Skip to comments.U.S. debt threatens to be overwhelming
Posted on 02/15/2010 11:48:41 PM PST by ErnstStavroBlofeld
It's bad enough that Greece's debt problems have rattled global financial markets. In the world's largest economic and military power, there's a far more serious debt dilemma.
For the U.S., the crushing weight of its debt threatens to overwhelm everything the federal government does, even in the short-term, best-case financial scenario -- a full recovery and a return to prerecession employment levels.
The government already has made so many promises to so many expanding "mandatory" programs. Just keeping these commitments, without major changes in taxing and spending, will lead to deficits that cannot be sustained.
Take Social Security, Medicare and other benefits. Add in interest payments on a national debt that now exceeds $12.3 trillion. It all will gobble up 80 percent of all federal revenues by 2020, government economists project.
That doesn't leave room for much else. What's left is the entire rest of the government, including military and homeland security spending, which has been protected and nurtured by the White House and Congress, regardless of the party in power.
The U.S. debt crisis also raises the question of how long the world's leading power can remain its largest borrower.
Moody's Investors Service recently warned that Washington's credit rating could be in jeopardy if the nation's finances didn't improve.
Despite election-year political pressure from voters for lawmakers to restrain spending, some recent votes suggests that Congress, left to its own devices, probably isn't up to the task of trimming deficits.
(Excerpt) Read more at washingtontimes.com ...
Greece: 11 million. Apx. the size of Los Angeles. Assuming the EU is 400 million or so, it is 2% of the EU.
If 2% can take the whole structure down, then what happens when Germany or France hits the economic wall where the businesses can’t support their spendthrift laws?
And the community-organizer-in-chief wants to add another $1 Trillion by wrecking health care. They keep trying to push it via every avenue.
I’m afraid this wound is fatal. Especially in the current economy. We will likely default on China to a significant degree.
I hate to be pessimistic but the numbers are pretty sobering.
Germany and France are models of sobriety compared to Greece and probably compared to the US
What happens when interest rates rise?
When interest rates rise, everyone with a home equity loan, variable rate mortgage, and credit card debt is going to have even less to spend than they do today.
The triple whammy will hit, higher interest costs, higher taxes, and inflation - return of the misery index.
Since the government did little to pay down debt during the good economic times, and embarked on huge borrow and spend, it’s economic disaster, if we don’t get this turned around soon.
All out war against the bamkers.
At least he cut project constelation!!!! That’ll save a ton!
Worse than sobering.
Because they can’t pay it back, except by printing more dollars. And dollars issued by the FRB carry an automatic 6% per annum interest charge.
The only way to actually eliminate the debt is to pay it back with substance, not dollars. That means something real, like land or gold or cotton balls, something.
And we just ain’t got it. So they will continue to print dollars and make the debt bigger and bigger until sovereign paper is worthless.
It was only in the last week or two they authorized increasing the debt from 12 to 14 trillion. Guess where we are now, the last figure I saw?
At this rate, we’ll be near 20 trillion by the end of the year.
Then, it’s over. Cause if the welfare folks and the social security folks and all the other folks stop getting their checks, well, you can imagine.
And the net result is...
Because the only thing government debt has been able to accomplish is to curb hyperinflation. Instead of printing a half gazillion physical dollars, you just print a bond with a pretty picture on it and make it look all official, and use it to suck back the dollars that live all over the world.
Hyperinflation. If government is unable to sell bills of credit (they were explicitly prohibited from doing it in the first place by that old Constitution BS), they will go to the last resort. Physically printing the dollars.
They have to. Or else the populace would tear DC down to the ground.
Oh, and BTW: If Moody’s, or Standard and Poors, or any other of these shysters were doing their damn job, then they would be downgrading stuff way before the companies/countries go in the dump.
But they’re not. They are playing the same games as everybody else, just like the property assessors, and the bond rating agencies, and the whole other bunch of whores.
Then, when Triple A stuff is getting flushed down the toilet, Moodys and the rest will say “Well, you know, there’s risk in every investment... don’t blame us!!” and they will walk with their Lexuses and bonuses and Cayman Island bank accounts.
I agree. Everybody’s trying to keep the shell game going until it all goes kaboom. Scary indeed.
I wanna buy a steam engine!
A steam engine geared to an alternator wired to an inverter.
Can you buy a steam engine with one of them stupid green energy star labels on it?
I wish I had the cash to pay for a 5th-wheel trailer and truck to tow it with. I imagine trailer parks are going to start to fill up.
Since I see no tag for sarcasm, I can only assume you meant what you just said.
Constellation would have had us return to the moon, and still might before it’s all over. Along with this program being cut, the administration will not only surrender moon exploration/exploitation to the Russians and the Chinese, we will also lose our ability to place any satellite in close Earth orbit ourselves. I’m wondering just what Russia or China might charge us to perform that service. Then of course there is India, surely they would charge lower than the going rate. Wouldn’t they?
NASA’s funding is being cut for want of about $4 billion dollars, roughly the same amount of funding that ACORN seems likely to receive.
Priorities my friend, priorities.
Then, when the shtf, one or two can come and live at my joint.
We'll eat alot of spaghetti and split pea soup, but we'll make it.
And if they can add an AR15 or two and a couple thousand rounds to my already significant collection, the more the better!
“The only way to actually eliminate the debt is to pay it back with substance, not dollars. That means something real, like land or gold or cotton balls, something.”
Okay, let’s say we back the dollar with 10% gold. Half the world loves gold. Would this cause a stampede to hold dollars? How would strong demand for gold-backed dollars affect our debt?
If the money is spent on schools to correct the output of illiterate individuals such as yourself, it might be a positive result of ceding space to everyone else.
I had hoped that both the responders to my post would notice the extra !!!’s as sarcasm.