National debt will become a very big deal when US Treasury bonds start to be downgraded which of course will further increase interest rate on them. I have no idea when that will happen.

When that happens there will be a worldwide panic in the financial markets. Cash in the bank may not be safe either with hyperinflation and/or FDIC bankrupt.

Who will be the big losers in a such a market calamity? Investors with long positions or those deep in debt? IMO it will be hell for both. Best way of surviving well may come down to those with marketable skills, self sufficient, or with ample goods for bartering and those that depend on government handouts will either have to become marketable, hope charity can help them, or resort to crime. This will all most likely happen after I have checked out but worried about my children's futures.

I hope I have a house, some land, and some distance to my neighbors before the collapse happens.

quote:

My theory is: very few people, especially government employees and elected leaders, give a shit

Well, their gilded pensions are considered a 'debt'. Given the Constitution requires the US must pay its debts, they're guaranteed a comfy life at our expense when they retire. Us prolls, not so much. Our Social Security is considered an 'entitlement', so they can pull it (while of course maintaining their lifestyle) if needed. Green fees ain't cheap you know.

The dollar will always be worth something in business. When Nationalization of private businesses starts, that’s when a true hyperinflation will occur.

quote:

Originally posted by wcb6092:
We are at the point where the biggest budget item is the interest on this massive debt,and that is with low interest rates.This payment will become more burdensome.

please site figures for that

it's around 5-10% i believe

SS and medicare is over 50%

defense / military is less - about 20% or so

The economy is massive so it's not a huge problem IMO - do not lose sleep over it.

Like others have said - not like any other economy can make us pay in any appreciable way for 'debt' especially when our economy - our spending power / GDP - is world-leading.

Its like on a personal level - if you have a reliable job making $100k and owe $10k you're in OK shape. Especially when you have reserves. our demographics, industry, know-how, free enterprise economy, global military, and technology are our 'strategic reserve'.

i know I worry a heck of a lot more about loss of manufacturing capability that I do about our debt. I don't like so much of our products being made in communist China...

------------------------------------------------

You need only look at the British. After the World War (Act I & II), their national wealth had been transferred from London to New York. The Empire had been dismantled. Since then, they have struggled as a nation, just getting by, with barely the resources to field a decent military. Certainly not the resources to project power.

That's what's in store eventually. We will plod along down the road to insignificance until we're the North American version of Europe. Not necessarily impotent, but no longer a superpower. Let's hope the Chinese run up some debts and decide to get serious about their social spending. The American century is nearly over.

quote:

Originally posted by sigcrazy7:
You need only look at the British. After the World War (Act I & II), their national wealth had been transferred from London to New York. The Empire had been dismantled. Since then, they have struggled as a nation, just getting by, with barely the resources to field a decent military. Certainly not the resources to project power.

That's what's in store eventually. We will plod along down the road to insignificance until we're the North American version of Europe. Not necessarily impotent, but no longer a superpower. Let's hope the Chinese run up some debts and decide to get serious about their social spending. The American century is nearly over.

no way - no how

we are blessed with natural resources unparalleled in the world

the only thing we need to do - is keep the commies / socialists from ruining our foundations

America - the USA - is truly the modern miracle and we have a long way to go

we have not yet seen our finest hour IMO

--------------------------------------

Neither side cares because it isn’t their money. It doesn’t matter to them. They can kick the issue down the road for some future legislators to deal with. Worst case they lose an election. So what? They have their pensions and cushy jobs from their old cronies. Beyond that who will come and collect the debt? Sure, China can come calling and plunge the entire world, including their own nation, into chaos. That’s a no win. Until and unless that happens it’s more bread and circuses from DC. Congress and their friends keep the people distracted while lining their own pockets. The bill ain’t coming due any time soon.

Inflation is how a government steals from it's citizenry.

Until it all comes tumbling down.

quote:

Originally posted by 46and2:
My theory is:

very few people, especially government employees and elected leaders, give a shit, and that the number may as well be imaginary, and the threshold may as well be infinite, and the budget will never be balanced again, and they'll keep printing money and playing games on a worldwide level, and if we're very lucky it all won't crumble in our lifetimes.

No successful business or household on Earth can operate this way and survive, yet our Government somehow does, because there are so many Peters we can rob to pay the Pauls that it all gets lost and overlooked in the process, with everyone just kicking the can. It's one giant shell game, and I doubt more than a handful know the raw truth of it all.

Money (e.g., printed money) is simply an exchange medium whose value is determined and agreed upon by parties to a transaction. At one time, U.S. money was backed by gold. FDR took the U.S. off the Gold Standard. John F. Kennedy and then Richard Nixon took the U.S. off the Silver Standard. The end result being what we employ now: Federal Reserve Notes.

According to reference.com,

quote:

"The U.S. dollar is a "fiat" currency, and it is therefore not backed by any tangible commodity, but rather the "full faith and credit of the United States," as is printed on every Federal Reserve note. According to the Federal Reserve, paper currency has not been redeemable for gold or silver since January 30, 1934.

Every major currency in the world today is fiat currency. The final break between the U.S. dollar and the value of gold came in 1971, when the U.S. abandoned the gold standard once and for all. Today, according to HowStuffWorks, the only reason the dollar has any value at all is that it is issued within the context of a society full of people who have agreed to treat it as though it has value. Without that faith, every major currency on Earth would be as useful as small pieces of paper generally are.

Governments don't behave the way businesses or households do. They can't exceed the amount of money they have (even credit cards require the piper to be paid, some time). But governments, if they exceed their budgets, just re-jigger the numbers, and adjust inflationary figures in attempt to continue the "full faith and credit." As long as other countries agree, things go smoothly. Oh, the native populace usually wind up paying more, but that's how it works. Tough shit, Mr. & Mrs. Everyman.

quote:

Originally posted by Sig209:

quote:

Originally posted by sigcrazy7:
You need only look at the British. After the World War (Act I & II), their national wealth had been transferred from London to New York. The Empire had been dismantled. Since then, they have struggled as a nation, just getting by, with barely the resources to field a decent military. Certainly not the resources to project power.

That's what's in store eventually. We will plod along down the road to insignificance until we're the North American version of Europe. Not necessarily impotent, but no longer a superpower. Let's hope the Chinese run up some debts and decide to get serious about their social spending. The American century is nearly over.

no way - no how

we are blessed with natural resources unparalleled in the world

the only thing we need to do - is keep the commies / socialists from ruining our foundations

America - the USA - is truly the modern miracle and we have a long way to go

we have not yet seen our finest hour IMO

--------------------------------------

The reason I believe what I do is because I think that battle is mostly lost. The ACA alone will consume so many resources that we'll never recover.

I truly hope you're right, though.

On a quarterly basis JPMorgan Chase publishes an extensive series of charts (https://am.jpmorgan.com/blob-gim/1383407651970/83456/MI-GTM_4Q18_Linked.pdf?segment=AMERICAS_US_ADV&locale=en_US ). I don't know how to paste page 23 into this reply so I'll note this data below:

2018 Federal Budget ($4.1T) is spent on the following:
Medicare/Medicaid = 26%
Social Security =24%
Defense = 15%
Non Defense Discretionary = 16%
Interest = 8%
Other = 11%

In round numbers the US borrows $78B to fund operations.

The National Debt is Sovereign debt and could be repaid with a quick phone call to the mint. Of course the infusion of +/- $22T of paper currency into the worlds economy would produce catastrophic inflation and the "Sheep would look up".

Seems we are not a Democracy as much as we are a Damocles.

quote:

Originally posted by Sig209:

quote:

Originally posted by sigcrazy7:
You need only look at the British. After the World War (Act I & II), their national wealth had been transferred from London to New York. The Empire had been dismantled. Since then, they have struggled as a nation, just getting by, with barely the resources to field a decent military. Certainly not the resources to project power.

That's what's in store eventually. We will plod along down the road to insignificance until we're the North American version of Europe. Not necessarily impotent, but no longer a superpower. Let's hope the Chinese run up some debts and decide to get serious about their social spending. The American century is nearly over.

no way - no how

we are blessed with natural resources unparalleled in the world

the only thing we need to do - is keep the commies / socialists from ruining our foundations

America - the USA - is truly the modern miracle and we have a long way to go

we have not yet seen our finest hour IMO

--------------------------------------

Sig209,
I am not as sanguine as you are, but I hope you’re right.

We print money to pay debt. Additional dollars devalue both savings and future earnings. It is an insidious silent tax we all pay. And, the printing presses will run, and run.

I believe the real question is will it fail? It will. There is no political will to stop what is coming. Economics is essentially a house of cards built on faith and confidence, e.g. "the full faith and credit of the United States Government". Without it, the cards fall. Exactly when is the only mystery.

Our debt and the strength of the dollar is backed by our ability to grow our debt and our ability to repay said debt. Defaults on debt increase inflation, as it is absorbed into debt owed, which in turn lowers our debt to payment ratio. Inflation also leads to a huge problem if the dollar strengthens, because the trillions of debt we amassed under a weakened dollar will be paid back by a stronger dollar. It will end up being the largest transfer of wealth ever, and that is what the world has been waiting for. Why do you think so many foreign countries own US debt? They are waiting to cash in, as the dollar rises their investment is growing. Buy debt when the dollar is low, cash in when the dollar is high. We ended world war by tying the world economies together. If the economy implodes we will be back at each other's throats again. Why do you think everyone is focused on military might again? The writing is on the wall and they are prepared with back up plans. US dollar gets stronger, our debt holders get rich. US dollar implodes we go to war and the winner collects the spoils.

Invest in precious metals, liquor, medical supplies, and ammo. When TSHTF you will be able to barter.

The real destruction comes when public services collapse.

quote:

Originally posted by darthfuster:
The real destruction comes when public services collapse.

There will be hell to pay when I can't get a container of delicious ice cream 24/7.

What happens when someone is in a bad position and they want to get out? Human nature, being what it is, dictates that a problem will be dumped on someone else, if possible. It'll also happen at the last second.

It'll be the same with our debt. Someone is going to be left without a chair when the music stops.

V.

Government expenditures for everything else will start to be cut as the debt service grows more and more. People will elect more socialists who promise to keep their gravy train running. At some point the US will start defaulting on debt payments, most likely initially to other countries so the US population doesn’t start marching on the capitol and tossing politicians out of windows.

Then it gets ugly as the rest of the world shifts from dollars to some other reserve currency or basket of currencies and everything the US buys from overseas skyrockets in price for us. Since no one will be willing to take our dollars, we’ll have to buy rubles/yen/whatever first and it will take a lot more dollars than it used to for whatever we’re buying as our currency will have lost a huge amount of value. Add vastly more expensive import costs to the already tapped out budget expenses within the country and the US is now spiraling down the road to poverty. Printing more dollars won’t help at that point since the world will just require even more of them for all goods that they’re still willing to sell us. “You need a ton of cobalt to make engines for fighter planes? That’ll be $100 million today instead of the $1 million it cost in 2018.”

Good luck maintaining a decent standard of living at that point!