$14 trillion in debt

**wincrasher** · 02-04-2010, 06:02 AM

Loans are not "called". All the debt instruments the government uses have various maturities - anywhere from 3 months to 30 years. They can't be called in early, but they have a market price and can be traded amoung investors.

The real problem is if people quit buying our debt instruments. China is the biggest foreign buyer right now. But we buy the majority ourselves. The majority of the debt is owed to Americans or American instituitions - including departments of our government.

Fortunately for us, the interest rates on our debt are historically very low. Until other investments start showing returns, and people are willing to take risk, US debt still is an attractive, safe investment.

How long that will last is anyone's guess.

**Slandgie** · 02-04-2010, 06:09 AM

Thanks for the correction on that!

However, the interest on the national debt is becoming a larger and larger portion of the fed gov't budget. I hear that someday in the not too distant future, it will exceed the amount we spend on our military!

Something's gotta give....

**wincrasher** · 02-04-2010, 06:18 AM

Well, if you really want to panic....

The unfunded pension liability of the federal and state governments is over $52 trillion dollars. Guess what that will do to your taxes and future deficits? By any generally accepted accounting standards, the US is already bankrupt!

And we're the "richest" country in the world!

**swanson719** · 02-04-2010, 06:36 AM

This has always been my biggest worry with our government. The people always complain about wanting more social programs, but anytime anyone talks about raising taxes on anyone but the rich, that's the end of their political career. Can't have your cake and eat it too.

**feh** · 02-04-2010, 08:25 AM

Yes, once the economy is back on solid footing, taxes need to be raised. I hope folks in DC have the guts to do it.

**Slandgie** · 02-04-2010, 09:01 AM

Feh, unfortunately, raising taxes tends to be counterproductive....it actually brings in less revenue! Check out The Reagan Tax Cuts: Lessons for Tax Reform

**bjl584** · 02-04-2010, 09:17 AM

Originally posted by feh View Post

Yes, once the economy is back on solid footing, taxes need to be raised. I hope folks in DC have the guts to do it.

It's a double edge sword. It will increase revenue for a while, but then it will begin to drop off. The problem with raising taxes is that on the surface it gives the appearance that more revenue will be coming in, but this line of thought never takes into consideration that we live in a dynamic world where people and institutions are able to change their behaviors and practices based on tax laws and policies. A few examples: Taxes are hiked on cigarettes and politicans claim that revenue to the state will go up by $10 million dollars in the next fiscal year. This $10 million dollar "claim" is then used as justification to increase funding to various state programs. However, at the end of the fiscal year we discover that people have changed their behavior. They quit smoking, they buy their cigarettes across state lines, etc. In the meantime, the state politicans already spent that $10 million and viola, we have a budget deficit. In more extreme cases the govt. will raise taxes on property or income to the point that people will start to move away and business will start to lay off workers. This dynamic nature of people is often not considered when raising taxes. Or at least it is grossly underestimated. You think they would learn.

**feh** · 02-04-2010, 09:32 AM

Originally posted by Slandgie View Post

Feh, unfortunately, raising taxes tends to be counterproductive....it actually brings in less revenue! Check out The Reagan Tax Cuts: Lessons for Tax Reform

I'm not going to take the time to refute that document, but it's clear that it doesn't show a causal relationship. Sorry, but I don't believe in supply-side economics. I'm also not interested in discussing it - such exchanges usually go nowhere.

**ActYourWage** · 02-04-2010, 09:47 AM

If you want to see how fast our debt is growing (real-time)...check this link out - U.S. National Debt Clock : Real Time

**Mike75** · 02-06-2010, 03:00 AM

I have always been saying that US must go back to being a production based economy. Today, we import everything from a safety pin to jumbo jets.... No wonder the debt is reaching the sky.

**Snodog** · 02-06-2010, 06:11 AM

Supply side economics is sooo 1980's.

Yes we have a lot of debt but most of the developed world has as much or more. And we had more debt in the past coming out of WW2 and somehow survived.

The future is unknown as usual but I take solice in the old saying. 'God Looks After Drunkards, Fools and The United States of America.'

**maat55** · 02-06-2010, 01:39 PM

[QUOTE]

Originally posted by Snodog View Post

Yes we have a lot of debt but most of the developed world has as much or more. And we had more debt in the past coming out of WW2 and somehow survived.

It is shameful that China owns a large portion of our debt. A communist country has us by the nads. Our founders would be sickened by this.

After WWII we had a powerful industrial base, little SS requirements and no medicare. Our production capacity is crippled and our entitlement obligations are huge. Not a recipe for success.

**maat55** · 02-06-2010, 01:44 PM

Take a real look at our options for continuing SS and medicare. We will likely have to postpone recieving benefits and raise taxes.

SS was originally only designed to last three years and be an small portion of ones retirement planning.

Who here would want to pay in 15% of their income for over 50 years just to collect three years benefits? The program is a failure and only getting worse.

**myrdale** · 02-06-2010, 07:06 PM

Why in a country as great as ours, that our government would want to run on debt has never made any sense to me. I am not too overly concerned with the situation though. I try to handle my money wisely and prepare for the future. The sun will rise tomorrow.

$14 trillion in debt