scared for america
you know fellas, this country is in trouble. i was looking around and found that the U.S. owes enough money, that it would take every household to pay 400,000 to pay it off. i can't pay mine, they are so hosed[;)][:D][:D][:D]
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Bond holders cannot demand that they be paid off. The bonds only become due at maturity. Bond holders do not have to buy more bonds but the government does need to sell more to cover its spending or they risk accelerating the devaluation of the dollar. The U.S. debt is denominated in dollars so the bond holders have to buy more of the bonds or the ones they hold will decrease in value. When they loaded up on U.S. bonds in the first place our problems became their problems. The foreign bond holders are smart they will slowly reduce their exposure to U.S. bonds and the value of the dollar will slowly decline. The costs of imports will increase (especially Oil)and the cost of exports will decrease. This will cause an increase in inflation because the cheap imported products we love will get more expensive and the increased demand for U.S. made products will push up wages unless we import more workers. This will start to increase the cost of U.S. made products. Everything will get more expensive and while wages will grow they will not grow as fast as inflation so there will be a reduction in the U.S. standard of living while the balance of payments returns to normal.
This assumes that nobody panics, while I don't think the Fed. has hit the panic button not everyone agrees and they might panic in response.
The increasing price of oil will stimulate the development of domestic alternatives. Taking advantage of these domestic alternatives will require new workers and new capital ($).
With unemployment low at around 5% there are not a lot of workers to fill demand for production of new exports as the dollar falls and new domestic energy production as the cost of oil rises.
One solution to the labor shortage is to allow much greater legal immigration but that will slow wage inflation and reduce the general standard of living of the lower and middle classes. It will make the country much stronger as legal immigrants will make products, buy products and pay taxes. We would be a bigger, stronger country but with a slightly different culture and slightly lower standard of living. The rich will get richer and you can't do anything about that but there will be some new rich people because someone will have to start the new business and current crop will be too busy to grab all the new opportunities.
This only can work if there is capital ($) available. Every new business runs off borrowed money. The Fed is trying to keep the money flowing but the rich (people and countries) took a big hit in Subprime and real estate crunch and still don't know how much they have lost so they aren't ready to start taking on more risks.0 -
Very very good post dtknowles, thank you. 0 -
quote:Originally posted by jpwolf
quote:Americas debt as a percentage of GDP is extremely small. Some of you experts arent very smart but here is an analogy......Person A makes $150,000 a year but he owes $5,000 in credit card debt. Person B makes $50,000 a year and he also owes $5,000 in credit card debt. America is Person A. However, since Americas debt is only 3% of our GDP then that would mean on $150,000 we are only in debt $4,500. Not a big deal. Not a big deal at all.
If stupidity was a criminal offense, your sentence would be the death penalty 3 times! Excuse me if I don't take advice from a teenage punk.
Here's the numbers for you Einstein...
GDP (nominal) 2007 estimate
- Total $13.770 trillion[4] (1st)
- Per capita $44,190
The United States public debt, commonly called the national debt, gross federal debt or U.S. government debt, is the amount of money owed by the United States federal government to creditors who hold U.S. Debt Instruments. As of December 19, 2007, the total U.S. federal debt held by the public was roughly $5 trillion.[1]
This does not include the money owed by states, corporations, or individuals, nor does it include the money owed to Social Security beneficiaries in the future. If intragovernment debt obligations are included, the debt figure rises to roughly $9 trillion.[2] If unfunded Medicaid, Social Security, etc. promises are added, this figure rises dramatically to a total of $59.1 trillion.[3] In 2005 the public debt was 64.7% of GDP According to the CIA's World Factbook , this meant that the U.S. public debt was the 35th largest in the world by percentage of GDP.
CR, you need to wait about 20 more years before you offer up an opinion on anything political in nature. Aren't you tired of going around with your pants down ALL THE TIME? Oh, I forgot, that's the "style" with punks right now, huh?
I'm sorry JP but a copy and paste job from Wikepedia doesnt make you an economics major, it only makes you look silly and ill informed.
I clearly stated that AMERICAS debt....not AMERICANS.
The figures you cited, although fairly accurate as numbers, are NOT used by anyone other than some wack job economists at college campuses to show how bad the American economy is.
More sane, logical and educated people determine debt by using the American budget deficit as the indicator. Here are the numbers...
Americas debt, due to budget deficit, is about 3% of our GDP. I will not copy and paste from any quick google searches for you to prove this but I suggest you take some time to understand economics before you think that the figures you presented are important to anything.
In America we use a slightly different measure0
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