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If one wants to look at the lessons of high national debt, one can look at Japan, who has held huge national debt several times it's GDP since the 80s. It's not entirely the same - most of the debt is held by Japan itself, but Japan has already instituted some austerity measures (higher taxes) as they know it's not sustainable in the long run. This has slowed there economy even further. They do have some ways to play some accounting games as the debt is held internally but it's not a perfect solution.
Everyone in this topic seems to ignore the interest payments. The problem is that in Japan, like the US, the interest payments are taking over more and more of the annual budget, and this is dependent on interest rates. Debt is not a free lunch, you pay for it now as well as later. The federal reserve can control the interest rate to some extent but if it increases you are going to have the highest item on the US budget as, not national defense, not medicare, not social security, but interest payments. With that, a future administration may be forced to implement austerity measures just to start paying off the debt to reduce interest payments - yeah that means more taxes, less entitlements, etc. But that's what our children have to deal with....Or we can default on part of our debt, and it won't be like Japan where the debt is held internally. Defaulting will destroy our economy.
How do interest payments affect our taxpayers with Fed owned national debt?
How do interest payments affect our taxpayers with Fed owned national debt?
Taxpayers pay the interest of course, just like taxpayers pay for any other service that the government performs and has to pay for - entitlements, Medicare, national defense, etc.
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The fed issues the national debt via treasury bonds, etc. The actual owners of these bonds are the public, including foreign governments (yeah - China holds a significant balance), banks, investors, some by the fed and the US government itself but certainly not the majority.
No one cares about the debt because they think it "doesn't matter." We've entered a total inversion of reality- this is a delusional fantasy land we're living in. It's like a lunatic jumping off the Empire State Building because he thinks he can fly and that it will all work out. And for some time, he really does feel as if he's flying- until he smacks the pavement.
That is what will happen to us. This debt is "not a problem," until we hit the pavement of a crisis. The crisis will come suddenly, without warning, and we will have our hands tied. There will be absolutely nothing we can do about it. The mountains of unsustainable debt must be repudiated, and it will, most likely through a global hyperinflation as central banks around the world maniacally print funny money in a futile attempt to save the system.
Taxpayers pay the interest of course, just like taxpayers pay for any other service that the government performs and has to pay for - entitlements, Medicare, national defense, etc.
.
The fed issues the national debt via treasury bonds, etc. The actual owners of these bonds are the public, including foreign governments (yeah - China holds a significant balance), banks, investors, some by the fed and the US government itself but certainly not the majority.
The Treasury issues the Bonds.
And any interest the Fed receives through US debt ownership is swept back to the Treasury. So you may be right in that federal taxes are used in real time to pay the Fed's earned interest, but by the year end the Fed sends it right back.
I don't know why so few people know and/or appreciate this, as the implications are more than just enormous.
"Big Bucks for the US Treasury
For the US Treasury, Fed remittances are something of a free lunch. When someone buys a Treasury bond, the government must pay them interest. This applies to the Fed as well, but then at year-end the Fed remits the interest back to the Treasury."
No. Depending on what party is in control the debt never matters. However the other party screams about it.
Then, no one does anything about it. So obviously, it doesn’t matter.
Maybe in the same way a comet or meteor with its path centered on the earth wouldn't matter either, since there's nothing we can do about it anyway...that is, until it hits. Then it's going to matter bunches.
The U.S. having the ability to print it's own currency until it runs out of paper and ink, will never actually "default" but it does run the risk of losing its position of being the default currency in the world. And, the foreign creditors may gripe a little when they borrowed the equivalent of five million barrels of oil, but a few years later, with the currency inflated greatly, you actually pay them back two million barrels. That's the other thing, when "petrodollars" cease to become A Thing (either because of depletion of fossil fuels, or their use outlawed because of CO2 limitations, or because they are displaced by something better), that's going to cause a bump in the road all by itself; for us, the Middle East, Russia, etc..
I have to wonder if buying foreign currencies (Swiss Marks?) would be a hedge against runaway inflation in the U.S., because that's what is currently being discussed with the uncontrolled National Debt, right? Owning farmland may be a hedge, but opens one up to being taxed off it, or it being "nationalized" if the Wrong Folks get into control (may be a little too late for that, LOL).
Anyway, only having read to page two, I shouldn't be posting yet anyway, as this all may be argued to death on page 7, but Tallysmom sucked me in. Back to the Books, I guess.
Vhat makes you tink the Norskies vould vant us, by golly?
"In International News today, it was reported that a group of Norwegians threw firecrackers over the border at a group of Swedes. The Swedes reportedly lit them, and threw them back. Video at ten".
Honestly I will believe anybody wants to eliminate national debt, when they go back to a cash on barrelhead economy and dont make most of their money scamming people into those 'easy payment plans'.
Companies no longer strive to make the better mousetrap, the actual goods mean little, thus reason they are mostly IMPORTED, its all about selling those to suckers that will pay more in future, so they can have their ice cream cone now.
Maybe in the same way a comet or meteor with its path centered on the earth wouldn't matter either, since there's nothing we can do about it anyway...that is, until it hits. Then it's going to matter bunches.
The U.S. having the ability to print it's own currency until it runs out of paper and ink, will never actually "default" but it does run the risk of losing its position of being the default currency in the world. And, the foreign creditors may gripe a little when they borrowed the equivalent of five million barrels of oil, but a few years later, with the currency inflated greatly, you actually pay them back two million barrels. That's the other thing, when "petrodollars" cease to become A Thing (either because of depletion of fossil fuels, or their use outlawed because of CO2 limitations, or because they are displaced by something better), that's going to cause a bump in the road all by itself; for us, the Middle East, Russia, etc..
I have to wonder if buying foreign currencies (Swiss Marks?) would be a hedge against runaway inflation in the U.S., because that's what is currently being discussed with the uncontrolled National Debt, right? Owning farmland may be a hedge, but opens one up to being taxed off it, or it being "nationalized" if the Wrong Folks get into control (may be a little too late for that, LOL).
Anyway, only having read to page two, I shouldn't be posting yet anyway, as this all may be argued to death on page 7, but Tallysmom sucked me in. Back to the Books, I guess.
You can't be a world reserve without creating a massive amount of money well beyond the needs of the people. And a reason the Swiss franc is not going to substitute for the USD. There aren't and can't be enough to satisfy the world.
Like you say, a meteor could do it, otherwise the USD will be there. There is no other currency on the horizon to replace it. And even if there was one to emerge, more than likely the USD will remain. Since the future global economic world will be larger and there should be plenty of room for another reserve.
Obama spent more than any other president he's the dummy that made it ultra high !
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