National Debt - To Whom Do We Owe?

[thebishopp]

... is in the bonds issued by the Federal Reserve Private Bank System for sale to anyone stupid enough to buy them. A large portion of the rest of the debt is in obligations to pay YOUR S.S. retirement, YOUR Medicare, YOUR interest on the same debt. In your answers eventually will come the idea of protecting yourself by use of HARD ASSETS. Buy Gold, Silver, and Guns, and Groceries. Eventually their value will increase. Be ready to sell INSTANTLY if you can get a better price that your original price. NO-BODY is responsible for YOU more than YOU are.

Yeah but they love to distract us with the whole "we owe so much money to china they are going to take over" thing.

 

[thebishopp]

Wait; there IS another option. You've forgotten "the blood in the streets" option that was only hinted-at with the Occupiers. There IS the real possibility that Americans will go off the really-pissed-off end of the handle, and make the original revulsion at King George seem like a panty-raid. No single edge of this sword-tripod can be totally eliminated. Taxes will be eliminated for the duration of the revulsion, and no-one in D.C. will need paid. Et Cetera. Printing more "money" will be ineffectual, since the vendors of those dollars will be in the Bastille, awaiting worse. Those wise men and women whom we revulsionists appoint as watchers of our funds, food, future, and fortune will be in charge of the New Solution where we've established New Government, based upon the true consent of the governed. John Galt will carry on and take us through. Stand there and watch it happen, or get to arms and MAKE it happen. Run to the sound of the cannon. The long line of usurpations and complaints is ending.

I don't know about this... Americans, in general, are pretty lazy as a whole, though I suppose if they got rid of welfare, tv, videogames, porn (especially porn) then we may have an uprising on our hands.

 

[tenring]

Excellent points made so far. I am seeking a list of entities to which we owe our national debt, the total amount of which would be the reported $15 Trillion we allegedly owe. Any ideas where that could be found and shown here?

Try starting with $2,600,000,000,000.00 to the Social Security Trust fund.

 

[dross]

So then we just continue down the "deficits don't matter" route and await total collapse?

No, we dig ourselves out of the whole the same way we got into. By slowly paying off the principle of the debt each year.

Reduce spending and government growth. Grow the economy.

The debt has meaning only as a percentage of our production. If we hold spending and grow our economy, the debt shrinks.

Not that I think that's going to happen.

 

[level.eleven]

Reduce spending and government growth. Grow the economy.

The debt has meaning only as a percentage of our production. If we hold spending and grow our economy, the debt shrinks.

Not that I think that's going to happen.

Isn't it impossible to hold spending? We have been expanding the debt ceiling on a regular basis. We are set to extend it by $1.2 trillion. What do we do the next time this needs to happen?

 

[fireblade]

We are hosed almost to the point of no return

ps thought you was missing my front size and boldness so ^^^

 

[dross]

Isn't it impossible to hold spending? We have been expanding the debt ceiling on a regular basis. We are set to extend it by $1.2 trillion. What do we do the next time this needs to happen?

You can't hold deficit spending to zero right now. It's practically as well as politically impossible. But remember what we've added in just the last three years to the deficit. We need to repeal Obama's healthcare and hold levels to current. Some things can't be touched right now. Hold what we can, grow the economy and continue to work toward some long term fixes.

None of which we are likely to do, I'm afraid.

 

[88GT]

Well, I think repudiation would result in a more favorable result and deter this from occurring again in the future. You are less likely to loan money to an entity that didn't pay you back at full value the previous time. Plus, as stated up-thread, this is a route governments have pursued in the past with favorable results. The state of Indiana, for instance, has written off debt in the past.

Define more favorable. I'm not being sarcastic. Are we talking hundreds of people in poverty instead of thousands? $100 to buy a loaf of bread or $1,000? Or do you really think repudiation will stave off a significant set of negative consequences that are sure to occur under default of our obligations? More like tightening the belt and not eating out any more vs. living out of one's car and collecting cans for change to afford a gallon of milk.

Regarding your second point, I don't know why we constantly hear debt to GDP ratio touted by economitricians. It is said that the better the ratio the more likely it is the nation can cover their debt. We are at 100%. Some Euros are at 200%. Japan is at 300%. The output of the private sector has little relation to the ability of a government to cover it's debt. Particularly when they can print money. Taxing production is counterproductive to increasing GDP. I guess the theory is the more our people produce, the more we can tax them. But, by taxing them you stifle production. I believe that is a position of the MMT economists. But, I don't think it is sound policy to play the juggling game.

You don't have to increase the taxes to get more revenue. It's a simple mathematical truth that X% of Y is less than X% of 2Y (or Y+Z; or whatever increase Y experiences). And it should be at least moderately obvious that the less debt one holds as a percentage of income, the easier it is to pay off. Think of the minimum wage employee who by nature of his paltry wage is already living as low as he can. Contrast this to the mid-level manager of a corporation. If both parties owe $10,000, which one do you think will be able to pay it off more easily, if at all? The minimum wage guy devotes 90% of his income to basic necessities, and the simplest ones at that. The manager is living much higher on the hog for a lower amount (as a percentage of income) and has the room to reduce his standard of living. Let's say he's devoting 72% of his income to basic necessities. The minimum wage guy can never contribute more than 10% of his income to paying off his debt. Even if the manager keeps all his basic expenditures the same and only cuts out the disposable income expenditures to divert them to paying off the debt, he can start out contributing 27% of of his income to the debt. (even if the percentages were identical, the 10% the manager can contribute to debt payment is larger by definition than the 10% the minimum wage guy can contribute.) But he's also able to cut his basic necessity expenditures by selling cars with payments and buying one for cash, relocating to a more modest home with a lower monthly payment, etc. To add to the pain, the minimum wage guy may not even be able to make his interest obligations with that 10%, meaning that even though he pays 10% of his income to debt payment every month, he never actually pays off any principal, so he always going to owe money. And he may actually increase his debt obligation without borrowing a single penny more.

I don't pretend to believe that an increase in our GDP (the nation's equivalent of income) is sufficient to solve the problem, but it certainly makes it easier to do so.

Do you agree with that assessment? What are you thoughts?