National Debt

[johnboy]

I'm having a hard time understanding the thought process that allows our politicians (yours more than mine but they are all generally the same) to continue to spend FAR more than they 'earn'. A quick search shows that the USA national debt stands at $17T (that's trillion!) and continues to increase by some $1.8B/day. That's about $53K/person.

Canada is somewhat better (?) at $638B or $19K/person but better is only relative.

How can this level of debt and debt increase be viewed by any sane person as acceptable, normal, no problem folks? WTF!!??

Project this a little into the future and even the most dense among us (politicians?) must reach the conclusion that there will be a time when the lenders, mostly the Chinese, will say no more. What's the contingency plan for that? Sell of a chunk of real estate? Alaska maybe? Hawaii? Haida Gwaii? Total collapse of the worlds financial system might be the result.

Somebody mentioned that the doomsday preppers are starting to make a little more sense and I gotta agree. Time to start squirrling away beans.

[BarryBobPosthole]

Part of the spending is both countries are propping up their economies in several different ways to prevent that very crash from happening. They keep talking about ways to cut spending but none of the plans really cuts it in a way that the economies can survive without serious repurcussions for SOMEBODY. Who that somebody is depends on your constituency. And both claim its really for the good of the country when in actuality its not that, its whoever got them elected to office in the first place.

such is the politics of a free democracy.

BKB

[BarryBobPosthole]

And just as I hit enter on that a big group of resident Canadians flew over my house at rooftop high honking like crazy. An omen?

BKB

[Chicken Dinner]

I'm not trying to disagree with your point which is valid. But, the Chinese, while the single largest foreign holder, only hold 8% of our debt.

(Edited to indicate that China is the single largest "foreign" holder.)

[Penguin]

Oh we'll pay everyone off. In full. We'll just do it with dollars that are a bit smaller than they were when the debt was piled up. :)

If you want to understand why we continue to pile up debt you have to ask yourself one question: Who benefits from us continuing to pile it up?

Will

[johnboy]

Maybe my very literal mind views thing from too much of a micro perspective. Debt, for example. I know that if my household budget exceeds my total income then at some point I will no longer be able to meet my repayment obligations. Sure, I can fiddle with different repayment plans and various ways to delay or postpone the inevitable but if I do not drastically curb my spending, at some point I will be incapable of paying the interest on my loans (whoever holds them) never mind the big nut. At that point, I'm screwed and would probably go into bankruptcy with all that entails.

Are countries that much different? We've seen it happen with Greece and a few others who are right on the brink of being failed states. Why do we think it can't happen to us?

I think part of the problem or maybe a large part of the problem is the quality and caliber of the people we elect to 'lead' us. You gotta admit that they are generally not the sharpest knives in the drawer. If they were, why would they want to be in politics? So we have a bunch of less than capable people trying to figure out a way to stay in power, keep their noses in the trough and if possible blame everything bad on the 'other' guy. It leaves very little time or interest in actually fixing anything of substance.

OK, I have to stop thinking about this because it gives me a headache. Aaaaaargh!

[Chicken Dinner]

Well, the difference is that countries can print money to pay it off. The downside of doing so is that it's highly inflationary. (Probably something nobody under 40 can even imagine, but there was a time in the late 70's and early 80's were mortgage interest rates were in the high teens.)

As it turns out I think the Social Security Trust Fund holds something like a third of the US debt. So, right now our .gov retirement is being invested in something that's earning between .01% and 3.66%. These guys are freaking genuises.

[BarryBobPosthole]

I think my home loan for my first house in 1979 was right at 10%. Might have been 9.9, but hell houses prices in the Dallas area were in creasing at 10% per year minimum anyway. I made 25% off of that house when I sold it three years later. I'd take a 10% mortgage with those numbers.

BKB

[Penguin]

OK, I have to stop thinking about this because it gives me a headache. Aaaaaargh!

:o

Don't let it get you down brother, that won't help a bit. It'll only give you ulcers or headaches or worse.

You're talking about things that have drastic global implications. Tearing down the most influential political lobbies in the world. Enforcing balanced trade on countries whose very lifeblood is built on an overvalued dollar and continued US debt accumulation. Ending the era of the Petro Dollar which was the reason for accepting the reserve currency in the first place. Rebuilding American industrial strength when practically all of Wall Street has long term bets on that not happening. All of this and much much more is tied up in the system that generates further US debt. In all honesty the entire global finance regime currently is based on the fact that the US runs a deficit and generates higher levels of debt.

This is much too big for guys like us to lose sleep over or waste time worrying when that could be spent hunting or fishing. Or putting up this year's apples or taking your wife or kids out on an autumn walk to see the leaves. Or any number of things. Hell, live below your means take normal precautions for your financial security and let it ride.

Will

[Thumper]

I bought my first house in L.A. in 1980. When I bought it, the interest rate was something like 9%. As I said, it was our first house and we were super excited. I had a 30-day escrow and when we closed, I noticed the payment we THOUGHT we would have, had gone through the roof! (from 9% - 13% in a month!) I almost backed out of the deal, but we were so excited and more than ready to move in, we signed the papers anydamnway. Shortly after that, the mortgage rates hit 18%. It took a lot of belt tightening, but we made it through. I didn't touch that house (as far as improvements go) and sold it 9 years later for MORE than double what I paid! (then moved to Florida to start my business).

As youse dufes know, I've gone through a major belt-tightening here too. A few years ago, my income went from very comfortable, to ZERO! I was in a panic. I had visions of losing my house, cars ... everything and pictured myself moving in with Lynn's mom, my mom, or one of my siblings. Again, I broke out the pencil and paper, did some scribbling and figured a way to make it. Heck, we ain't well-off ... but at least we're back to taking vacations and half-way enjoying life.

I wish it were as easy for me as it is for the government ... but my creditors won't let ME raise my debt ceiling ... AND, I'd go to jail if I started printing more money. If I can do it, why can't those hair-brained politicians do it?

[johnboy]

Are all levels of government incompetent? It sure seems so. For example, the geniuses on the council that run (?) the little town I live in have decided to borrow $7M to put artificial turf (that nobody wants) on a playing field that sees very little use while they are raising taxes to pay for road and sewer work that desperately needs to be done. Does this make any sense at all?

I really believe that the inmates are running the asylum. What to do about it? I have no friggen clue but I do believe that real change will have to come from the unwashed masses because those most invested in the status quo will never change. Power to the people!