has been 'borrowing' from China since the 1990's. (read the article to get what I'm talking about!)

It seems that we are in for a continuation of this. I can't make sense of the macro stuff, but looking at the US debt clock - http://www.usdebtclock.org/ - , my intuition says we are in for a long, slow, painful grind. Maybe no economic collapse then. But that doesn't rule out investment bubbles generated by central bank money printing. (*cough* stock market *cough*)

As for a US dollar collapse??? I see it only happening if China sells its USD holdings. This scenario is not likely at all. So, no USD collapse.

Also , please can they stop calling it 'stimulus', 'easing', etc. These terms used by central bankers are really just trying to cover up the US inflating away its debt. I guess they are trying to avoid being more honest to keep the peace with the country's main creditors.

EDIT

I just was reading some other posts here, I thought I'd add a small rant about Bitcoin and how it could evolve. - just for fun!

As someone earlier mentioned, the level of integrity amongst politicians, bankers is just incredibly low right now. I don't know if this will have any immediate consequences, but I see in the future society will continue to evolve (ignoring any wars or conflicts *).. will continue to evolve so that we are each more independent of centralized control structures - corporates and politicians. The internet has been the most recent iteration of this, a technology that removes power from corporates and gives it to the individual - in this case the power for easy access to information principally, but many other powers besides. Bitcoin is the latest iteration of the internet , but is even more disruptive than the internet itself. In the future - ignoring any wars as stated - , human nature (greed, corruption, dishonest) will not change, but those in power will have less influence on the individual, so such weaknesses amongst our politicians will have less effect on the average citizen. Bitcoin is removing the power of control over us from central bankers. The financial crisis / events of the last 5 years have shown politicians and central bankers so be utterly incapable of managing the economy. It is therefore fitting that Bitcoin should come about at this time to relieve them of repeating the same mistakes that have caused this crisis. Bitcoin is the internet's replacement to the fed. I have no doubt that this technology will one day replace all currencies. With the world using bitcoin (or some more technologically advanced replacement), hopefully this financial crisis and the devastation caused by it may no longer feature in human history.

* Note: Wars are truly the worst events that can happen - I truly hope that any world wars do not occur in our lifetimes - if this could be true, then we would have a lot to be thankful for - really, I can imagine that all of our day to day worries would fade into insignificance if WW3 was to start - let's hope that is a place where the world *never* goes in our lifetimes or after

[farfiman]

It's for sure an old article but still relevant to the current situation. The pundits who keep talking about a 'recovery' are incredibly irritating. The reality is, there is no recovery - just a slow and painful repayment of the extra hours the US has been 'borrowing' from China since the 1990's. (read the article to get what I'm talking about!)

It seems that we are in for a continuation of this. I can't make sense of the macro stuff, but looking at the US debt clock - http://www.usdebtclock.org/ - , my intuition says we are in for a long, slow, painful grind. Maybe no economic collapse then. But that doesn't rule out investment bubbles generated by central bank money printing. (*cough* stock market *cough*)

As for a US dollar collapse??? I see it only happening if China sells its USD holdings. This scenario is not likely at all. So, no USD collapse.

The only way to do this is if there is growth- somewhere to pay it back from. This growth is not happening  and the exact opposite is true. The debts are getting bigger because no politician  was willing to do what needed to be done( it's too late now). All they can do is delay the collapse by more debt.

[Schrankwand]

As for a US dollar collapse??? I see it only happening if China sells its USD holdings. This scenario is not likely at all. So, no USD collapse

That is what they are doing. Very slowly. For more than a few years already...

[ibminer]

--snip--
As for a US dollar collapse??? I see it only happening if China sells its USD holdings. This scenario is not likely at all. So, no USD collapse.
--snip--

Unlikely scenarios seem to be happening more and more these days.

[crumbcake]

--snip--
As for a US dollar collapse??? I see it only happening if China sells its USD holdings. This scenario is not likely at all. So, no USD collapse.
--snip--

Unlikely scenarios seem to be happening more and more these days.

Foul whisp'rings are abroad. Unnatural deeds
Do breed unnatural troubles. Infected minds
To their deaf pillows will discharge their secrets.

[ibminer]

--snip--
As for a US dollar collapse??? I see it only happening if China sells its USD holdings. This scenario is not likely at all. So, no USD collapse.
--snip--

Unlikely scenarios seem to be happening more and more these days.

Foul whisp'rings are abroad. Unnatural deeds
Do breed unnatural troubles. Infected minds
To their deaf pillows will discharge their secrets.

See what fictional books do to people's minds...
I want to hear YOUR words. 

[crumbcake]

--snip--
As for a US dollar collapse??? I see it only happening if China sells its USD holdings. This scenario is not likely at all. So, no USD collapse.
--snip--

Unlikely scenarios seem to be happening more and more these days.

Foul whisp'rings are abroad. Unnatural deeds
Do breed unnatural troubles. Infected minds
To their deaf pillows will discharge their secrets.

See what fictional books do to people's minds...
I want to hear YOUR words. 

Taken out of context ->  different meaning (google Duchamp ready-made )

[TheGovernedSelf]

Imo, debt should be completely wiped. You know how big the economy would boom if debt was wiped?

You realise this wipes out an equal amount of savings?

Oh well. They weren't doing anything useful with it anyway.

[Hawker]

Imo, debt should be completely wiped. You know how big the economy would boom if debt was wiped?

You realise this wipes out an equal amount of savings?

Oh well. They weren't doing anything useful with it anyway.

Its not your money to take - if people save up, there has to be a damn good reason to confiscate the money.

[TheGovernedSelf]

Imo, debt should be completely wiped. You know how big the economy would boom if debt was wiped?

You realise this wipes out an equal amount of savings?

Oh well. They weren't doing anything useful with it anyway.

Its not your money to take - if people save up, there has to be a damn good reason to confiscate the money.

No one is "taking" it, the money's value is simply evaporating, and anyone who reads the news and has half a brain should have realized this years ago. Bond and CD holders today are being paid -1 to -5% interest and I expect these negative interest rates to accelerate later this decade.

[Hawker]

Imo, debt should be completely wiped. You know how big the economy would boom if debt was wiped?

You realise this wipes out an equal amount of savings?

Oh well. They weren't doing anything useful with it anyway.

Its not your money to take - if people save up, there has to be a damn good reason to confiscate the money.

No one is "taking" it, the money's value is simply evaporating, and anyone who reads the news and has half a brain should have realized this years ago. Bond and CD holders today are being paid -1 to -5% interest and I expect these negative interest rates to accelerate later this decade.

I agree.  But that is a voluntary evaporation - people choose to put their a percentage of their savings into government bonds and they know full well that in real terms that percentage will shirink in value.  Wiping government debt would mean outright confiscation of savings which is what I'd oppose.

[kodo]

We are so in debt Im not even sure if its possible to get out.. We will have to see.

[kodo]

Our national debt is unpayable at this point. Might as well nuke china and get the war thats coming over with.. 

[Adrian-x]

Our national debt is unpayable at this point. Might as well nuke china and get the war thats coming over with.. 

what! We live in a global village, corporation is the key to making the whole bigger than the sum of all the parts. Fix the problem; you don't need to kill anyone, that doesn't solve the cause of the problem.

Ps I know it was said in jest, But killing people is a touchy subject for many, the Jewish people were the producers in Europe before WWII and killing them wasn't a solution.

[farfiman]

Our national debt is unpayable at this point. Might as well nuke china and get the war thats coming over with.. 

The war is here already. It's not manifested  in 100,000's of soldiers hacking at each other ,  at the moment its economic
and political maneuvers in the middle east and africa.

[xavier]

--snip--

I see in the future society will continue to evolve (ignoring any wars or conflicts *).. will continue to evolve so that we are each more independent of centralized control structures - corporates and politicians. The internet has been the most recent iteration of this, a technology that removes power from corporates and gives it to the individual - in this case the power for easy access to information principally, but many other powers besides. Bitcoin is the latest iteration of the internet , but is even more disruptive than the internet itself. In the future - ignoring any wars as stated - , human nature (greed, corruption, dishonest) will not change, but those in power will have less influence on the individual, so such weaknesses amongst our politicians will have less effect on the average citizen. Bitcoin is removing the power of control over us from central bankers. The financial crisis / events of the last 5 years have shown politicians and central bankers so be utterly incapable of managing the economy. It is therefore fitting that Bitcoin should come about at this time to relieve them of repeating the same mistakes that have caused this crisis. Bitcoin is the internet's replacement to the fed. I have no doubt that this technology will one day replace all currencies. With the world using bitcoin (or some more technologically advanced replacement), hopefully this financial crisis and the devastation caused by it may no longer feature in human history.

After writing the above post, I stumbled across this book "Aftershock". Anybody familiar with this? IMO, it is the only book I have read that acutely summarizes the world economic situation. Having read it, I must admit I feel alot less fearful about the future. I recommend everyone read it also.

http://bit.ly/19Mlzcd

Here's a quote from the book (it was published in 2009, so the author probably did not know about Bitcoin at the time). Read from p163 onwards.

I would quote the following sentence in particular:

IMUs will be inflation- free because the system that controls the supply of IMUs will be set up to avoid it.

Here's the full quote. Please remember this book was published in 2009, before Bitcoin was well known.


Driven forward through time by STEP Evolution the next step in the evolution of money will be the development of an international agency (the global equivalent of a international central bank) that manages a single international currency that is entirely electronic. We are not saying this will come quickly or easily, but eventually it will come. In time, old-fashioned cash stashed under the mattress will become as useless as a manual typewriter.

Why a single international currency? Because it will be necessary to avoid repeating the pain of another global Bubblequake. A sin- gle international currency will eliminate the problems with foreign currency exchange, making currency bubbles (like our current dol- lar bubble) impossible. It will also block us from spending our way into huge foreign trade imbalances (like our current international trade deficit bubble). And because a single international currency is the most technologically and economically efficient form of money at this stage of our societal evolution, it eventually becomes the best option.

Will nations resist it every inch of the way? Absolutely . . . for a while. But eventually, they will come around, for the same rea- sons evolution always occurs: because it beats the alternative. In the long view of STEP Evolution, a global economy requires a global currency.

Why an electronic currency? Because money—like every other human technology since the Stone Age—evolves through time fol- lowing the STEP Evolution principles of “Material Substitution” and “Energy Substitution” (which we explain in more detail at www .aftershockeconomy.com/substitution).
Certainly we have the beginnings of an all-electronic monetary system already in place. Credit cards, debit cards, electronic checks, checks by phone, checks by fax, direct deposit, and online banking are all beginning to supplant some of our cash and check payments because they are so much more efficient. Moving cash around in a big, money bucket brigade is expensive, requiring banks, ATMs, armored cars and security personnel. The cost of cash maintenance and cash crimes drains a society’s productivity.

Remember those big bags of gold coins we don’t bother lugging around anymore? Remember the high cost of mining, protecting, and using gold? Sooner or later, people do prefer cheaper, eas- ier, and better—especially when the consequences of not evolving become very, very painful, as they are in the Bubblequake and in the coming Aftershock.

It may be hard to believe we will ever have a single international currency, given how fond individual nations are of their own forms of money. But when you look at how far we’ve already come, it’s easier to see that we’re much more than half way there now.
Imagine how hard it would have been 2,000 years ago to con- vince hordes of Germanic tribal chiefs wrapped in bear skins that their warring tribes of 10,000 or more people would eventually come together to form a single European Union in the twentieth century, with a single European currency, the euro. Given how far we’ve already come, it’s only a matter of time before Japan, the United States, and the European Community come together, too, to create a common international currency.

Again, we are not saying this because that is what we hope will happen. This is not about wishful thinking or pushing a political agenda. In the big picture of STEP Evolution, evolving to a single electronic currency is just a matter of time. Sooner or later, unless the sun fails to shine, all other less-efficient options will simply be eliminated.

The natural solution to the Bubblequake and Aftershock will feel as unnatural to many Americans as giving up baseball. But sooner or later, major social and political changes, including a single, global electronic currency, operated by a central administrative agency, are in the cards for us. After the temporary global mega-depression, an international electronic currency, operated by a central adminis- trative agency, will eliminate foreign exchange problems. We don’t know what this new currency will be named, but for convenience, let’s call it “IMU” (pronounced EYE-mu), short for International Monetary Unit.

At first, the IMU will simply be a merger of the euro, the dollar and the yen. Other strong democracies, such as Canada or Australia will then join. Then use of the IMU spreads around the world since a country does not have to be a member of the governing group in order to use the IMU. IMUs will be far cheaper for society to administer than cash. There’ll be no expensive bills to print or coins to mint. There’ll be no cash to steal. IMUs will be inflation- free because the system that controls the supply of IMUs will be set up to avoid it.

Many people, including some Americans, will oppose the com- ing evolutionary transition to a new form of money, but change is inevitable. When America’s bubble economy fully pops, and people ride the roller coaster from denial to panic to anger to understanding, the first thing they’ll do is blame the politicians. Of course, it will be too late to punish the politicians who created the problem.

[Kluge]

Our national debt is unpayable at this point. Might as well nuke china and get the war thats coming over with.. 

what! We live in a global village, corporation is the key to making the whole bigger than the sum of all the parts. Fix the problem; you don't need to kill anyone, that doesn't solve the cause of the problem.

Ps I know it was said in jest, But killing people is a touchy subject for many, the Jewish people were the producers in Europe before WWII and killing them wasn't a solution.

Jewish people owned the producers prior to WWII. In labor camps, they were producers. It's a common misconception.

The US as a whole is in a similar situation insofar as that, and a much less extreme version of fate will likely be shared. Though.... that falls apart pretty quickly -- US citizens probably won't be starving en masse, though the many foreign manufacturing companies taking over failing US businesses probably won't be employing the sick, gypsy, or elderly any time soon, and a close-enough-to-bankrupt USG will take away the social safety nets..... no cattle trains, though.

Definitely no executions, low-value high-mortality medical experiments, or starvation of the fit, either... as a global community, we're smarter, now. We know how valuable producers are.

[Kluge]

What the fuck, guys? Y'all are going to let that end the thread? 

[farfiman]

What the fuck, guys? Y'all are going to let that end the thread? 

The thread was about the USA paying back it's debt ( will never happen) and ended
with your statement about the jews......  we could get back on track and continue this

[worldinacoin]

It is definitely possible for the USA govt to repay back the debt.  Do not forget that the debt is in USD.  The govt can theoretically print all the money it needs to pay off the debt.  That's the advantage of being a reserve currency.   But I guess there will be stagflation in the least.

[ibminer]

... Although I do tend to be pessimistic as well. I do not care much about the financials in this situation, as I don't believe there is much hope from this end.

Politicians have lost their way in the US. Greed, corruption, evil - yes they have all existed for a long time, but they are out of control and in an elevated state. Maybe due to increased population, increased communication/understanding of the world (internet), maybe due to just natural progression - if your not caught or stopped (they usually aren't) - you are going to keep getting worse. Think about how many studies have been done on humans and human behavior... not to mention the numerous studies we probably don't know about. They know how people think, how they act, what they respond to... they know what to say, when to say it, how to say it, where to say it, etc. They are our 'physical' Gods. They have people down to a science.

All people are 'different' and have uniquenesses about them, but IMO there are several classifications of humans, potentially tens of thousands or more. You can call it stereotyping or whatever you want, you can call them democrats, republicans, communists, socialists, etc. This is not how I personally would be naming the classifications... but the fact is that there are people who act/think alike and follow the same ideologies that contribute to who we are as humans and a society and can coincide with how we act, what we do, who we talk to, etc. Albeit, these are human taught classifications and not really something we were born with.

They know what each classification responds to, what they want to hear, what they like/don't like, what they forget, what their interests are, what they buy into, etc. For federal-level politicians, the trick is how to say what you need to say or do what you need to do to a particular group or figure out a way to say something that appeals to multiple classifications, and do it without the other group(s) knowing/hearing about it (assume we would call this being politically correct? - no clue why political correctness even exists)... and this is not very easily done anymore with the creation of the internet and technology in general (mobile phones, video cameras, etc) that catch everything anyone is saying about anything...but its not entirely impossible. Assuming they were not able to bribe there way out of the situation, the strategy right now when you get caught in a situation like this seems to be to apologize, disappear for a while, then come back. (because they know we typically 'forget', based on the aforementioned studies) I assume they will ultimately achieve some type of internet regulations or government oversight to control what information goes 'viral' and what information may be deemed a threat to national security.

For me, if you believe they have knowledge about people and have ways of accessing it... it is scary to think what government developers/hackers could do with a dataset of information like this. Does a database like this exist would be the question (or is it being created)... and where would you put that much information? Who knows... maybe in the new 'spy center' complex that has been established by the NSA to house data/information/servers that will be linked to all of the intelligence 'listening posts' around the world. With four 25,000 sq. feet halls with wall-to-wall rows/racks of servers, you don't really think they are only listening and data mining stuff that is related to terrorism or national security, do you?  

So, is the USA debt repayable?   It doesn't matter... we are all doomed  


I feel like I have slipped passed the line of a rational individual to a conspiracy theorist. I am going to go crawl into a cave now...    

I just want to re-quote my post from last month... maybe, at least, the last paragraph has more meaning now?    

[Crypt_Current]

... Although I do tend to be pessimistic as well. I do not care much about the financials in this situation, as I don't believe there is much hope from this end.

Politicians have lost their way in the US. Greed, corruption, evil - yes they have all existed for a long time, but they are out of control and in an elevated state. Maybe due to increased population, increased communication/understanding of the world (internet), maybe due to just natural progression - if your not caught or stopped (they usually aren't) - you are going to keep getting worse. Think about how many studies have been done on humans and human behavior... not to mention the numerous studies we probably don't know about. They know how people think, how they act, what they respond to... they know what to say, when to say it, how to say it, where to say it, etc. They are our 'physical' Gods. They have people down to a science.

All people are 'different' and have uniquenesses about them, but IMO there are several classifications of humans, potentially tens of thousands or more. You can call it stereotyping or whatever you want, you can call them democrats, republicans, communists, socialists, etc. This is not how I personally would be naming the classifications... but the fact is that there are people who act/think alike and follow the same ideologies that contribute to who we are as humans and a society and can coincide with how we act, what we do, who we talk to, etc. Albeit, these are human taught classifications and not really something we were born with.

They know what each classification responds to, what they want to hear, what they like/don't like, what they forget, what their interests are, what they buy into, etc. For federal-level politicians, the trick is how to say what you need to say or do what you need to do to a particular group or figure out a way to say something that appeals to multiple classifications, and do it without the other group(s) knowing/hearing about it (assume we would call this being politically correct? - no clue why political correctness even exists)... and this is not very easily done anymore with the creation of the internet and technology in general (mobile phones, video cameras, etc) that catch everything anyone is saying about anything...but its not entirely impossible. Assuming they were not able to bribe there way out of the situation, the strategy right now when you get caught in a situation like this seems to be to apologize, disappear for a while, then come back. (because they know we typically 'forget', based on the aforementioned studies) I assume they will ultimately achieve some type of internet regulations or government oversight to control what information goes 'viral' and what information may be deemed a threat to national security.

For me, if you believe they have knowledge about people and have ways of accessing it... it is scary to think what government developers/hackers could do with a dataset of information like this. Does a database like this exist would be the question (or is it being created)... and where would you put that much information? Who knows... maybe in the new 'spy center' complex that has been established by the NSA to house data/information/servers that will be linked to all of the intelligence 'listening posts' around the world. With four 25,000 sq. feet halls with wall-to-wall rows/racks of servers, you don't really think they are only listening and data mining stuff that is related to terrorism or national security, do you?  

So, is the USA debt repayable?   It doesn't matter... we are all doomed  


I feel like I have slipped passed the line of a rational individual to a conspiracy theorist. I am going to go crawl into a cave now...    

I just want to re-quote my post from last month... maybe, at least, the last paragraph has more meaning now?    

No; disgruntled / angsty youth rebel / mis-directed / unfocused stoner ramblings.

[ibminer]

No; disgruntled / angsty youth rebel / mis-directed / unfocused stoner ramblings.

Thank you for the constructive criticism.

[farlack]

2/3 of the debt is owned by the population, the other 1/3 come and get it