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What is the National Debt?

Bruce

Philosopher
Bruce
Joined
Jul 26, 2001
Messages
7,519
I know I'm exposing a great deal of ignorance here, but F it, I'm an American.

What exactly is the National Debt and why is it that liberals seem to be the only ones concerned about paying it off? Is it money that we owe other countries, money the government owes us, or a combination of both? How does paying it off effect our lives? What happens if we never pay it off? Does the international repo man come and load Congress onto the back of a truck? :confused:
 
I am not an economist...

The national debt is, in large part, money that the government has borrowed from citizens, people from other countries, and corporations. The government sells bonds and is liable for fixed interest on those bonds thereafter (until "maturity", when the government pays back the original money it borrowed).

The debt itself isn't the problem; the interest on that debt is. If the government doesn't pay out on its interest obligations, then people lose confidence and won't lend them money anymore. If the debt is large, the interest bill is large, and it's hard to balance a budget when 20% of your revenue goes to stop the creditors from phoning you up and threatening to make your economy collapse.
 
Oh.


So I take it to mean that if I don't get my money back from the government, I can hitch Congress to my pick-up and drive off?
 
Only if you have an F-150, I hear those things can take down water towers.

If the government doesn't pay you your money back, suffice it to say that getting your money back will be the least of your worries.
 
Here's a little different perspective on it.
Why Debt Doomsday is a Myth

The US has not had a balanced budget AND the debt fully paid since 1800-something and the longest stretch of having a "balanced budget" was immediately preceding the Great Depression.

However:
... an in-depth look at the "selling-out our grandchildren viewpoint":
Grandfather Economic Report

The biggest changes I see over the past (besides the amount) is that we are owing an increasing amount of foreign debt and our government controls an increasing amount of the total economy. I don't like either trend.
 
peptoabysmal said:
Here's a little different perspective on it.
Why Debt Doomsday is a Myth
Click to expand...


From the link:
Bottom line:* If the economy grows at least a fast as the debt grows, and inflation is low and under control, our ability to make growing interest payments will increase at least as fast as our obligation to make those interest payments.*
Click to expand...

Is it reasonable to expect that the economy will grow as fast as the debt for several years or decades?
 
Ladewig said:
Is it reasonable to expect that the economy will grow as fast as the debt for several years or decades?
Click to expand...

Political answer: Absolutely, as long as you elect me.

Thanks for the websites, Pepto. I figured it wasn't as scary as most people seem to think it is. :rolleyes:
 
Bruce said:
What happens if we never pay it off? Does the international repo man come and load Congress onto the back of a truck? :confused:
Click to expand...

We can only hope.

If we never pay it off there are a few problems. First, we owe a lot of it to ourselves. If the government said, "Sorry about your savings bonds, Mrs. Smith. I know you were going to use those to fund retirement, but you'll have to rely on Social Security. Oh...Social Security had savings bonds too? Never mind. Sorry Mrs. Smith."

Second, you can't borrow if you don't pay off the last debts. Government does need to borrow, and they won't be able to do so if they default on the debt.

One huge problem I see with the national debt is that we are paying people a lot of money for nothing. I have some bonds myself. Thanks for the money, folks. Most of my money, I had to earn. That which was invested in private sector instruments, I had to risk, and help grow businesses. However, teh money I got from instruments issued by the US government has no risk, and doesn't fund anything except government spending. All I have to do is count it. Why do we want to give away so much money?
 
What's the national debt? The national debt is larger than a breadbox and slightly smaller than the observable universe.
 
SlippyToad said:
Taxes that have been levied on my children. Plain and simple.
Click to expand...

Americans always whine about taxes, but as I understand it, our taxes are very low compared to most European countries. How does our national debt compare to those European countries?


Or is this one of those apples to oranges things?
 
peptoabysmal said:
Here's a little different perspective on it.
Why Debt Doomsday is a Myth

The US has not had a balanced budget AND the debt fully paid since 1800-something and the longest stretch of having a "balanced budget" was immediately preceding the Great Depression.

However:
... an in-depth look at the "selling-out our grandchildren viewpoint":
Grandfather Economic Report

The biggest changes I see over the past (besides the amount) is that we are owing an increasing amount of foreign debt and our government controls an increasing amount of the total economy. I don't like either trend.
Click to expand...
You're missing an important part of the problem, pepto. A part that obviates any pollyanna good feeling you might have gotten from those very misleading articles:

An increasing amount of our national debt is in the form of dollars being purchased by Asian nations, in particular the Chinese. They value these dollars because it means we can continue to finance the walmartization of our country by buying cheap manufactured goods from them. But that relationship only worked with a strong U.S. dollar.

As we've outsourced our labor force, the payoff from manufacturing overseas has declined because people have less money to buy crap with. Because their jobs are worth less than they were 20 years ago. Now that our jobs are all worth less money, our money is worth less, too. With the dollar sinking like a neglected inflatable bouncehouse after the kiddie carnival has all gone home, they are starting to rethink their relationship with us. They can't quite cut it off at the knees, because after all who's going to buy their crap but us -- however the party cannot go on indefinitely. If for some reason they discover a way out of the corner we've both painted ourselves into, you can bet they'll take it. They can't be happy with the money we owe them becoming less valuable every year, and if they stop buying the dollars before we stop borrowing them we're screwed.

Not to mention that none of this debt money we owe is getting us anything. If it were revitalizing our economy in some way it would be worthwhile to put ourselves into debt. But that money's going right into the numbered overseas accounts of people who aren't spending it on worker wages or public infrastructure or anything of value to any of us. Quite simply our national treasury is being raided and the bill is being passed on to future generations. We will end up with nothing to show for it.
 
HarryKeogh said:
What's the national debt? The national debt is larger than a breadbox and slightly smaller than the observable universe.
Click to expand...
But astronomers and economists working together have determined that the debt is expanding faster than the universe is expanding, and in another 38 years, will in fact be slightly larger than the observable universe.
 
Bruce said:
What happens if we never pay it off? Does the international repo man come and load Congress onto the back of a truck? :confused:
Click to expand...

We can only hope.

If we never pay it off there are a few problems. First, we owe a lot of it to ourselves. If the government said, "Sorry about your savings bonds, Mrs. Smith. I know you were going to use those to fund retirement, but you'll have to rely on Social Security. Oh...Social Security had savings bonds too? Never mind. Sorry Mrs. Smith."

Second, you can't borrow if you don't pay off the last debts. Government does need to borrow, and they won't be able to do so if they default on the debt.

One huge problem I see with the national debt is that we are paying people a lot of money for nothing. I have some bonds myself. Thanks for the money, folks. Most of my money, I had to earn. That which was invested in private sector instruments, I had to risk, and help grow businesses. However, teh money I got from instruments issued by the US government has no risk, and doesn't fund anything except government spending. All I have to do is count it. Why do we want to give away so much money?
 
Bruce said:
Americans always whine about taxes, but as I understand it, our taxes are very low compared to most European countries. How does our national debt compare to those European countries?


Or is this one of those apples to oranges things?
Click to expand...

I can only speak for Norway, but in 2005 we had a 235 billion dollar surplus.

That's over 50.000 dollars per citizen.
 
Ryokan said:
I can only speak for Norway, but in 2005 we had a 235 billion dollar surplus.

That's over 50.000 dollars per citizen.
Click to expand...
That's impossible! I know for a fact you can't have a surplus in socialist nations who tax their citizens to death!!! Ooh look, there's a gay couple....

:)
 
Bruce said:
What exactly is the National Debt and why is it that liberals seem to be the only ones concerned about paying it off?
Click to expand...
This just depends on who's in charge and what's going on in the world at the time. Libs didn't like the debt under Reagan, either, because it was the only thing they could possibly win on. Cons harped on it in '94 because the timing was right then, too.
 
Snide said:
I know for a fact you can't have a surplus in socialist nations who tax their citizens to death!!!
Click to expand...

Well, most of the surplus was built up by a liberal/conservative coalition government.

But the surplus would probably have risen even under the socialists. That's the advantage of being the third largest oil exporting nation on a planet with oil addicted Americans ;)
 
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