Someone explain National Debt to me

If you default on your debts, no one will lend you money again should the need arise.

And that’s just the tip of the iceberg.

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Theoretically what can say China do to us about debt we them

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China could say "We have almost twice as much debt as you" and in another year or two can probably drop the "almost".

If you owe the bank $10,000 dollars, they own you.

If you owe the bank $22,000,000,000,000 dollars, you own the bank.

/thread

For one thing, if interest rates go up, the percentage of the budget that goes to pay the interest on the debt consumes a larger portion of the federal budget. It's like an individual family making an interest only payment and not even a minimum payment on their credit card debt. It's insane.

Well to start, the vast majority of that debt is owned to American citizens, not to China. If the US government defaults on that debt, it means hundreds of millions of American retirement plans will take a hit. And millions will straight up go bust.


And that’s just step 1; the most immediate impact. The next step is that nobody lends to the American government any longer (because why lend money to someone who just proved unable to pay it back?). Cutting off this loan source means we are immediately forced to go back to a balanced budget. And while that’s something we ultimately want to work our way to, it’s not something we can possibly do at the drop of a hat like this. The gov is currently collecting about 3.5 trillion dollars. They are currently spending about 4.75 trillion dollars. If no one lends to us, it means we need to cut government expenditures by over a trillion dollars a year (or accept hyperinflation, the cost of which would be aleven worse). This cut alone would represent like 5% of our total gross domestic product. No matter your view of gov’s role in the economy, immediately removing 5% of any nation’s total production is the definition of an economic catastrophe. And that’s before any spillover costs associated with the cuts to military, healthcare, education, research, policing, etc. Virtually every sector of our economy would take a catastrophic hit. By the time the full effects of the dafault were felt, it would be a greater economic collapse than the Great Depression.





So why be concerned about it? Because defaulting on our debt is one of the only things that could ever threaten US global economic dominance.

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What is the point of it? We owe 22 Trillion Dollars. That number will continue to grow. So whats the end game? Why even be concerned about it? Theoretically what can say China do to us about debt we them

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Most of that money is owed to Americans citizens. I’m assuming you don’t want your part defaulted on..

The debt is financed by the sale of government notes. The government is not required to pay off any of the debt and simply rolls over the old notes as they come due, or something like that.

The interest on the debt is what really counts. That amount must be paid every year and is part of the federal budget. This year the amount is over $400 billion, or about 10% of the entire budget. This amount will continue to take a larger and larger part of the budget as long as we run deficits. Where it all ends, who knows, but it likely won't be pretty.

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The interest on the debt is what really counts. That amount must be paid every year and is part of the federal budget. This year the amount is over $400 billion, or about 10% of the entire budget. This amount will continue to take a larger and larger part of the budget as long as we run deficits. Where it all ends, who knows, but it likely won't be pretty.

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Lets say the goverment stop paying it, what would happen in real terms? (Andy Jackson staring from the great beyond with fiery eyes)

Physical and intellectual work are the only creators of wealth, we have been tricked into believing the fantasy of self multiplying "money".

The U.S. is sovereign monetary power that borrows without collateral, just with its record of always paying back with interest, there has been never been any economical danger of not being able to meet any and all maturing bonds payments. Of course, there could be a political decision that would needlessly wreck the economy. And even if the federal government just created new dollars to pay back the maturing bonds, the only issue would likely be a weaker dollar. But deciding not to pay back the bonds would not just make dollars weaker in value, but might reduce them to meaninglessness.