It is mathematically impossible at this point, as this article suggests? http://theeconomiccollapseblog.com/...y-impossible-to-pay-off-the-u-s-national-debt What happens if the country just keeps borrowing and borrowing and raising the debt ceiling higher and higher?
Are we listening to a blog that's called "The Economic Collapse" with an article that's 10 years old? Sure, I would hate to be the one holding the debt when the US Government goes into default. (Eyes my 20-year savings bonds.) But the debt, it is a problem only if you agree that the US Government's spending isn't giving a boost to the economy, an investment that grows the economy. Of course, I guess that supports the move from currency to digital money. Then your ==== account balance is just a number in a computer. A digit with no physical form.
As long as the US dollar is the world's reserve currency, we won't have to. When that ends (as it inevitably will) then we'll be in trouble. In a rational world, the Congress would pass a balanced budget amendment. It wouldn't pay off the debt of course, or even stop it's growth, but it would slow it's down to manageable levels over time as the economy expands.
We are informally monetizing the debt. If you would prefer we do it formally, we could print up some trillion dollars bills and hand them out and be done with it. It would just end the illusion that making more money is really getting you further ahead in the game of life.
The Treasury can just write a check to the Fed, buy back all the bonds, and have a bondfire with weenies and marshmallows. It's that simple.
That's what many people think. However, I've actually done a basic calculation estimate, and if the Fed did this, basically something along the lines of what you are describing, it would result in a figure of around 480% inflation overnight. That high inflation would pretty much ruin the country's credit rating just as bad as a debt default would. The issue is, the National Debt is basically somewhere around 3.8 times the amount of bank notes on the Fed's balance sheet. (And we have had other threads discussing this in more detail before) (Just for the sake of hypothetical argument, let me also point out that 480% inflation would also eat into the purchasing power of the Treasury by 79% for one year. So in addition to ruining the economy, that would pretty much be like one year where the government couldn't spend money)
Not if it was done by replacing debt money with fiat money as existing debt money was destroyed. That's not the issue. The issue is the debt money system.
At one moment things would break down. Countries like China that are largely dependent of american consumption are already getting ready to shift toward their inner market. It's not only US, it's southern European countries, western European countries (excepted Germany), even Japan. I try to prepare to go live in the countryside and try to find a place to cultivate for reasons, because I'm not sure that food would be guarantee in the future. From what I understand, the western world (the USA and his allies) is extremely close to the situation of USSR in the late 80's, and basically what happened to Russia in the 90's would happen to the US and a larger part of the world. However, the consequences would go far far more beyond of what happened in Russia.
The bulk of the debt is owed back to Americans in the form of pensions and securities and such. In theory, this is paid back as more is borrowed. I consider this 'good debt' as its not meaningfully different from Americans investing in America. Foreign owned debt is a problem imo. We should be moving to pay that off by replacing it with more of the 'good debt' owed to Americans.
Well, the U.S. is probably never going to pay off its debt. And it probably shouldn't. The last time that happened (during the Jackson Admin.) a depression resulted though there were many reasons for that. People forget that the government securities the U.S. sells to finance its debt are traded just like cash assets around the world. Thus if the U.S. radically reduced its debt the effect would be much the same as suddenly reducing the money supply here in the U.S. The U.S. should work to reduce its yearly deficits for obvious reasons, but eliminating the national debt is probably out of the question and probably should be.
I could see how you could argue foreign debt is worse than domestic debt, but domestic debt is still not good. People will be relying on this debt. Meaning, it still has to be paid and if you don't pay it it's going to cause some big problems. What it has to do with of course is spending power. The government is basically forgoing taxation and spending power in the future.
~ I think China owes the U.S. as much as we owe China. If Trump gets reelected I believe he will hold China liable for the cost of Wuhan virus catastrophe. If Democrats get in we will likely sink .
If true, what a ridiculous situation! How is that meaningfully different than not owing eachother anything?
~ It's not. However the U.S. is not responsible for destroying the western economy and killing innocent people. How much is that worth in compensation. I am guessing a few trillion for the U.S. alone.
~ Not likely. Most Americans want China to pay reparations . I think voters are focused on the economy and recovery - not the Wuhan virus.
I agree, but its all about the credit rating. Im not saying we shouldn't cancel our debt to China, but we should prolly stop relying on the global debt passing game before we do. If you're gonna default on your credit cards, wait until after you pay off the house and car, if you know what I mean.
~ At this point China is on the ropes. There are several countries threatening to seize Chinese assets . Here is a likely scenario that could play out with Beijing : https://nationalinterest.org/feature/china-should-pay-financial-cost-its-coronavirus-lies-141267
There are only two countries, America and Russia, with the military power and strength to seize Chinese assets without a powerful response from China. Trump could start a war in his current manic state of mind.
Or stave off the inevitable by printing more money without possessing the gold equivalency. In other words, just leave it to the coming generations to choke on. Actually I didn't say anything new - it's just another way of saying what you've already said: "Bankruptcy".