I guess I've been in the dark since I don't really pay attention to politics, but I don't really understand this national debt thing. I understand that it is amaziongly large, and especially now while gov't money is tight it's probably growing faster than ever, but I don't really understand the concept of it. This national debt, to whom are we indebted? Why don't we pay it? If we're just making it larger and haven't payed it does it really matter? Can we just keep making it larger since not a whole lot of fuss is being made about it? It seems that if the nat'l debt really mattered we'd either stop letting it grow, or we'd try to pay it off. We're not doing either, doesn't seem anything bad is happened so does it really matter? Please straighten me out on this, don't really understand it, but I've always wondered about it.

I can't exactly describe how it worked out, but once upon a time a Capitalist tried to explain to me who was really in charge in this country, and for some reason the answer was insurance companies and other abstract-commodity empires. Apparently, if you get a clear enough picture of how the US economy works and relates to the international economy, you eventually run across the private corporations to whom the US is, technically, indebted.

However, many bongs and many beers have passed this brain since then, and I can't even begin to connect the dots or justify the position, so let that stand for what it will.

:m:,
Tiassa :cool:

National debt is mostly a myth. The federal government is largely indebt to the federal reserve bank (The name is misleading, technically it is a private organization, even though it was set up by executive mandate).

Essentially the Federal reserve Loans the US government money whenever it's a bit short, these are loans which generally get paid back by other loans also taken from the federal reserve. Where does the federal reserve get all of this money you ask? Well that's simple, the US government actually sells it to the Fed, it's minted at the treasury and then sold for a fraction of the value to the federal reserve (Who pay for it with money that they got from the government paying back it's loans with other money that was loaned by the fed) The Fed will then loan this money out to the government, and to other consumer banks which are playing a simmilar game with us. Over the years there has been a lot of controversy about it, but what are you going to do, right? Banks are the biggest scam ever!

Banks and how they create money by lending is the greatest scam ever.

Okay, a quick set of references. And then you've got some reading to do:

http://www.wikipedia.org/wiki/Debt
http://www.oswego.edu/~economic/newbooks.htm


And try to get a hold of Smith's The wealth of nations (http://www.amazon.com/exec/obidos/ASIN/0553585975/qid=1059002726/sr=2-1/ref=sr_2_1/104-4143739-6340705) as well, it's the work this all springs from.

Then also read riccardo, who was around at the same itme as smith. there is a good argument that almsot none of the capitlaist economy stuff we have today actually fits properly with what smith and riccardo postulated.

national Debt information

http://www.uwsa.com/uwsa-usdebt.html

the american national debt now stands at 70 sextillion $
(that's 70 thousand million million million dollars) :D

lol

Yeah, but the fiscal debt stands at $44 trillion...

Originally posted by EI_Sparks
Yeah, but the fiscal debt stands at $44 trillion...

The fiscal debt...now what is that?

And one more thing about the nat'l debt, so we don't really have to worry about paying it do we?

Originally posted by Grey Seal
And one more thing about the nat'l debt, so we don't really have to worry about paying it do we?

Well in a very real and practical sense, no we don't have to ever pay that sucker off.

Something else you may have heard of is the national deficit. A deficit is different from debt in that deficit is when you spend more money than you are taking in (And as such are bound to go into debt). If we could get rid of the deficit we wouldn't need to up the national debt (who's practical effect is to speed up inflation, that's just what happens when we print new money to sell as "payment" for a loan).

In the old days, trade relied on Worth for Worth.
Trading items of equal worth for goods of equal worth or even coins were actually made of precious metal and worth what they were worht.
Example a dollar would actually be a dollars worth of presious metal but i dont think this got to America, i know it was this way in the UK at first.

Soon Governments realised using "Money" to act as a vauled comoddity was a great benift because they could make as much as the damned stuff as they want and not actually give up anything of value.
Soon coins became cheap metals but still bore face values of higher and higher amounts.

And now banks, big business and Governments have made this imaganary wealth and creation thereof into an art form conjouring as much as they need out of thin air almost.
I know its not that simple but at the end of the day its close.
Now days comddities even include time, your feelings / emotions and heck even your thoughts.
All of these are given a Cash value these days and someone somewhere has a way to exploit it and bring more money into the world.
Its all so damned confusing, probably because they dont want to many people looking at it that way.

Originally posted by EI_Sparks
Yeah, but the fiscal debt stands at $44 trillion...

doesn't "fiscal" mean "yearly"
how the hell can an economy fall so bad in one freakin fiscal year?

and btw, 70 sextillion is the number of stars in the visible universe... it has nothing to do with the US or cash

National Debt is the total public and private debt owed to nonresidents repayable in foreign currency, goods, or services.

All this mean is the amount of money owed by the government of the country, public enterprises in the country, private enterprises in the country and residents in the country to governments, enterprises and residents of other countries.

So this means if Johnny Smith in Australia borrowed a thousand US dollars from Billy-Bob McHughes in the US then Australia's National Debt would go up by a thousand US dollars.

It also means if the Commonwealth Bank of Australia borrowed 5 million British Pounds from a bank in Britain then Australia's National Debt would go up by 5 million British Pounds.

Similarly if Australia borrowed 2 billion dollars from the Japanese government then Australia's National Debt would in-turn go up 2 billion dollars.

So National Debt can be, but is in no ways exclusively, and usually only makes a small percentage, made up from the government of the country in question owing money.

In reality, the government does not 'owe' the National Debt and therefore does not need to pay it off. The US, nor any other major country, will never have a zero national debt because at least one of their citizens or corporations will have borrowed money from someone else in a different country.

Mitch, you're confusing National Debt and Foreign Debt.
Foreign Debt is owed by the government, not private individuals. And yes, it does have to be repaid, though it tends to be a self-perpetuating kind of thing.

Fiscal Deficet, is the total amount that the US government will have to find to pay off all it's programs (if, for example, it had to shut down today at 1700) and debts. The majority of that $44 trillion is for Medicare at approximately $36 trillion or so.
It's not so much a debt owed to someone else as the amount of money you need to have to do what you need to do.

othedap
doesn't "fiscal" mean "yearly"
No.

Mystech,
Well in a very real and practical sense, no we don't have to ever pay that sucker off.
Actually, in a very real and practical sense, you do. Foreign Debt is paid off annually. Thing is, it's also increased annually (this isn't like taking out one loan, but a series of several loans - the overall figure of what's owed is what we're talking about when we say Foreign Debt).

So, as long as the us dollar is accepted as the worldwide trade currency, they can afford to keep printing new dollars, the burden of inflation would actually be spread amongst all the foreign countries trading stuff in dollars, this is as close as you can get to a free lunch and makes you understand what kind of damage the euro could do should it ever become a semi-global currency for oil trade and why the usa government was not pleased at all by Saddam Hussein setting a example in the middle east, having his oil payed in euros.

At least Saddams Euro-WMD problem is removed for a while.

Freedom is slowly getting back in iraq...or so I have been told...

gees and to confuse things even more, we have to include a constantly fluctuating exchange rate.

http://www.x-rates.com/

But to get down to the simple nitty gritty on the national debt, we are living on credit as a nation. 11% of the federal budget each year currently goes to pay just the interest on the national debt.

This means that 11% of the money that we pay in taxes each year must go to pay this interest. We can get by without paying the debt itself, we can even increase the debt, but the interest has to be paid.

The federal Budget, for the first time since WWII, was balanced when Bush took office. Within two years it was at an historical high.

If you think back or remember the Reagan administration, we were constantly told that the budget deficit was the single most difficult problem facing the nation. " Tax and spend democrats" was the ralling cry of the conservatives for over 30 years. But when Clinton did finally give us a balanced budget, Bush the conervative, with great irony quickly destroyed all hope of a balanced budget for the next 10 years.

And of course nothing can be paid on the national debt unless there is a yearly balanced budget with a surplus. You can check in the link I posted above, but I am thinking that if divided up, the total debt comes to over $30,000 for each man , woman and child in the entire nation.

JUSA is right. The problem the USA is potentially facing is similar to that being experienced by underdeveloped countries. THey owe so much that a quarter or more of their budget goes to pay off the interest of the debt. Not the principal, just hte interest.


"In reality, the government does not 'owe' the National Debt and therefore does not need to pay it off."

No? try telling the developing countries that.


"Example a dollar would actually be a dollars worth of presious metal but i dont think this got to America, i know it was this way in the UK at first.

Soon Governments realised using "Money" to act as a vauled comoddity was a great benift because they could make as much as the damned stuff as they want and not actually give up anything of value."

Yup. in for example the 16th century, with Henry 8th, debasing currency was taken to a height in england. Henry reminted the currency with les and less silver in it every time, thus he ended up with more money, and the country with a hangover. And the USA used to be on the gold standard, ie you held a certain amount of gold in the central bank or fort knox, that was the guarantor of your curency. The USA went off the gold standard during the great depression or was it before? I cant remember. Anyway, going off a gold standard is one way of freeing up imaginary money to do what it does best, which is trasfer wealth from teh poorer ot the richer.

Ask yourselves, how do you control inflation? Now, inflation is an increase in the money supply isnt it? So you blame the gvt for printing money. But the otehr driver of inflaiton, is borrowing. You control borroing by interest rate manipulation. This borrowing is very very important, since it is done by banks, with no relation to the maount of deposits they ahve. There used to be controls on how much banks could lend compared to their deposits, ie their ability to pay out what people had despoited with them, but the monetarists and otehrs trashed them. Now, banks have lent more than they have in deposits.
Anyway, the end result is that the banks create money and feed it into the economy by lending it to people and businesses. This leads to a continous inflation, and problems wiht too much borrowing, you end up having to run faster to stay still, borrow more and more to pay off more and more.
If everyone stopped spending and instead paid off their debts, the economy would collapse, because nobnody would be consuming.