Prepper Forum / Survivalist Forum banner

1 - 7 of 7 Posts

·
Registered
Joined
·
2,074 Posts
Discussion Starter #1 (Edited)
If there's one thing I know absolutely nothing about it's Economics!
America is supposed to be one of the richest countries in the world, so how can she have a national debt of 16 trillion dollars????
And who exactly is the debt owed to? Has America had to borrow from other countries or what?
According to news articles she ranks 7th in the "ability to compete on the world's stage", and Britain ranks even worse at 8th, so what the heck is going on? It means there are 6 better off countries ranked higher than the US and Britain, so why are they better off?
 

·
Registered
Joined
·
159 Posts
Countries are businesses. They have payrolls to make, infrastructure to maintain, they initiate projects, award contracts, etc. The government’s income comes in cyclic doses and like many businesses they need operating funds now and so they borrow against the income they expect to receive later… or that’s how the theory goes. Much of the ‘borrowed money’ is in the form of bonds sold. They’re essentially promissory notes to pay back to the buyer a higher amount than the buyer pays for the bond. Those bonds come due and the initial amount plus interest must be paid. If we don’t have the ready capitol to cover what’s due (and we don’t) we either sell more bonds to pay off the first and effectively compound interest owed on top of interest owed (like paying a credit card with another credit card), or we print more money (Quantitative Easing ‘QE’). Because QE money has nothing to back it up, all of our dollars are immediately worth less (which ticks off the people who bought our bonds because the money they get paid back with is worth less than the money they bought with)... no wonder they don't like us. At this point we owe 16 trillion dollars to investors in our country. These are European and Middle Eastern countries (banks), China, India and US financial institutions.

A business or government gets rated based on its ability to make good on the debt it owes. If our creditors all needed their money back at their respective due dates and we could not cover that debt with more debt, what is the likelihood that we could make good?.. that’s our rating.

To make matters worse, major banking businesses have come up with creative and complex financial schemes that essentially create investment and profit opportunities (Derivatives), where no tangible commodity exists. These schemes are high risk and carry substantial downsides if anything goes wrong. Regrettably, our government has invested largely into Derivatives (which does not help our rating). The rating doesn’t reflect a countries wealth, but its wealth contrasted with its liabilities. That’s how a less wealthy country can have a better rating than we do…. They’re not in hock to their eyeballs.

As long as we have continuously growing income as a nation, our wealth to debt ratio can hold its own. While our economy slides, debts come due. A liberal Congress piles on the contracts and programs that require immediate money we don’t have. We borrow in unfavorable markets and dig the hole deeper. At some tipping point the house of cards will fall. More debt will come due than we can pay. No one will buy our bonds or take our QE dollars and in a heartbeat we will become a third world economy… financial meltdown. We will cease to be the leading financial power in world… the goal of this administration.
 
  • Like
Reactions: PrepperRecon.com

·
Registered
Joined
·
2,074 Posts
Discussion Starter #3
Okay thanks...I think! I'll try to digest it but send out search parties if I don't make it back..:)
I try to look at everything in an ultra-simplistic way, for example suppose I was the ruler of a small country with say a million tax-paying inhabitants who each pay 10 dollars tax a week.
That means an incredible 10 million dollars would be coming into the national coffers every week which could be used to build hospitals schools,factories,roads and railways etc to put a smile on my peoples faces bigger than waves on slop buckets..:)
As long as I didn't spend more than 10 mill a week I'd never be in debt would I?
Or am I being oversimplistic?
 

·
Registered
Joined
·
159 Posts
And you said you didn’t know anything about economics.

Simple or not, you’re exactly correct. What would make more sense than recognizing your financial limits and functioning within them?

That begs the question.. if our political and financial leaders are truly smart people (and their degrees and accomplishments testify that they are) why would they take our country in the direction they have?

The simple answer is.. they wouldn’t (unless of course they were corrupt, didn’t care about the welfare of the people and stood to reap huge gains in wealth and power by raping the nation for billions), but that would never happen. The people would be too smart for that. You couldn’t dummy-up a huge part of the population, control media, subvert the educational system and create an entire class of cradle-to-grave dependents simply by promising entitlements and favors that eventually destroy the nation’s financial standing. The people would never go for it.;-)
 

·
Registered
Joined
·
2,074 Posts
Discussion Starter #5
Okay thanks, in that case I seem to know more than world leaders about economics because I'd never spend more tax money than is coming in..:)
Are politicians therefore just dumb shits or what?
As that news item says, the USA national debt was 10.6 trill when Obama took office, but has since climbed to 16 trill under his "leadership".
Is he to blame, or would the same also have happened under any other President?
How could he have stopped the debt climbing, or was it unstoppable?
 

·
Registered
Joined
·
227 Posts
Oh, it was stoppable. He just had no interest in stopping it. We have trained up generations of dependents as AnvilIron spoke of who simply have children with the intent of reaping government benefits. The government pays out $3000 annually per child in tax credits, plus food stamps, plus rent assistance, plus free phones, plus, plus, plus. We reward irresponsibility and punish productivity with higher taxes. If we cut all of those programs, we could have stopped the debt from rising. If we had a government that only did what it was designed to do by the constitution, we could have stopped it. If we weren't trying to be the worlds police and operate an empire on a republic's budget we could have stopped it. Our annual revenue is $2.73 trillion, we should be able to defend our boarders, protect property rights, and even build roads and bridges for less than half that amount.
 

·
Registered
Joined
·
1 Posts
Are politicians therefore just dumb shits or what?
They know what they need to do to get elected or re-elected: give the populace what the (slight) majority demand...government spending/hand-outs/bail-outs.

As that news item says, the USA national debt was 10.6 trill when Obama took office, but has since climbed to 16 trill under his "leadership".
Yep. And he said during his first campaign that he would cut it in half.
 
1 - 7 of 7 Posts
Top