re: What will it take for us to deal with the national debt?

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Realistically? We won't and the system will collapse because of it.

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I agree that we won't, but I am unsure what the consequences will be.

If the system does collapse, what would that look like? Would a new form of currency replace the government IOU? Would a whole new type of government take control?

With how interconnected everything is, could one country collapse in isolation or would that spark a global economic collapse? Or just a first world collapse?

Same thing as stocks. Reverse split

Governmental\economic collapse.

Buy rice, beans, and ammo.

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Nothing will pay it off. That’s an incomprehensible amount of money.

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No one even talks about it. No politician, at least mainstream politician with any power, even mentions it.

It's not on anyone's list of priorities. It's not the centerpiece of either party's platform.

Not only do they have no interest in reducing it. No one seriously even wants to keep it from growing.

Very weird.

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BTW, not only are his policies working great, he's proven just how politically viable it is.

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The country we just gave a $40 billion bailout to?

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If the system does collapse, what would that look like? Would a new form of currency replace the government IOU? Would a whole new type of government take control?

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Those are all great questions and the most accurate answer is that no one knows for sure because of:

-the US Dollar's dominance as the preferred currency
-the US' role as the economic engine of the global economy
-the US military's role as the most dominant military force in the world

What we can be sure of is that if we were to fall, the rest of the world would fall into various levels of chaos from economic upheavals and a vacuum of military potential.

Before we can being to know what that looks like, we have to at least take a guess at what the steps leading up to it would look like. In order to do that, we have to understand how the USD has value.

The USD's value comes from three major sources:

1. The value of US debt as an investment vehicle (T-bonds, i-bonds, etc).
2. The USD's role as the primary world reserve currency.
3. The "petro dollar" (the USD being the preferred currency to trade oil/gas).

This makes it like a 3-legged stool, it's pretty stable unless one of the legs fail and then it all falls.

Along with this, the USD can also be viewed as a good since the Law of Supply & Demand impacts it every bit as much as it does anything else. As each successive new Dollar is created through debt, the more the value of all Dollars drop. That said, to me the most important "leg" to watch to see early signs involves the first one: debt investment vehicles.

I can get a bit into the weeds on this if you need, but the short (and very generalized) version is that the 10yr bond's return is set when it's sold at auction (the auction is the selling of the debt created by deficit spending). If investors are concerned about the US, the auction will need to offer higher returns (ie: the interest, referred to it as its "yield") to entice investors to buy the debt. The difference between the initial yield and the yield it actually goes for in an auction is called the "tail". A positive tail means it had to go up due to weaker demand, a negative tail means demand was so strong that yields could drop and bonds would still sell.

Over the last five years, tails have tended to be positive.

Yields generally move with inflation and inflation is a function of how much money is in the economy.

Still with me?

So as more debt is created, inflation is going to remain strong because of supply/demand. Because inflation is the lessening of the value of the USD, investors watching the Dollar, the debt, Congress, etc. are going to want higher yields on debt (not just the 10yr, but it's a standard to watch as it and the 30yr mortgage mirror one another).

Here's where the catch comes in: eventually you reach a point where all those yields (interest on the debt) have an accumulated effect of being its own problem. Currently it's 14%-15% of total US federal spending, ranking behind only Social Security as the largest single budget item.

What then happens when yields no longer draw enough investors and an auction fails? That's likely going to be the big sign that the pain is about to start.

So when the auction fails and Congress suddenly can't pay bills, that is likely to create a rippling effect as that starts killing the value of the Dollar (read: inflation). The Fed would need to raise rates quickly and to historic highs to arrest such an issue, but that's going to cause mass unemployment over the coming months. And there's no money for government programs which would normally help folks weather such a storm. Unlike the Great Depression, most Americans are far, FAR from being agrarian and that means a lot of people soon won't be able to find (much less afford) food.

Let your imagination take you from there.

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The country we just gave a $40 billion bailout to?

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FWIW, Argentina used $2.5 billion which they have already paid back.

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The country we just gave a $40 billion bailout to?

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You need to go figure out what a currency swap is. They already swapped back with interest...

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Easy to do if not worried about reelection…..

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Find me enough politicians in Congress so unworried about re-election they'll cut total spending by 30%.