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- Posts:
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- estonianman
- Apr 24 2016, 06:45 PM
- CautionaryTales
- Apr 24 2016, 06:20 PM
- Eddo36
- Apr 23 2016, 09:16 PM
It's funny because CautionaryTales already plans to run away from paying the national debt... run away to the grave long before it's paid off so he'll never see the struggle to pay back what he owed.
Should be law that each time someone of his generation dies, $60,000 is taken from his will to pay for his share of the national debt. That is unless he doesn't blow it all away like the rest of his generation has a habit of doing.
This country has run on debt since it was formed. Most of the debt, we owe in promissories to ourselves. Everyone dies before the debt is "paid off". You will be one of those too. No one will ever come knocking on your door to force you to "pay in full". Your melodrama is noted however. Countries dont work like households. The investment in all of the infrastructure that make the society work is what our years of spending has given us. That we have not been conquered in any war is testimony that we have invested enough to stave that off. We haven't been conquered in spite of a huge cornucopia of natural resources as a grand prize...that should tell you something. Don't invest? It doesn't work. Look around the Internet and see if we are one of the top tier can untried, or if we are a third world cesspool. That will tell you whether we have invested wisely.
I was waiting for this "we owe it ourselves" bulls**t. The american government owes it to T-Bill holders, individuals and organizations all over the world. Most of our debt is to ourselves. http://www.businessinsider.com/who-we-owe-federal-debt-to-2013-10
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Eddo26
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Apr 24 2016, 07:32 PM
Post #43
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- Posts:
- 2,077
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- Mar 23, 2016
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- CautionaryTales
- Apr 24 2016, 06:20 PM
- Eddo36
- Apr 23 2016, 09:16 PM
It's funny because CautionaryTales already plans to run away from paying the national debt... run away to the grave long before it's paid off so he'll never see the struggle to pay back what he owed.
Should be law that each time someone of his generation dies, $60,000 is taken from his will to pay for his share of the national debt. That is unless he doesn't blow it all away like the rest of his generation has a habit of doing.
This country has run on debt since it was formed. Most of the debt, we owe in promissories to ourselves. Everyone dies before the debt is "paid off". You will be one of those too. No one will ever come knocking on your door to force you to "pay in full". Your melodrama is noted however. Countries dont work like households. The investment in all of the infrastructure that make the society work is what our years of spending has given us. That we have not been conquered in any war is testimony that we have invested enough to stave that off. We haven't been conquered in spite of a huge cornucopia of natural resources as a grand prize...that should tell you something. Don't invest? It doesn't work. Look around the Internet and see if we are one of the top tier can untried, or if we are a third world cesspool. That will tell you whether we have invested wisely. Yes "we owe to ourselves". Meaning, your generation owes to my generation. I'll be taking a dirt nap long after you and your classmates do so you won't see how you made USA turn into Greece the exact same way.
Many places hasn't been conquered, but they didn't vote for failed offensive wars and give the bill to future generations to pay. I'll ask you the same question as I asked many others, and have yet to get a direct answer. What does any war since WWII has to do with freedom? You can't answer it. You'll ignore it, or sidestep it with some feel-good cliché statement that doesn't relate to the question in any way. Your generation is best known for warhawks screwing with the Middle East and the rest of the world to play an expensive Cold War game with the Soviets and dissing off Muslims against USA.
And before you run away quietly to the grave, cough up the $60,000 for your share and not be like any other money sucking boomer looking for a quiet exit. That is what you personally owe.
Also, seeing how you're babbling without having an economics degree, this is what happens when you're generation doesn't pay off your debt. It's like Greece and it's not pretty.
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What happens when the US government can't pay off its debt?
A few things can happen. But first, note that USD is not just any currency. USD took over the gold standard in many ways as a standard in the first world countries. In other words, it is not just the currency one would use in the States, it is a currency that everyone relies upon. Because of this reliance, US seems to be capable of creating "wealth" through printing more of its currency, and therefore, seems to be able to borrow indefinitely, unlike any other economy. The caveat is that US government can undermine this global status by printing more money.
This sets USD apart from other currencies. To understand, please bear with me as I explain how debt works for all other economies:
To pay government debt, any government can collect taxes. Of course, a high tax burden, or even the expectation of a high tax burden can stifle economic growth.
Otherwise, so long as the debt is in its own currency, any government can print its own money. It has been argued that this causes inflation under certain circumstances. When this is the case, printing money is the same thing as tax: It means that the government transfers purchasing power from whoever is holding the currency at the time. Therefore, printing money may stifle economic growth.
If these fail, a government can always default. Defaulting is simply a government declaring that it will not pay its debt. The consequences of a default are undesirable for those who hold debt. It has been argued that defaulting hurts reputation, but it has also been argued that the threat of default allows countries to get better terms when they are heavily in debt.
Because USD has this global standard status, the U.S. government does not need to default. Therefore, everything hinges on the status of USD as a globally-accepted currency. So long as USD is credible, the U.S. government can always print more of it to create "wealth". A high debt is one way that the U.S. government can undermine the credibility of USD. If creditors believe that the U.S. government will have to print large amounts of USD in the future, they can be reluctant to loan to the U.S. government in USD, because it just might lose value. Nobody, especially whoever is holding USD right now, wants to believe that that can happen. But if they are convinced that this is inevitable, they will move away from USD.
Therefore, the debt level, sustainability of the debt level, credibility of the U.S. government as a lender, printing of USD, the credibility of USD, and the value of USD are closely linked. The moment one gets out of control, the others also will, as they all affect each other in a loop.
A lot hinges on the credibility of USD. Any holder of USD has purchasing power because many believe that USD holds value. Can the U.S. government undermine this credibility by increasing its debt? Yes, it can. The moment creditors of US believe that US government will not be able to pay off its debt obligations, creditors will try to save their wealth by flocking away from assets backed by the U.S. government. Disastrously, this would make the debt even more unsustainable, causing the USD to lose even more value. This would be a monetary and financial crisis for everyone. It is possible that at some point, the debt level will cross a certain threshold and will cause whoever is holding USD at lose a significant amount of wealth. This would include everyone who is getting paid in USD.
How close are we to such a possible threshold? I don't know, and it is unlikely that anybody could know that with certainty. This depends on whether the international money market believes in USD and the U.S. government. Note that as with any other previous superpower, many parties around the world are invested heavily in USD, meaning that most of the world would have nothing to gain from such a collapse. However, such crashes of imperial powers did take place in the past - just a century ago, people would not have talked about USD as a powerful, global currency, instead, GBP would have been the closest candidate. Before that, the French monarchy had established an early experiment at a monetary system which came crashing down. Even before, the Ottoman Empire was able to exert monetary control through its gold mines in Ethiopia, but that came crashing down when the Aztec gold flooded Europe. Monetary systems do fail at some point.
TL;DR: The government debt may hurt the economy and make Americans poor in a crisis. Whether this crisis take place or not depends on whether the debt is sustainable. Whether it is sustainable or not depends on what international markets believe about America.
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