16 Trillion Dollars in Debt: Not a Crisis?

[Bolson13]

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

It happens but pretty much only to countries in Africa that really cannot pay their debt and are in a "debt vicegrip" as it is translated to my language.

Obviously when you make debt to access more funds, you should pay it back. Else why would anybody loan you money if you are not good for it right? Countries don't borrow money the same way you borrow money to your friends for a night out. "oh, i got you next time" .



In regards to the tpoic, it is not like the US will explode tomorrow because of debt but it is pretty serious in % to the GDP + the US has a very high deficit (and rising still I think?), highest in a long time (if ever?). So the situation is not turning around.

And then there are other economic monitors like the job market, import/export difference etc. with which people try to predict the future. And they also do not point in the right direction. And this then leads to less investments and higher prices for government loans or as they say "bonds".


So this entire economic picture is showing a bad economic forecast. Not some whole the US can never come out of but something that needs to be addressed. for sure by a good solid economic plan (that hopefully also still leaves room for social policies since there is more to life then money right?).


Didn't watch the video though so just summarizing what I got on info.

[Masark]

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

Yet, but barring clever number twiddling (The "surplus" during Clinton's presidency.), you've been spending more than you've taken in for about 50 years.

[Reeve]

Yet, but barring clever number twiddling (The "surplus" during Clinton's presidency.), you've been spending more than you've taken in for about 50 years.

And that's OK, even good, as long as we grow our economy equivalently.

[Faloestin]

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

This is actually an important question. Here's the deal: for a county that can print it's own money, national debt is nothing like household debt. There is no magic amount of debt that is bad or good. If you run your credit card past it's limit and don't pay, predictable bad stuff will happen to you: the credit card will get cancelled, you'll get lots of calls from debt collectors, eventually you'll get sued, and your wages will get attached if you don't follow the court's judgement. None of that applies to the national debt. In effect, we're giving ourselves our credit cards, and we're aren't likely to cancel them. There are no debt collectors in international waters, and if there were we would have the Coast Guard run them off.

The only limits on the the debt we run up are political: externally political, around our ability to continue to convince the rest of the world that we're a good bet; and internally political, to the degree we cut off our own credit as cynical politicians convince our innumerate electorate that we ought to run a $17 trillion economy like a local bake sale.

[Tore]

I feel like the points in that video were probably made by some treasurer in the Roman Empire before that all went to shit.

You can't shrug off $16 trillion and say "ehh, we'll be okay," especially when it's growing by a trillion every few months.

[semaphore]

That doesn't really answer my question.

I misread your question because I was thinking in terms of your original post.

What you described there is not forgiving debt, it's actually just paying off the debt. And the reason we don't do that, is because no one wants to pay any debt down earlier than they have to.

[Tinykong]

Intragovernmental holdings (used famously by Clinton to make it look like he was running a surplus) still have to be paid back. It's no different than using your Capital One card to pay your American Express card bill.

[Rukentuts]

I misread your question because I was thinking in terms of your original post.

What you described there is not forgiving debt, it's actually just paying off the debt. And the reason we don't do that, is because no one wants to pay any debt down earlier than they have to.

Yeah, but I thought of it as forgiving as I really don't owe you $10 anymore, I just owe you $5. So really we cut down our debt without really paying anything.

[Deadvolcanoes]

I feel like the points in that video were probably made by some treasurer in the Roman Empire before that all went to shit.

You can't shrug off $16 trillion and say "ehh, we'll be okay," especially when it's growing by a trillion every few months.

How is our debt growing by a trillion every few months? And no one is suggesting that you should shrug it off. They are suggesting that its not an urgent problem, which some people make it out to be.

[semaphore]

Yeah, but I thought of it as forgiving as I really don't owe you $10 anymore, I just owe you $5. So really we cut down our debt without really paying anything.

Well, this part doesn't work because of the reasons I described in my first answer. The US doesn't own $1 trillion of Japanese debt. And if it does, chances are those debt are issued with different interest rates. Which means that the debt is worth more for one of the countries, which would then lose money in such an exchange.

[Rukentuts]

Well, this part doesn't work because of the reasons I described in my first answer. The US doesn't own $1 trillion of Japanese debt. And if it does, chances are those debt are issued with different interest rates. Which means that the debt is worth more for one of the countries, which would then lose money in such an exchange.

Yeah, but we could crunch numbers to arrive at equivalent value.

[Reeve]

Well, this part doesn't work because of the reasons I described in my first answer. The US doesn't own $1 trillion of Japanese debt. And if it does, chances are those debt are issued with different interest rates. Which means that the debt is worth more for one of the countries, which would then lose money in such an exchange.

More than that, a lot of that debt "japan" holds is individual investors and institutions in Japan, not the Japanese government, though I'm sure they hold a lot too.

[Rukentuts]

More than that, a lot of that debt "japan" holds is individual investors and institutions in Japan, not the Japanese government, though I'm sure they hold a lot too.

Well yeah, individuals kind of ruin my claim. This is why I was mentioning government to government debts and not mentioning individuals.

[Jackmoves]

USA should sort out the deficit, the debt should not be a priority. But getting the budget balanced should be prioritzed over most things imo.

[Tore]

How is our debt growing by a trillion every few months?

http://www.skymachines.com/US-Nation...ental-Term.htm

Shows debt growth per year. Last 3.5 years, it's averaged at about 1 trillion every 6 months.

[mrmsix6]

Bondholders typically don't like to be repaid early. When an investor buys a bond, they're buying a defined income stream (coupon or interest rate) with a specific date of maturity based on interest rates at the time of issuance. You can't just repay them whenever you want to settle debt, and the bondholder can't just demand to be paid the principal amount before the maturity date. If you could repay bonds whenever you wanted, whenever interest rates dropped they would be paid off en masse and be reissued at lower rates and a cheaper borrowing cost. This completely fucks the creditors. Hence, treasuries are fixed.

Forgiving each other's debt because we owe each other money is idiotic and wouldn't work for about a billion reasons, several of which have already been mentioned.

[semaphore]

Yeah, but we could crunch numbers to arrive at equivalent value.

What would be the point? Sounds like an awful lot of trouble to go to, just to make the numbers seem slightly less threatening.

[Slummish]

I got a chart too

Obama needs to spend the rest of his re-election treasure trove on television commercials that do nothing but paste this chart on the screen for 2 minutes and 20 seconds at a stretch until every moron sitting on the couch can absorb its message.

[Slybak]

The United States got out of the Great Depression through a massive fiscal expansion known as World War II, with debt levels reaching 120% of GDP by the end of the war (the current ratio is 100%, and it's basically set to taper off). You know who the last President was to pay off the debt incurred during World War II? Ronald Reagan, forty years later. Meanwhile, those debts built a consumer class that fueled the most robust economic engine in human history, that in and of itself erased a lot of that debt through inflation.

Worrying about public debt to the exclusion of everything else in an economic climate of high unemployment, low consumer demand, high household deleveraging, and low interest rates is one of the worst cases of misplaced political priorities a nation can possibly adopt.

[Brutes]

I learned this stuff in school when I was 15, and I'm quite suprised that people are amazed by the message of this person.