you owe me a million bucks!
You can't pay it!
Who's yer boss?
Absolutely we are bankrupt. What does it mean for us? Inflation, downgrade of our credit rating, dollar to eventually be dropped as world currency.
We've been bankrupt for decades. As for what it means. Not much. I'm sure the government will repudiate the debt once it gets so high that foreign investors will start shying away from buying US debt. The government will go bankrupt and all governmental programs will come to an end in one great resounding crash. What happens after that is anyone's guess.
Too much information is required to answer your question.
If you want to get technical, the U.S. has been broke, since 1913.
Is the value of America, it's people, it's land, and it's Economy beyond the ability to repay the Federal Reserve Bank, for loans borrowed?
Then again, there is a lot of information to incorporate. The National Debt is just over $12 Trillion, not including $48+ Trillion already owed for medicare and medicaid.
This is also not including any money borrowed from the U.S., which was given to other Countries or Nations?
To be quite frank...when all the numbers tally up...America is a third world nation, which is controlled by the upper 1%, while 20% of society reaps the benefits and 79% have to struggle to keep up.
So, I think it's a little deeper subject than just your question.
Welcome to HubPages. Hope you enjoy your time here.
Don't forget that all unfunded liabilities including Medicare and Social Security actually total more than 100 trillion dollars.
HUBBERS The latest info to digest
Social Security Trust Fund
In the 2009 Trustee Report to Congress (signed by Chairman Tim Geithner) the following information was provided:
First year outgo exceeds income excluding interest OASI 2017 DI 2005 OASDI 2016 OOPS we hit this threshold in 2009 ( a very big miss )
The social security trust fund ended the year with a $100 billion surplus. The US treasury IOU’s as of Dec 31rst is 2.5 trillion. In 2010 due to reduced payments to recipients the treasury will save $46 BILLION.
IN 2007 The surplus was 190 BILLION.
Due to UNEMPLOYMENT IN 2010 the fund will receive far less funding throwing the projections into stress.
Social security trust fund debt Treasury dept announcement on fri ------national debt is $11.46 trillion
End of fiscal 2008 debt was increased 12.3 %
Congress recently approved increasing debt to $14.5
A bi-partisan effort to address the issue head on and make the necessary fixed would be needed. The fix would require a 2% increase in payroll taxes and as much as a 20% reduction in benefits (over time). Taxes on benefits be increase as well.
Medicare is facing bankruptcy Medicare will be bankrupt in 6 to 8 years without rationing the reserve will be empty by 2017,medicare will have to cut benefits by 19% to balance the budget , the actual date may be as early as 2015 .
THE ABOVE DEBT DOESN'T INCLUDE
The federal reserve
Fannie and freddie
And the budget proposed by the obama administration
They just don't get in congress , unless we get jobs, the insurance pool of workers gets smaller hence forcing the insurance companies to raise rates to cover expenses.Another round of forclosures on the horizon ?
If no money is coming into the treasury,and government continues to spend and borrow,the nation's economy can callapse into a deeper recession.
Well you learn something new every day. There are roughly 80 million families in the US. Roughly half of them, 38 million, are on food stamps. Yet we're still one of the biggest producers of food on the planet. What's wrong with this picture?
what's wrong? Food subsidies, tariffs, taxes up the wazzoo, leacherous government agencies, contradictory policies pertaining to food, rent controls, price controls, gov't monopoly on money, welfare, food stamps themselves are part of the problem.
Check out my Evan's Easy Economics if you wanna see an explanation - it would take too much room here.
Oh I know what the problem is. Most people still don't have a clue, I was being facetious. Perhaps I should have used my sarcasm emote.
Congratulations on discovering the Austrian School of Economics. I first came across the site via a link a friend sent me about opposition to the war in Iraq. It's an eye opener, is it not? Much like you, previously unknown vistas of history, philosophy and economics opened before me like dawn after a seemingly endless night. I'll check out your hubs, I've thought about writing some "Economics for Dummies" hubs, perhaps yours will give me some inspiration.
There is no "fixing" the system. The originators of the program in the 1930's knew this would happen. They also knew that they'd be long dead before it came time to pay the piper. What's going to happen to those who rely on SSI payments and Medicare when time runs out? Don't expect the government to fix it, they're too delusional and divorced from reality.
Bankrupt? how do you mean? economically or morally?
Of course we're not really bankrupt - we all have some idiotic faith in some piece of green paper being money and acceptable for goods and services. We'll never actually be bankrupt - if anything we're only trillions in debt.
The simple, disgusting fact is that we can't go bankrupt. we can just print money out of thin air and use it to buy whatever we want. The only problem with that is hyperinflation will set in (in fact, this has already happened, the money supply has more than tripled in the past 10 or so years).
Doomed to inflation and horrible economic problems which could easily lead to despotic government policies? yes.
Check out my 'Evan's Easy Economics' for more info - I discuss everything relevant to this conversation in (so far) 15 posts. I'm adding more each day!
So if the United States is bankrupt, how does this compare to other countries? It seems the rest of the world can't be in much better financial shape? Why not everybody just forgive everybody else's debts and start over? Kind of like the old-fashioned handshake?
The prophets of doom are spreading ignorance as usual. The current U.S. debt as a percentage of GDP is high but not as high as it was at the end of World War II as we entered an extended period of economic growth and prosperity. When we are on track to come out of the current recession will be the appropriate time to take steps to deal with the national debt and unfunded obligations.
Good times, bad times, recession, no recession, and the debt still has not been dealt with. There seems to be no incentive for our government to pay down the debt. If they had, they would have started 20 years ago. Our government just services the debt, and now that is getting to be a struggle-especially in this recession.
During a recession is NOT the time to pay down the debt. That would just deepen and prolong the recession. Virtually all economists agree on that. The debt is quite big and should be dealt with once the economy is clearly on the road to recovery. Actually, paying off the debt will never happen and is not necessary. All that is required is that it not be allowed to get too large in relation to the size of the U.S. economy. It's currently quite large and reducing it is on President Obama's agenda.
the time to pay a debt is when it's owed. as we individuals do and as the states are required, the feds should have their books balanced at the end of each fiscal year.
we need to stop spending money on illegals, stop giving tax free status to the legal immigrants and stop sending money overseas until we can pay our own bills.
it's time the insanity stops and we all have to suffer for a while so our nation can be strong.
No you didn't Ralph. You really couldn't have picked a worse example for your point of view. Before the wars end, some economists, Keynesian trained I might add, spread doom and gloom that the economy was going to collapse and we'd see the country return to the Great Depression. So much so that Montgomery Ward shut down quite a few stores in order to stay solvent during the impending collapse.
Why was the economy going to tank? Government spending would ease and that would negatively impact growth. What happened? As you said, when government spending ended, the country entered an unprecedented period of growth. I might also add that growth was aided and abetted by the enforced savings of Americans during the war years. Whether on the home front or in the fighting American's couldn't spend what they earned due to combat or rationing. It was that pool of savings that financed the boom.
Really, really bad example if you propose that government spending is the cure-all for economic woes.
Please don't put words in my mouth. I haven't said that government spending is the cure-all for all economic woes. Sometimes it's required when a bubble bursts and private spending and investment tanks. As I'm sure you know there was a lot of savings during the WWII and pent-up consumer demand at the end of the war. Government spending and debt went down and consumer spending went up. Perfectly in accordance with Keynes' theory. BTW, who said the economy was going to tank after WWII. If anyone did, their forecast was wrong, not Keynes's theory.
And, as you know, taxes were much higher than now during that period of postwar prosperity.
You're doing that "debt as a percentage of GDP" thing, which is nonsense and doesn't tell people anything meaningful. You'd be better off looking at your country's total debt, which in the case of the US, has been on a steady upward curve for decades:
http://www.brillig.com/debt_clock/faq.html (apologies if anyone else has already posted this)
Sorry, it's not nonsense. It is the principal standard measure used by economists all over the world to assess the amount of debt a given country can prudently carry. For example, the U.S. has a bigger GDP than Gabon or Costa Rica and therefore can safely carry a greater amount of debt.
And as I said on another thread, GDP includes government spending as part of its calculation. So a government can just increase its spending and hey presto! GDP goes up and the figures look better because debt as a percentage of GDP is lower.
Smoke and mirrors. I'm getting more and more fed up with the way that so-called "experts" are pulling the wool over our eyes (although whether they're just deceiving us or deceiving themselves as well I can't tell). You seem to be happy to believe them, but I'm not.
It's not smoke and mirrors. The government spends money to provide services many of which are much more important and useful than some in the private economy. Many private goods are what economists refer to as "positional," that is those which are designed to let others know you've "made it." For example luxury goods such as BMWs, Gucci bags, Manolo Blahnik shoes, designer dresses, McMansions, expensive restaurants, multiple houses and so forth. Most government expenditures are for things that are really needed--building and maintaining highways, public health measures to assure safe food and drugs, and so forth. Why is it that you hold our government in such contempt?
Yeah those IPOD's that parents were going to get from stimulus money in a Florida school district were sure needed, right up to the point it hit the news and then Voila, not that needed!
Just because I question some of the spending carried out by governments (*all* governments, not just yours), it doesn't mean I hold them in "contempt". However, I don't think that governments have our best interests at heart either. Most of them just seem to want to perpetuate their own existence. And a lot of the general public has brainwashed itself into believing that more laws/government is the answer to any problem they might have.
I would also question your assumptions that *all* government spending is useful, and that a large proportion of private goods are "positional". I don't think that any of the items in my food shopping this week were "positional".
Here are some interesting spending statistics for my government (the UK), if anyone's interested:
As AIG plans to ask for $80 billion more, as Jim Bunning blocks extended unemployment payments (and I can't blame him one bit), and our country continues to tank, all this grand logic of Keynesian theory and so-called historical precedence means absolutely NOTHING to the unemployed not only here but globally. Any further monies paid out by the almighty government should go to the AMERICAN PEOPLE. To hell with any trickle down philosophy. There needs to be a direct pipeline of monies that provide jobs. No more circuitous blundering. No more trillions in additional debt.
OK.. but that still doesn't mean the US is bankrupt
You poor child. You remind me of a wide-eyed youngster staring at his first merry-go-round. What anticipation! But, after realizing, the merry-go-round merely runs in circles the wonderment slowly turns to disillusionment. So, too, with this government. Is the United States bankrupt? It is, then it isn't. Being able to service one's debts runs in cycles. Right now the United States is living check to check. IF this country enters into double-digit inflation, as is forecast for later this year, then very likely it will be bankrupt. Other countries, notably China, are now turning their financial resources inward -- a sort of "feed thyself first" mentality. And that spells potential disaster for this country. No, the United States isn't bankrupt -- by definition -- but the rocky precipice on which it stands is crumbling.
Yes, I know.. the sky is falling, and the US is at death's door.
Look, I'm not an American, but although I am not questioning that it has some MAJOR economic issues it has to deal with over the next few decades, I have faith that the American people can meet these challenges.
I think history is on my side on this one
You say the "American people." Again, IF the American people had control then I would agree with you. But increasingly, the American people have lost control of their country primarily because their representatives -- members of Congress -- are not representing their respective constituencies. Instead, Congress is caving in to monied properties like AIG and the banking industry, as well as to high-powered special interest groups. As I write this Americans are refusing to spend. Why? They don't trust Congress, they don't trust the White House, nor do they have any faith in the financial sector which has received billions in bailout monies with very little trickling to the people. And Americans, this time, don't trust the future. This will have dire effects later -- count on it. And this scenario is being played out in all industrial countries -- all at the same time.
Historically Americans have met the challenge. We have always prided ourselves on ingenuity and finding a way to get the job done. But globalization not only draws nationalities together, it also dilutes nationalistic pride that usually serves to elevate a country to meet the challenge. Translated: There are too many fingers in the pot. Not everybody's going to get fed.
I suspect that all you know about Keynesian theory is that you don't like it because of what you heard about it from somebody else who hadn't the foggiest understanding of it.
This might be nothing - but a friend of mine who is a student of economics said there is a crude analogy of the greed that damaged the USA that is seen in parts of the film "Goodfellas". He couldn't remember which part, but he said it struck a chord with him. As I haven't got that film in my dvd collection, maybe someone will tell me if it's true or not. It's supposed to be a scene with stuff going into a store through the front door, then out the back door. Later 2 of the characters burn it down for the insurance.
Anyway, its a facinating subject, people! God Bless America!
I saw the movie a long time ago, but I can't remember the details. It was a great movie, but I don't recall a connection with economics or the national debt.
That would be the "Bust out" economic theory made popular by Carlo Gambino and Joseph Bonano, very respected economists of their day!
The Crash will come when there is a run on the Banks. Until then the Government will continue to borrow and spend.
It's not Doom and Gloom it's an economic reality. Debt is not Capital and the ability of the American People to repay what is owed has been surpassed.
So the question is really to whom the debt is owed, and what happens when the default comes.
Money isn't real. Debt and Currency are just numbers on Computer Screens.
What is real is hard tangible assets... things you can touch and feel.
And the Federal Reserve/Central Bank has made sure that when the crash comes the title to all tangible property of value will be in the hands of a select few bankers.
Then the system will be rebuilt.
Have you heard of the Federal Deposit Insurance Corporation? A run on the banks is highly unlikely.
Oh yeah, the FDIC needed a vast infusion of money last year, they'll probably need it again this year. It's speculated that the FDIC was down to 8 billion to cover all the other banks in the nation. If you think the FDIC can cover another shock like the ones the banks had in 2008, you're either crazy or really really clueless. Oh and the Alt-A and commercial loans have yet to reset. Banks are going to suffer further losses from bad real estate deals in the future. How is the FDIC going to cover the trillion dollar losses from that one?
Ldt, your name calling and ignorance is tiresome. The FDIC and the Congress, if necessary, will take whatever action is necessary to stop a run on the banks. I notice that some of your Mises lunatics are actually advocating that everyone withdraw their bank deposits. Not a very constructive suggestion.
Hey we still have our guns and the Supreme Court is probably going to extend the Second Amendment to the states via the Fourteenth Amendment. If the bankers think they can manipulate the currency to take over all tangible assets after the economic collapse, I think they have another thing coming.
A realization hit yesterday when my neighbor's refrigerator died. She was going to buy a new one. She consulted her checkbook, looked into the near future, and instead walked down the block to a garage sale and bought one there. Same with my truck. "Time for a new car," I said. A chill went down my back. So instead I changed the oil and pocketed the $15,000. Multiply these two examples times hundreds of millions of people and what do you have? Keynesian economics?
I'm sensing an underground movement of sorts. People are making things last and fixing stuff Instead of spending. They're looking to Craigslist For Sale ads. I'm seeing exotic cars parked in front of thrift stores. More and more smaller shops are going out of business. Is this short-term or for the long haul?
Obviously nobody knows. But never, never have I heard so much reported about sovereign debt to say nothing of entire countries (seven at last count) on the verge of bankruptcy. By the way, prices went up again at a local King Soopers. Even the day-old bread was priced at what a fresh loaf would have cost 6 months ago.
Can the American people weather the storm? Or perhaps this is a new age of global economics.
Yeah, Ralph, it's called printing money. Ever bother to study the history of Weimar Germany or the First French Republic. As for ignorance, that's rich. Unlike you, I've read General Theory, Human Action, The Communist Manifesto, Mein Kamph. I don't just seek out the stuff I agree with, I seek out it's opposite so that I'm better able to articulate why I'm against something.
You on the other hand, start out with a position and look for stuff to support it. That's how you can be as nutty to suggest the US Congress will make it all better. The same Congress who in the last year has been trying like crazy to take over 1/6 of the economy just like they have the auto and some of the banking industry.
This must mean absolutely nothing to you and that's why I call you mad:
Where else do you think the government is going to get the "funds" to rescue the FDIC? They'll just add it to the debt. But then again, why do you care, by the time it comes due, you'll be long dead, just like those insane criminals who put this into place almost a century ago. You can afford to be smug and complacent because we are the ones supporting you. Personally I'd not want my kids or grandkids to suffer by having to support me and my generation. That's the final difference between us.
Bye, Bye. You are not capable of a friendly, fact based discussion. You condesceningly and insultingly portray yourself as some kind of economics guru based on outdated, discredited, far out libertarian theories and superficial knowledge of the contemporary world. So long pal.
No Ralph, I have to admit I cannot be friendly, not when you profess beliefs that in the end will doom us. As for fact-based, don't make me laugh. You've proven in word and deed, time and again, that you don't care about facts, except as they support your narrow minded dogma. It would seem that you're as frustrated with me as I am with you. So be it. Just realize that as long as you persist in spreading your biased views, I'll be there to debunk it. Just as, I expect, you'll do the same to me.
You might not like LDT's manner of addressing you or agree with his politics, but you've got to admit he might have a point here.
If I as an individual go into more and more debt, then at some point my creditors are going to call in those debts. Unless I have something to pay them with, I'm in trouble, unless I can move abroad, change my identity, or go bankrupt. Neither of the first two options is available to a country that's in debt. As for the bankruptcy option... what do you think the implications of bankruptcy would be for the US? Or indeed any developed nation?
"Yeah, Ralph, it's called printing money. Ever bother to study the history of Weimar Germany or the First French Republic."
The difference is they were alone in their financial meltdown while the rest of the world prospered.
Now, we are just one of many countries (if not all) in the same predicament. When the whole world is broke and printing money it levels itself out and we all end up standing on the same level playing field.
That's the theory of common sense.
Not really. Germany at least, was able to keep up the pretense of good times until credit dried up at the onset of the Great Depression. Hey...that sounds familiar doesn't it?
What we have here is two main beliefs on the nature of money. One belief is that debt can be used to create full employment and that it's the exchange of money in society that is important. That's the velocity theory Keynesian's use in basic economic classes.
Another theory is that a stable monetary supply is essential to prosperity. The argument goes that if you have a commodity backed money like gold, you can expect that the value of your money will stay stable. The exchange rate may change over time to reflect supply and demand, but the value will remain the same.
The big problem with a debt based inflationary monetary supply is that is sends mixed signals to the economy. Look at the housing bubble as an example. By keeping interest rates low, the Fed encouraged people to buy homes. This sent a signal to the construction industry that more houses were needed. Now in a free market system, as more and more people took out loans and as those loans became riskier, the interest rate would have gone up. This would have sent a signal to the market that things were cooling and it was time to slow the pace of construction down. But by keeping the interest rates artificially low, that signal was never sent. Which is why we have such a surplus of homes on the market today.
See Ralph, that is what we call a line of reasoning. Not rhetoric or sophism.
I hope not - many tens of thousands of Irish workers are employed by American companies here in Ireland
In a way, Ralph has a point. It's impossible to go bankrupt when you can just print more money. What happens then, is much much worse. When people lose faith in their paper currency, you get what we call hyperinflation. People are so ready to dump their paper currency for anything else that the value of the currency basically becomes worthless. You've seen this time and time again in places like Mexico and various Central and South American countries since the end of the Big 2.
If you want a contemporary example, look to Zimbabwe.
The Zimbabwe dollar has become so worthless, they now use United States Dollars or other nations' currency as their official currency. You'll note, I hope, that the as the currency was inflated the value of the currency declined. It's no great supply, even the rawest economics student can tell you that as the supply of something grows, the value of it lessens.
If we are not bankrupt right now we may be in the near future. This new healthcare or as I call it, healthscare bill may do the job and we have to stop giving away money to foreigners who just turn around and spit in our faces as soon as we had them the money. If we don't reign in our spending we'll all be speaking Chinese because we owe more money to China than to any of our other creditors. And how did it happen we ended up owing China so much? How come we owe them anything? We as citizens of this coutry have to start making our elected officials accoutable for how they spend our money. It is our money, not theirs and they should spend it the way we want it spend, not how they want to spend it.
Yeah everyone is just ignorant. Right.
The reality is this.
The $12+ Trillion and growing National Debt can not be repaid because the entire "worth" of all the countries assets is $54 Trillion.
Now you consider that the PERSONAL DEBT is an additional $26 Trillion.
So we have 12+26=38 Trillion in debt on a "value" of $54 Trillion.
So to all those who say tbe country is not bankrupt.
What's your plan to pay back this debt?
Go ahead and outline it below. Let us know how the repayment is going to take place.
So much for ignorance.
The reality is the debt load has surpassed the ability to repay it.
So the real question is not "if" but "when" the final crash comes. And then currency is wiped out and whomever is holding Title to the assets "wins".
Our currency has no real value only perceived value. And when people finally realize this... then they will hoard real tangible assets which they may have to protect with violent means.
Still... waiting for the plan on repayment... go ahead and outline it below.
FDIC that's funny.
With a whopping 3% hard currency the FDIC is a joke! It's a propaganda tool.
You can't insure debt with debt. What are they going to do fire up the old Government IOU machine?
Well sir I'm sorry we can't give you your money... but here is an IOU backed by the full faith of the United States Government.
IOU... that's hilarious.
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