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Author Topic: What happens when the U.S. has overdrawn its loans?  (Read 1920 times)
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jpinard
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« on: November 09, 2004, 04:48:31 AM »

I'm seriously concerned about this.  It seems the Federal government is borrowing huge sums of money each month to pay interest charges on the $7 trillion in debt we have.  Most states are also way in debt, have a deficit, and are borrowing to pay too.

Considering the average wage is going down, and tax revenue is waayyyy down - what happens in 2 years when we have a $10+ trillion debt and even less tax revenue?  

Will we end up in an economic crisis that makes the Great Depression look like an invisible dust particle?
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Daehawk
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« Reply #1 on: November 09, 2004, 05:01:08 AM »

We invade whoever we owe money to and look for WMDs till the local government gives up and calls our debt paid in full  biggrin


But seriously I have no idea...I dont really know of any country who pays off thier defecit or loans.
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jpinard
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« Reply #2 on: November 09, 2004, 05:16:14 AM »

Wow, am I the only person scared to death about this?
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The Rocketman
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« Reply #3 on: November 09, 2004, 08:04:38 AM »

Quote from: "Daehawk"
We invade whoever we owe money to and look for WMDs till the local government gives up and calls our debt paid in full  biggrin


But seriously I have no idea...I dont really know of any country who pays off thier defecit or loans.


If countries want to be able to join the european union, they need to have a plan that shows they're paying off their debt, instead of building it up. There are all kinds of economic conditions a country has to fulfill, and these are taken quite seriously.

Take my country for example, Belgium. It's a small country, with a huge debt, that was created in the 70's. But since the 90's we're steadily paying it off. It doesn't help off course to have a 'new' government that uses up all the money the previous one saved up (yeah, lower taxes, free bonuses and other stupid shit that costs a lot of money!), but hey, that's politics...
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dangerballs
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« Reply #4 on: November 09, 2004, 08:42:52 AM »

Quote from: "jpinard"
I'm seriously concerned about this.  It seems the Federal government is borrowing huge sums of money each month to pay interest charges on the $7 trillion in debt we have.  Most states are also way in debt, have a deficit, and are borrowing to pay too.

Considering the average wage is going down, and tax revenue is waayyyy down - what happens in 2 years when we have a $10+ trillion debt and even less tax revenue?  

Will we end up in an economic crisis that makes the Great Depression look like an invisible dust particle?


We start collecting from those who owe us.
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JSHAW
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« Reply #5 on: November 09, 2004, 02:35:12 PM »

For once in my life I'd like to send the U.S. Government a NSF (non-sufficient funds) notice in the mail and tell them they need to ensure that a deposit is made to cover the funds or their account will be closed in the next 7 business days.  :lol:
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whiteboyskim
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« Reply #6 on: November 09, 2004, 02:45:53 PM »

I guess France will get to forclose on the Louisiana Purchase after all.
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Falator
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« Reply #7 on: November 09, 2004, 02:47:10 PM »

How about we invade a country for no reason to get our population's minds away from "non-important" issues? wait a second... :?
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Sepiche
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« Reply #8 on: November 09, 2004, 02:50:31 PM »

I'm just a passenger at this point.

51% of the country says they don't care, so what can you do? Tongue

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« Reply #9 on: November 09, 2004, 03:12:29 PM »

This brings up a question I've had and never really looked for an answer. Who do we owe 7 trillion dollars to?
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SpaceLord
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« Reply #10 on: November 09, 2004, 03:26:20 PM »

Quote from: "coopasonic"
This brings up a question I've had and never really looked for an answer. Who do we owe 7 trillion dollars to?


Each other, mostly. Most of the world's countries owe each other money. The national debt is the money owed by everyone in the country. Our economy, especially the government, is driven by debt. So, while it is important, it is not as massive and suffocating as it seems.
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Nameless
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« Reply #11 on: November 09, 2004, 04:01:21 PM »

Actually, I would be that the amount we owe other countries is pretty small.  It's what we owe individuals and companies that is scary.  Every time you buy a US Govt savings bond, you're loaning the govt money....
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draegun
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« Reply #12 on: November 09, 2004, 04:22:11 PM »

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« Reply #13 on: November 09, 2004, 05:00:28 PM »

Quote from: "Falator"
How about we invade a country for no reason to get our population's minds away from "non-important" issues? wait a second... :?


Or make up conspiracy theories to get the population's mind off of it.  That'll work too.
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draegun
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« Reply #14 on: November 09, 2004, 05:07:40 PM »

Quote from: "Laner"
Quote from: "Falator"
How about we invade a country for no reason to get our population's minds away from "non-important" issues? wait a second... :?


Or make up conspiracy theories to get the population's mind off of it.  That'll work too.


Or, we could have our heads up our asses . . .
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El Guapo
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« Reply #15 on: November 09, 2004, 07:41:30 PM »

Quote from: "draegun"
Quote from: "Laner"
Quote from: "Falator"
How about we invade a country for no reason to get our population's minds away from "non-important" issues? wait a second... :?


Or make up conspiracy theories to get the population's mind off of it.  That'll work too.


Or, we could have our heads up our asses . . .


All viable and sensible solutions.

A few points.  First, the national debt is something in the nature of 5-6% of GDP (IIRC).  That's not good (and it's not good that it's growing), BUT we're definitely not on the verge of economic collapse here.  Countries (generally developing ones, of course) often have double-digit percentages here.  So it's big, though it's not yet to the point where we'd have big trouble paying it off. (Though if you're paying attention, Mr. Bush, I'd get started on that).

Secondly, what happens if it gets to big to pay off is the same thing that happens with any debtor: we announce that we're bankrupt and that we won't be paying off our loans (or that we'll be paying them on a significantly delayed schedule).  Lenders collect what they can, write off what they can't.  One big problem comes when we try to borrow again, because our credit rating as such is tanked; we couldn't borrow as much, and what we could would be at much higher interest rates.  The value of the dollar drops.  I don't think the end result is apocalyptic "Mad Max" territory, given that the underlying private economic market would survive, it just wouldn't be pleasant.
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« Reply #16 on: November 10, 2004, 08:36:48 PM »

the things that have me worried-

1. so many countries have their economies based upon the USD, and it is mainly because their economies arent exactly strong or stable.  So if we are their firm bedrock (a position we havent exactly discouraged), what happens to most of the developing world when the US starts its downward spiral?

2. Im not sure whether this one is good or bad.  If the value of the USD keeps falling, does that make our relative debt worth more or less?  Im thinking more, because if you owe $7.5 trillion, you cant pay it off with USDs, since that is what is being invested in.  So you need to pay it off with money from another source, like gold or the Euro or whatever.  But since those things are worth relatively more, does that make the national debt worth less or more (or neither)?
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jpinard
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« Reply #17 on: November 12, 2004, 08:04:12 AM »

THe National Debt is not what we "oew" other countries.  It's what we owe private firms.  Banks (wether here or abroad), bonds etc.

What bothers me is how much of our taxes is going towards loan payments and interest.  Instead of making banks richer, that could be going towards making our country better.
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