US budget deficit nearing $500 billion

Economics 101

ASTRALdragon said:
Forgive me for not staying awake in my economics class, but what happens if the federal deficit is too high? Inflation? US dollar is kicked off world markets? Please explain. Thanx in advance!
HISTORY REVIEW - when Bush and the Republicans came to power, we had a surplus and were slowly paying down the National debt.
Since King George ascended the Presidency, our National Debt has spiraled out of sight. Estimates state that the debt will be in the neighborhood of 7-8 trillion dollars or higher by the time we get a new president and because of decisions made by the Bush administration, those 'in-the-red' dollars will continue to grow.
You don't stop a freight train by putting down your foot and dragging it.

The rest of the posts are interesting - but - I think there is one consequence that was overlooked:

If the National Debt gets too high, one of the ramifications could very well be that other world governments, corporations and individuals who float loans to the United States via bonds and securities are liable to stop backing the American Dollar because of the monstrous debt. What the consequence of that would be I won't even hazard a guess - the implications are staggering. (Has there ever been a country which has gone bankrupt?)

Let's face it, if you or I were to run our debts through the ceiling - we would be in debtors court filing bankruptcy papers.

I realize that the above is simplistic in it's nature and that there are many more problems that arise because of our out of control budget deficits.
 
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The difference, Chief Bones, is that we don't owe the majority of our "debt" to foreign governments or evil multi-national corporations. We owe it to "ourselves" by means of government bonds; the safest investments in the world, really.

Although I am strongly against the Bush administration's policy of big government for politics little care for the future; simplistic scare scenarios are best left for the alien-invasion folks. :D
 
Whispering Death

Unfortunatly thats not correct. 70% of all our debt his held by foreign investors

Here is a partial list of to whom we owe what (US Treasury website)

http://www.treas.gov/tic/mfh.txt

Bones

Countries CAN go belly up. The most recent was Argentina in 2002
 
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Thanks for all the responses guys! With these new revelations in my head, I have a few more questions. As Chief Bones was saying that the US' national debt is approaching $7-8 trillion, isn't it bad or going to be bad for the US if its national debt is about 75% of its GNP, which I believe is around $12.1 trillion? Isn't that like someone making an annual income of $1 million but owing $750,000 in credit card debt? Secondly, seeing as how we owe a good chunk of money to other countries, isn't there a time in which they will want to collect? When that time comes, what will happen to the US economy? Thanks in advance for your answers!
 
Check out the "real" figures for yourself

Whispering Death said:
The difference, Chief Bones, is that we don't owe the majority of our "debt" to foreign governments or evil multinational corporations. We owe it to "ourselves" by means of government bonds; the safest investments in the world, really.

Although I am strongly against the Bush administration's policy of big government for politics little care for the future; simplistic scare scenarios are best left for the alien-invasion folks. :D

Check out mmarsh's post and visit the site he listed for some "real" numbers. I could probably have posted them, but thought most people were aware where MOST of our debt was owed.

GUESS I WAS WRONG.

As far as the "simplistic scare scenarios", I was pointing a very simple truth - the United States Government can NOT continue spending as though there were NO bottom to the money bucket.
IT WILL HAVE A CONSEQUENCE.


mmarsh - thanks for the reminder. I forgot about Argentina.
 
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