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  1. #1
    I am Murloc! Roose's Avatar
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    Will US Ever Pay Off Debt?

    Does the US have any intentions of ever paying off the debt, or are they too big to fail just like their banks?

    What would happen if the US told their debtors to piss off? Does anyone have any recourse?

    Are we ignoring the deficit because we know that nobody can ever make us pay it back?

    I do not mean this to sound contentious. I am curious and have no idea how it works.
    Last edited by Roose; 2013-01-21 at 08:19 PM.
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  2. #2
    Debt or deficit?

    I think you're a bit confused about how debt works though. We're paying back debt constantly, we've never defaulted on our debt, and the debt we're presently incurring is financed by loans that will be paid back as they always have been.

    The main recourse of not paying debt would be an inability to take further loans.

  3. #3
    I am Murloc! Roose's Avatar
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    Ya, I suck at economics and always get those two mixed up.
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  4. #4
    Merely a Setback Reeve's Avatar
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    Quote Originally Posted by Roose View Post
    Does the US have any intentions of ever paying off the deficit, or are they too big to fail just like their banks?
    Probably not. There are advantages to both the US and the world economy to having US debt exist.

    What would happen if the US told their debtors to piss off? Does anyone have any recourse?
    They would simply either not loan any more money to the US, or they would do it at much higher rates of interest. This would be very very bad for the good ol' US of A. They may also levy trade sanctions or other punitive measures on the US in order to strongarm us into trying to pay them back. Unfortunately, that would probably put the US in a position of being unable to pay anything back. Again, this would be very very bad, for both the US and the rest of the world. It's in EVERYONE's best interests to keep the US solvent.

    Are we ignoring the deficit because we know that nobody can ever make us pay it back?
    No one is ignoring it. It's in the news every day and we're continuing to try to find ways of reducing it (not eliminating it). Unfortunately, Social Security is becoming too expensive with the Baby Boomers retiring, and as medical costs continue to climb, Medicare is becoming too expensive to maintain also. Contrary to what most people believe, we can't get rid of our deficit by reducing non-SS, non-medicare, non-defense programs.
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  5. #5
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    Quote Originally Posted by Roose View Post
    Does the US have any intentions of ever paying off the deficit, or are they too big to fail just like their banks?

    What would happen if the US told their debtors to piss off? Does anyone have any recourse?

    Are we ignoring the deficit because we know that nobody can ever make us pay it back?
    Yes, there will be tax increases to close the yearly budget deficit.

    Yes, the national debt will be paid off, we are the largest first world country with the largest tax-base and economy. We can term out our debt over hundreds of years.

    Global investors will continue to purchase US debt, no matter what, because we are an integral part of the global economy. If the US "collapses" in the conservative/libertarian paranoia sense, then the entire global economy would collapse.

    Republicans are using the debt and deficit as a political tool because they are becoming more and more desperate to remain relevant in a country whose demographics are changing. They are willing to halt the paychecks to soldiers and law enforcement, in order to get their antiquated ideology into the mainstream.

    This is the first time in the history of the US that the majority party in the house of representatives represent LESS people than the minority party.

    Don't swallow the doomsday scenarios the libertarians/conservatives are selling you.

  6. #6
    The Lightbringer Deadvolcanoes's Avatar
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    The US cannot and will not default on its debt. I really don't think its a big problem, not in the least really. We're not even close to full employment.
    It is difficult to free fools from the chains they revere.

  7. #7
    One day the national debt will one day be worth more than all the money in the United States. Then everyone will leave the US and tape a giant "abandoned" sign on the front door. This will most likely cause China's economy to collapse.

    Or we could print a few trillion dollar coins with Obamas head on it.

  8. #8
    Quote Originally Posted by Shop Ebay View Post
    One day the national debt will one day be worth more than all the money in the United States. Then everyone will leave the US and tape a giant "abandoned" sign on the front door. This will most likely cause China's economy to collapse.

    Or we could print a few trillion dollar coins with Obamas head on it.
    Thats the much more likely case, with the money printing. But don't mistake the crisis causing China's collapse-- China will "cause" the crisis when it realizes that constantly depreciating treasury bonds are a terrible investment.

  9. #9
    Quote Originally Posted by Deadvolcanoes View Post
    We're not even close to full employment.
    That's where you lost me. Why does employment rate matter ?
    If I had to hasard a guess, a positive unemployment rate means the taxpayer base and thus federal revenues aren't at their maximum level, so there's still room for growth and if the US can manage their debt in the current state of things they should be fine. Correct ?

  10. #10
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    Quote Originally Posted by Hiricine View Post
    Thats the much more likely case, with the money printing. But don't mistake the crisis causing China's collapse-- China will "cause" the crisis when it realizes that constantly depreciating treasury bonds are a terrible investment.
    Which will never happen, ever.

    ---------- Post added 2013-01-21 at 08:58 PM ----------

    Quote Originally Posted by Sealed View Post
    That's where you lost me. Why does employment rate matter ?
    If I had to hasard a guess, a positive unemployment rate means the taxpayer base and thus federal revenues aren't at their maximum level, so there's still room for growth and if the US can manage their debt in the current state of things they should be fine. Correct ?
    Full employment means larger tax receipts, so yea you are correct. In the US currently we have an oversupply of labor and capital. The private sector is either unwilling or cannot steer the global economy, there is only one other agent in this scenario that can, and has done it before, the US federal government.

  11. #11
    Quote Originally Posted by Hiricine View Post
    China will "cause" the crisis when it realizes that constantly depreciating treasury bonds are a terrible investment.
    As long as the dollar is sought after as a global currency and widely used for international contracts, depreciation is still a safe strategy for the US though.
    Granted, that's changing, but slowly, and it's not in China's interest to cause any kind of crisis with a sudden dick move.
    Last edited by Sealed; 2013-01-21 at 09:10 PM.

  12. #12
    Banned Rukentuts's Avatar
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    Quote Originally Posted by Shop Ebay View Post
    One day the national debt will one day be worth more than all the money in the United States. Then everyone will leave the US and tape a giant "abandoned" sign on the front door. This will most likely cause China's economy to collapse.

    Or we could print a few trillion dollar coins with Obamas head on it.
    As long as the GDP growth outpaces debt accumulation, this will never be the case.

  13. #13
    Merely a Setback Reeve's Avatar
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    Quote Originally Posted by Rukentuts View Post
    As long as the GDP growth outpaces debt accumulation, this will never be the case.
    That's not happening right now, but once we're out of this recession fully, it should be.
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    Or a yawing hole in a battered head
    And the scuppers clogged with rotting red
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  14. #14
    Banned Rukentuts's Avatar
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    Quote Originally Posted by Reeve View Post
    That's not happening right now, but once we're out of this recession fully, it should be.
    We're headed in the right direction though, the deficit is decreasing. It was below $1T for FY2013. Just like in the Clinton era when we're out of the recession, the debt vs. GDP will decrease.

  15. #15
    No no, that was a joke on the Bank loans towards Houses.

  16. #16
    Don't worry, the zombies will eat you WAY before we pay off our debt. You're worried about the wrong thing.

  17. #17
    Why would the US want to pay off it's debt in the first place?

    The debt is only just a number that represent the circulation of money. They are loaned money that they spend generating profits in the private market that is eventually used to loan the governament again.

    If there is an issue it is not with the debt. A healthy economy will always have an element to it which is debt. As I said it represent the circulation of currency. Actually the bigger and better an healthier economy is the higher its debt will be. For good reason.

    The problem is with DEFICIT. It is not an elusive term and is not at all difficult to understand. When it comes to the above described circulation of currency, if the governament loans more then it can pay back on term (meaning if he loans for 10 years, being able to pay it back in 10 years using money earned trough taxation).

    In that situation the governament will be forced either to print more money, devaluing the existing currency or to loan more money at probably higher interest rates as lenders will become uncomfortable with the income deficit to pay off previous debt. In both cases you just end up having to pay back more and more without actually increasing the effective size of your economy.

    Debt is not something one should worry about by it self. Actually you should freak out if your governament had no debt, because it would mean you had no governance and you economy has stalled. Debt only becomes an issue once Deficit is the reason behind it. No defecit then the debt is completly irrelevant because your governament will be always able to pay on time, which inherently will either push the rates very very low or low and at a stable rate.
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    Today Obama once again kneeled at the altar of environmental naziism and hurt this once great country. He has now banned all drilling in the Atlantic Ocean

  18. #18
    Mechagnome Warpaladin's Avatar
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    I have my doubts, I think it's unlikely that the U.S will pay off the $16 trillion (and growing) debt. I suppose it's possible strange things have happened before.

    http://www.usdebtclock.org/ this is fun to look at once in awhile
    Last edited by Warpaladin; 2013-01-21 at 10:53 PM.
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  19. #19
    Quote Originally Posted by Warpaladin View Post
    I have my doubts, I think it's unlikely that the U.S will pay off the $16 trillion (and growing) debt. I suppose it's possible strange things have happened before.

    http://www.usdebtclock.org/ this is fun to look at once in awhile
    Unfortunately the only way to do it is to do what any person who has a ton of debt can do without going bankrupt... learn to live without big expensive things for a while and just be happy with what you have until the debt is paid off.

    ...but you try telling the warmongers and fearmongers in congress today we should just relax and focus on ourselves for a change. =/
    Isn't it immature that you call him Donald "Dump"?
    I agree, it's childish and stupid - and that's my point. it's meant as a deliberate mockery of his blatant disrespect via using "Crooked Hillary", and thus I can call him "Dump" since he dumps his campaign promises, dumps campaign managers, dumps his wives, wants to dump the first amendment, dumps common-sense war ethics and dumps the use of proper English in favor of a mongrel white-trash dialect.

  20. #20
    Mechagnome Warpaladin's Avatar
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    Quote Originally Posted by mvallas View Post
    Unfortunately the only way to do it is to do what any person who has a ton of debt can do without going bankrupt... learn to live without big expensive things for a while and just be happy with what you have until the debt is paid off.

    ...but you try telling the warmongers and fearmongers in congress today we should just relax and focus on ourselves for a change. =/
    Indeed, I believe living small is the way to go but not many would follow. I saw an apartment that's like 240 sq/feet but acts like it's a 1000 sq/foot apartment. I hope to see more people who invest in apartments like this.
    Quote Originally Posted by Unknown
    "The world is a magical place full of people waiting to be offended by something"

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