Obama and the National Debt

[ginkgo]

Obama was talking about reducing the national debt. Practically speaking how does it affect anything in America if the national debt is 100 billion or 5 trillion? They owe it to the federal bank that America created. All the federal bank does is keep track of surplus and debt.

[goldberg]

Originally Posted by ginkgo

Obama was talking about reducing the national debt. Practically speaking how does it affect anything in America if the national debt is 100 billion or 5 trillion? They owe it to the federal bank that America created. All the federal bank does is keep track of surplus and debt.

The national debt is not owed to the fed it is owed to the bond holders. The bond holders could be anyone, including for example the Chinese government. At some point the bond holders start to worry that it will not be paid back, which can ultimately lead to a default, so it does not make any sense to keep increasing debt in an unsustainable fashion. This is currently happening to countries such as Portugal.

Although there are other countries such as Japan that have higher national debt levels they are in the enviable position that most of their debt is held by the domestic population, this allows them to have a high debt to gdp ratio.

The Fed could just print money to pay down the debt, but this normally does not work as all it does is cause inflation (look at Zimbabwe for an example of this).

[Brutha]

Although there are other countries such as Japan that have higher national debt levels they are in the enviable position that most of their debt is held by the domestic population, this allows them to have a high debt to gdp ratio.

Japan holds a lot of the US bonds. They also had problems with deflation.

[veloci]

As the debt grows higher, the less confidence there will be in the dollar currency. If it comes to the point where others don't think we can pay it off and whatnot, our currency will be of no use on a large scale sense. That is as much as I know. Please correct me if I am wrong; it's been a while I took my economic course from high-school.

[Curtis2011]

Originally Posted by ginkgo

Obama was talking about reducing the national debt. Practically speaking how does it affect anything in America if the national debt is 100 billion or 5 trillion? They owe it to the federal bank that America created. All the federal bank does is keep track of surplus and debt.

According to this government website, in 2010 the USA paid $413 billion on interest payments on its debt.

That is 413 billion dollars that could have been spent on providing social services, providing health care, increasing funding for NASA or for national defense, or even just lowering taxes.

Every year we have debt, we have to pay interest on it. (That is why people loan us money to begin with - to make a profit on the interest payments they receive). Eventually as the debt grows, it could reach a point where our total tax revenue cannot cover the interest payments alone, thus leading to a "We are incredibly ♥♥♥♥♥♥♥" situation.

[garentee]

Originally Posted by Curtis2011

According to this government website, in 2010 the USA paid $413 billion on interest payments on its debt.

That is 413 billion dollars that could have been spent on providing social services, providing health care, increasing funding for NASA or for national defense, or even just lowering taxes.

Every year we have debt, we have to pay interest on it. (That is why people loan us money to begin with - to make a profit on the interest payments they receive). Eventually as the debt grows, it could reach a point where our total tax revenue cannot cover the interest payments alone, thus leading to a "We are incredibly ♥♥♥♥♥♥♥" situation.

Or we could cut back on our habit of war..or collect taxes from corporations who pay none, or we could cut back on WASTE...or...or... many things could be done. The 413 billion dollars is less then half of what we spend on war.. seriously WTF?

[Curtis2011]

Originally Posted by garentee

Or we could cut back on our habit of war..or collect taxes from corporations who pay none, or we could cut back on WASTE...or...or... many things could be done. The 413 billion dollars is less then half of what we spend on war.. seriously WTF?

I know. But you have to start somewhere. Hell, start anywhere.


Le sigh. Politicians. And people in general. They all suck!

[Sfumato]

What surprises me the most is that none of the "sides" in this seem to want to reduce military spending which constitutes 50% of the budget.

What is even more fascinating about it comes from a historical point of view that republicanism and good Jeffersonian Republicans should be in total opposition to the non-defensive role our military plays. John Adams never wanted a standing Army.

Consider just the military spending in the last 60 years.

1951-22 M.
1953-50 M.
Korean War Ends and Cold War begins
1981 150 Billion
1983 200 Billion
By 1987 military spending hits 50% in the national budget.
NOW 2010 1 TRILLION dollars give or take a few billion.

I am a Veteran and I will always support my brothers and sisters and I will oppose wars that are not of a defensive nature.

Military spending does spur a god chunk of economic growth.
-Military R&D gave the early technology needed to eventually become this fine computer I am using.
-NASA
-Hospital construction
-Industrial Jobs in ship building, aircraft and mobile units.

The difference is that the military is a pure consumer element of the government which( because we don't take the spoils of the wars we fight) produces no profit for the country. Keeps us safe and free yes but produces no resalable product so to speak.

[Justin Mazza]

Originally Posted by ginkgo

Obama was talking about reducing the national debt. Practically speaking how does it affect anything in America if the national debt is 100 billion or 5 trillion? They owe it to the federal bank that America created. All the federal bank does is keep track of surplus and debt.

Just remember that there is nothing federal about the Federal Reserve. The Federal Reserve is owned and operated by private bankers not the U.S. Government.

If I was a private banker that was earning billions in debt from a country I would want to keep them in debt so I could keep the money funneling to me.

[Solipsist]

Originally Posted by goldberg

The Fed could just print money to pay down the debt, but this normally does not work as all it does is cause inflation (look at Zimbabwe for an example of this).

Isn't this precisely what they're doing with "Quantative Easing?"

[NoJobRob]

Originally Posted by Solipsist

Isn't this precisely what they're doing with "Quantative Easing?"

Yes it is, and it can only go so far. Now they're raising the debt limit. LOL It's like our government is a bad gambler who owes his bookie lots of money, and just keeps saying "I just need a little more time. I got this new thing going and if it works... blah blah blah". It has to end somewhere. If I didn't know any better I'd think they were destroying the dollar on purpose so they could declare bankruptcy and start fresh. My question though would be if they could still keep the house and car... Make ya wonder! LOL

[Sfumato]

Originally Posted by NoJobRob

Yes it is, and it can only go so far. Now they're raising the debt limit. LOL It's like our government is a bad gambler who owes his bookie lots of money, and just keeps saying "I just need a little more time. I got this new thing going and if it works... blah blah blah". It has to end somewhere. If I didn't know any better I'd think they were destroying the dollar on purpose so they could declare bankruptcy and start fresh. My question though would be if they could still keep the house and car... Make ya wonder! LOL

For some people in our culture it means "Honey, I am going to the store to get me a gun"

It is interesting how high gun and ammunition sales have jumped up in the demographic areas that are needed the most financial help.