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You don't think the $400 bil interest payment each year is relevant? This number is climbing fast.
Compared to a 20 trillion+ gdp that generally climbs when not in a pandemic?
400 billion is less than 5% of income being used to service debt. And again, that’s speaking strictly from an income perspective, because the national debt gazers think assets don’t matter in the question of ability to pay. Hell, what do you think foreign access to the U.S consumer is worth? People pay companies like google for search priority or to access ad space. What is our market worth?
I don’t know...should I be concerned about my mortgage interest and student loan debt being 5% of my cashflow? Nope. I’ll service it just fine. And I don’t even get to pay my thatsright debts off in thatsright currency.
Why do we owe China over 1 trillion dollars? I've heard for years that if China demands to be paid in gold instead of dollars, we can't pay. There is a movement worldwide to replace the dollar as the go to currency.
When that happens no one may want us to pay our national debts in dollars.
The only way the US can avoid defaulting on its sovereign debt is through massive inflation. A currency collapse is the endgame of this unsustainable debt.
Why do we owe China over 1 trillion dollars? I've heard for years that if China demands to be paid in gold instead of dollars, we can't pay. There is a movement worldwide to replace the dollar as the go to currency.
When that happens no one may want us to pay our national debts in dollars.
We owe China since they sell us stuff.
China then decided to buy our Treasuries with those USD's that we paid them. And they have agreed to be paid back in USD's. They can demand all they want (they won't), but gold is not in the agreement.
The BRICs and Iran are moving in a relative meager fashion in avoiding the use of the USD.
Our national debt is only in USD's. And that will never change.
That’s because you only focus on the debts of the country. What are U.S assets worth? What are the Great Lakes worth? The national parks? What is the Ogallala aquifer worth? Additionally, those treasuries are due over many years and so it makes little sense to look purely at one year of gdp or *insert your method here” and compare that to total debt that’s due over many many years of you receiving that gdp or insert your method here.
Is the U.S insolvent? In other words, liabilities exceed assets? Nope. Not a chance.
You also assume that national debts will actually ever be paid. The USD is king. 66% of reserves. The most powerful brand on earth with zero legitimate contenders to the throne. Our greatest allies in Europe and Japan hold the majority of the other reserve balances, and they are in the same debt positions or worse and we all move in proportion.
Would I look at my after tax salary, after fixed expenses, ect and take that income and compare it to my total debt burden that comes due across varying years? No, because it doesn’t make any sense.
My debt to my money actually available to service that debt would be enormously high if you took 1 year of income and compared it to my total debt package. Am I actually in that kind of scenario or trouble? No.
Perhaps you could consider looking at current debt (due in less than a year) compared to 1 year of income to actually access ability to continue to service debt.
I’m not saying that we can’t pay. I am trying to figure out how painful it will be. Even if we pay only interest and no principal, just getting to a balanced budget will require the equivalent of 5% of income. And if interest rates go up, this could easily rise to 10%.
This 5% or 10% is not 5% or 10% *total*, it is 5% or 10% *more*. People with high fixed payments will have to do it with a dwindling supply of after tax dollars if taxes are raised. If taxes are not raised and inflation is used instead, then cash holders are going to be the victims.
So it still seems fair to say that it could be painful.
The US Dollar is highly valued now, but in terms of market fundamentals, what reasons do we have for believing that to be sustainable, as opposed to being in a bubble?
ETA: regarding reserve lands etc. in theory, maybe, but what would have to happen to actually sell those lands? It seems like a lot to require if that is going to be used as a way out.
The only way the US can avoid defaulting on its sovereign debt is through massive inflation. A currency collapse is the endgame of this unsustainable debt.
I’m not saying that we can’t pay. I am trying to figure out how painful it will be. Even if we pay only interest and no principal, just getting to a balanced budget will require the equivalent of 5% of income. And if interest rates go up, this could easily rise to 10%.
This 5% or 10% is not 5% or 10% *total*, it is 5% or 10% *more*. People with high fixed payments will have to do it with a dwindling supply of after tax dollars if taxes are raised. If taxes are not raised and inflation is used instead, then cash holders are going to be the victims.
So it still seems fair to say that it could be painful.
The US Dollar is highly valued now, but in terms of market fundamentals, what reasons do we have for believing that to be sustainable, as opposed to being in a bubble?
ETA: regarding reserve lands etc. in theory, maybe, but what would have to happen to actually sell those lands? It seems like a lot to require if that is going to be used as a way out.
There is no other currency and sovereign based debt to replace the USD. Not is safety, security and maybe most importantly not in volume.
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