I don't mean to be alarmist but...Follow

The US has a lot of debt. The interest payments are huge, beyond $1000/person/year. The US population votes for less taxation and is resistant to less spending.

How is this sustainable? What happens if, say, China ceases buying up US debt? Or dumps it's existing debt back into the market?

They won't for as long as we're making the interest payments. Why would they? It's free money for them.

You're correct though in that our growth of debt isn't sustainable.

Uranium express...lol.

All is fine!

Nothing to worry about!!

Go shopping!!!






Edited, Sep 23rd 2008 7:25am by paulsol

You could always try selling them an economic instrument made up of sub-prime mortgages.

How surprising, Bush has done so well as an administrator in the past, I can't imagine what happened.

Oh, only 9 trillion then...

C'mon, it's only $32,000 per person.

But we will pay more than triple that due to interest.

Edited, Sep 23rd 2008 7:37am by Timelordwho

I'll trade someone my stake in Freddie Mac for their stake in Fannie Mae.

I doubt this debt calculates in the latest 700 billion to bail out the investment banks et al.

I heard it cost something like $3,200/person (if we had to pay it out of pocket) to purchase these bad investments. Go us.

Well, you are in a MUCH safer position than someone who has debt. Much. Much. Much.

Basically, sooner or later all this debt has to be repaid. Lets assume that not all the debt is going to be covered by a rise in the value of assets held. (let me lump in private sector debt here too, for a moment.) Part of that debt repayment is going to require a cut in spending from the Government, and also part from a cut in spending from private individuals while they pay off the debt instead of spending the money they have. Both the public and private cut in spending means that people will lose jobs as the services or goods they provide aren't bought as much as they used to be for the time being.

This is a contraction of the economy. The contraction will go into a bit of a feedback loop, since the people who lose their job from the first wave of redundancies have less money now that they are out of work (and there aren't many new jobs that they can move to, since everyone is cutting spending). They're out of work, so they spend less, which means a second wave of people lose their jobs from the reduced spending of the first lot. As more and more people lose their jobs, and spend less, the economy keeps contracting, putting more people out of work, until either the debt is repaid, or people put a hold on repaying the debt, or a boom happens elsewhere in the economy, or elsewhere in teh world and exports pick up.

If you have no personal debt, you are obviously in a MUCH better position if you lose your job than someone who has debt.

I forget or never knew what savings does for you in a recession or depression, or a time of rising unemployment (apart from the obvious), but savings are ALWAYS a good thing. Even if it's mere dollars a week going into some form of savings, if you can get compounding interest (either directly, or by reinvesting any dividends/payouts you get) over time it can REALLY accumulate.

The mathematics of compounding interest means that if you can get an effective 7% interest rate a year, then your money will double in 10 years. If you can get 10% interest a year, then your money will double in 7 years.

10% is usually achievable through an investment trust fund, over time.

Edited, Sep 23rd 2008 11:27am by Aripyanfar

No, he's not. It's not too late to withdraw them and convert them into gold and silver.

No, but you can take all your money out of your investments, go hit up the nearest pawn shop, clean out their gold and silver cases, and then flee to Sweden where they will happily take it to melt it down and give you euros.