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I just wonder what's the dollar amount of loans the government can handle before we go bankrupt? My understanding is we are making interest only payment on some of our debt. Sounds good for the lender but not to smart for the borrower.
I just wonder what's the dollar amount of loans the government can handle before we go bankrupt? My understanding is we are making interest only payment on some of our debt. Sounds good for the lender but not to smart for the borrower.
Da guberment debt is the money supply. A dollar note is also an obligation and differs from a treasury in that it is interest bearing which means as of now the difference between a dollar and a 10 year treasury is less than 2%. If you have a piece of paper that says Note, its a debt. The US simply cannot go bankrupt because its own debt is money. The problem that would occur is either inflation or something more resembling a command economy since large "debts/money" implies lots of spending. If we end up with a large foreign debt that would also be a real issue if not a debt per se. The US cannot collect foreign debts in taxes like it can domestic debts.
All fiat money should essentially be considered a debt. A note used to stand for a coin you could redeem. Da guberment owed you the coin. This note circulated as if it were as good as a coin. Now the note circulates and the coin does not. What does that mean? It means all money is now debt. A government really has no use for its own fiat produced currency. It always wants for goods and services and purchases these with debt one way or another. You have no use for it either and it essentially money is a lean against the rest of the economy, aka debt. Money is an instrument of debt.
Europe can, because they all share the Euro. Nobody can just print more.
The United States prints it's own money. As long as it does that, it cannot go bankrupt.
If you could just print more, would you ever declare bankruptcy?
Sounds as if this could end up like the Emperor showing off his new clothes. At some point a few people are going to start s******, and then the game's up.
I just wonder what's the dollar amount of loans the government can handle before we go bankrupt? My understanding is we are making interest only payment on some of our debt. Sounds good for the lender but not to smart for the borrower.
Generally speaking, the U.S. income exceeds its debt interest payments by about $75-125 Billion/month (income/expenses varies each month).
Keep in mind, unlike with people, national economics has a greater reliance on 'confidence' than 'economics'.
It finally gets to the point where the interest on the debt overwhelms the budget... since more and more that debt is hidden by fed purchases the problem will show as an ever increasing decline in the economy.
And most of the money they do print is far more diluted by recycling it as bank credit. 27 trillion in bank credit was created during the housing bubble which at the time was twice the national debt accumulated over more than a hundred years; and yet, the average person never bothers to condemn that colossal creation of debt, much of it to make absolutely nothing inflating ground rents; and on top of that, useless consumer capital of empty rooms and conspicuous ostentation.
Just to keep prices from collapsing they are adding deficits to the slowing bank credit velocity. You just can explain it to the average person. The debt money paradox confuses and baffles them.
Almost everything confuses and baffles most people these days.
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