16 Trillion Dollars in Debt: Not a Crisis?

[Deadvolcanoes]

I just watched the latest Vlogbrothers video on YouTube titled, "Understanding the National Debt and Budget Deficit," and the information kind of surprised me. I was always under the impression that our national debt was a huge problem that needed to be fixed immediately. This video changed the way I view things. A few points from the video:

-The largest single holder of U.S. government debt is the Federal government. China only owns 8% of our debt. Japan owns 7%.

-For every 1 dollar of U.S. debt owned by a foreign country, we own 89 cents of foreign debt.

-Our debt is incredibly cheap at the moment. The yield on a 1 year treasury bond is .17%.

-It is sometimes healthy for government to spend more than they take in.






So what do you think. I know that this is probably one side of the issue. I'm not incredibly good when it comes to economics, so if you have information that counters the logic in this video, I would be very interested to hear it. Links and citation are appreciated.

[Rukentuts]

Governments just need to start forgiving each others debt. I mean if the government of Japan holds some of our debt, and we hold some of theirs, why don't we just forgive it?

[semaphore]

Debt is only a crisis if the country can't pay for it.

The United States is unwilling to pay, not unable. Though the unwillingness to pay could triger a crisis too.

[Deadvolcanoes]

Governments just need to start forgiving each others debt.

I've always wondered why we dont just do that.

[Puremallace]

I got a chart too

[semaphore]

Governments just need to start forgiving each others debt. I mean if the government of Japan holds some of our debt, and we hold some of theirs, why don't we just forgive it?

What would be the point?

And Japan holds way more American debt than the other way around.

[Reeve]

Just because it isn't as dire as people make it out to be doesn't mean that it's not a problem that our budget is 31% larger than our revenues. Our national debt should increase, but it should increase commensurately with inflation and our GDP, and we're way way past that at the moment. I have faith though that once this recession dies off, the deficit will reduce to reasonable levels again, and everything will be fine. The international financial community has faith in that as well, or our interest rates wouldn't still be so ridiculously low.

[Rukentuts]

What would be the point?

And Japan holds way more American debt than the other way around.

Because if I owe you $10, and you owe me $5, why can't I just pay you $5 and we call it even?

[Purlina]

Governments just need to start forgiving each others debt. I mean if the government of Japan holds some of our debt, and we hold some of theirs, why don't we just forgive it?

Maybe they have different interest rates?

[Deadvolcanoes]

I got a chart too

I'm not trying to politicize the debt. I'm interested in what it actually means. I'm constantly hearing pundits and politicians saying "We're gonna be slaves to China." Then I realize that china owns a very small percentage of our debt.

[Rukentuts]

Maybe they have different interest rates?

There has to be a way to crunch the numbers to arrive at an "equivalent" value solution though.

[Puremallace]

I'm not trying to politicize the debt. I'm interested in what it actually means. I'm constantly hearing pundits and politicians saying "We're gonna be slaves to China." Then I realize that china owns a very small percentage of our debt.

That "us and individual" is Medicare and Medicaid. The problem is those cost are growing year over year at some insane rate, hence ObameCare is supposed to help there.

Our foreign policy is pretty damn idiotic right now. Basically we are borrowing money from China right now to fight in Afghanistan. If we goto war with Iran guess who will finance that war also?

During the Bush administration the Republicans came up with the great idea to pay for the two wars by dipping into the social security trust fund.

[Letmesleep]

I got a chart too

[img]snip

This is irrelevant. The debt will still grow regardless of who put the current policies in place. You can't blame everything on a previous president while refusing to cut his programs. This applies to every president.

Edited for what I meant.

[Deadvolcanoes]

During the Bush administration the Republicans came up with the great idea to pay for the two wars by dipping into the social security trust fund.

Wouldn't it be better to owe ourselves that money rather than borrow it from a foreign nation? I know the best solution is to not start those two wars, but lets take that off the table, as we can't go back in time.

---------- Post added 2012-10-24 at 11:29 AM ----------

This is irrelevant. The deficit will still grow regardless of who put the current policies in place. You can't blame everything on a previous president while refusing to cut his programs. This applies to every president.

Our deficit has gone down the past four years. In 2013 its going to be under a Trillion dollars.

[Reeve]

That "us and individual" is Medicare and Medicaid. The problem is those cost are growing year over year at some insane rate, hence ObameCare is supposed to help there.

Our foreign policy is pretty damn idiotic right now. Basically we are borrowing money from China right now to fight in Afghanistan. If we goto war with Iran guess who will finance that war also?

During the Bush administration the Republicans came up with the great idea to pay for the two wars by dipping into the social security trust fund.

The social security trust fund has never NOT been dipped into. Think about the fund. How does the government store the money? The only way it can is to buy US government treasuries, which means lending the government money to spend on other things, which it then pays itself back.

[Letmesleep]

Our deficit has gone down the past four years. In 2013 its going to be under a Trillion dollars.

Excuse me, I meant the debt. If we're still spending more than we're taking in, the national debt doesn't shrink. It's early for me.

[Purlina]

Wouldn't it be better to owe ourselves that money rather than borrow it from a foreign nation? I know the best solution is to not start those two wars, but lets take that off the table, as we can't go back in time.

Sure, but where are we going to get the money to pay "ourselves" back?

[semaphore]

Because if I owe you $10, and you owe me $5, why can't I just pay you $5 and we call it even?

Because real life is almost never this convenient. Japan doesn't owe the United States a trillion dollars.

[Rukentuts]

Because real life is almost never this convenient. Japan doesn't owe the United States a trillion dollars.

That doesn't really answer my question.

[Faloestin]

That "us and individual" is Medicare and Medicaid. The problem is those cost are growing year over year at some insane rate, hence ObameCare is supposed to help there.

Our foreign policy is pretty damn idiotic right now. Basically we are borrowing money from China right now to fight in Afghanistan. If we goto war with Iran guess who will finance that war also?

During the Bush administration the Republicans came up with the great idea to pay for the two wars by dipping into the social security trust fund.

There isn't really a separate social security trust fund. Remember the lockbox? It never existed. Funds to pay social security obligations come out of the general pile of money Treasury uses to pay debts.

What Bush did was try to pay for two wars with tax cuts, which is even stupider.