Do we really have a "national debt" that has to be paid?

No, not any more than your corner bank has a debt that must be paid.

You make a bank deposit. It’s insured and you get it back when you ask for it. The bank pays you interest out of bank earnings. No problem.

You buy a bond. Nothing is safer and it’s redeemed when it matures. The Treasury pays you interest earned by selling more bonds. Even less of a problem. (Remember Bush’s bond shortage scare?)

With the nations’ banks holding about $9T of deposits, there is no run on the banks.

With about $11T of outstanding Treasuries, there is no long line at the Treasury’s redemption window.

But while bank stocks are soaring, deficit hawks say that we have a debt crisis. Why?

Republicans who pretend to worry about the national “debt” get elected only because half of all voters have below-average IQ. Unfortunately, there’s no cure for that.

Update:

Amazing! Almost every respondent was in the bottom half of the IQ spectrum. Not one dealt with my facts and logic - just pretended I asked a question without knowing the answer.

One even accused me of knowing the answer, like it's a crime!

Another accused me of saying that banks have a debt when I specifically said the opposite.

And I made it so simple.

Update 2:

Phillip H: “Banks operate on Trust”

No, banks operate on belief that the FDIC will protect 99.999% of depositors.

“The credit rating of the USA is faltering.”

According to rating agencies that never heard of a sub-prime mortgage.

“The value of the Dollar is questionable and many Nations would dump dollars if it weren't for the fact that so many Other Nation's money is even Worse.:

Amazing! You refuted your own argument!

“The credit ratings of several States and many Cities are rather Negative.”

Apples and oranges. I am discussing the Treasury and the banks. Stay focused!

“Yes, the system IS failing.”

Yes, but the Treasury is not “in debt”. It holds funds in custody and can refund every cent.

“Your "proofs" aren't proof.”

Prove me wrong, why don’tcha?

“Your charges about low IQ are bogus and since I'm a MENSA member I'd be willing to challenge you assertions on that matter.”

My IQ assertion is that half of all voters inhabit the bottom half of the spe

15 Answers

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  • 6 years ago
    Favorite Answer

    You have said them all correctly

  • 6 years ago

    Banks operate on Trust so as long as the depositors trust they will get their money back they will still invest even when all the math says the entire banking system is not much more than a corrupt Ponzi Scheme.

    If banks loose that trust the entire system will come crashing down so fast you will be Shocked!

    Reality IS and banks are being propped up by a myth.

    The credit rating of the USA is faltering. The value of the Dollar is questionable and many Nations would dump dollars if it weren't for the fact that so many Other Nation's money is even Worse.

    The credit ratings of several States and many Cities are rather Negative.

    Yes, the system IS failing.

    Your "proofs" aren't proof.

    Your charges about low IQ are bogus and since I'm a MENSA member I'd be willing to challenge you assertions on that matter.

    You appear to be both arrogant and blind to reality.

    Can you tell us what gives money its Real Value? Or is it all just an illusion we have erroneously placed our trust in?

  • 6 years ago

    You should ask this question in Detroit. The problem is at some point the liabilities that the entity builds over time have to be paid. These liabilities can be paid with debt but at some point even the debt holders need to get paid. This can only go on so long, ask Greece. At the point where the debt service is equal to the revenue the gig is up.

    With the US we have the same type of problems. The difference is that the Fed will keep buying the Debt of the Nation even if the service is greater than the tax revenue. The issue is that nobody else will and the interest rate will spike. The gig will be up.

  • 6 years ago

    Yes and no.

    Since we stopped backing up our money with gold under FDR (D) in the 1930s and silver under Johnson (D) in 1964, our money is nothing but paper. We can just print more money. Or as was kicked around a few years back, issue a TRILLION DOLLAR COIN and use that to pay the debt. Of course if we use that route to pay the debt we will have hyper inflation like Germany did in the 1920s.

    Right now we are trying to honor the debt and are paying interest on it. But sooner or later the debt will have to be paid or the interest rates will start going up.

    Face it, we have been living the good life on borrowed money and our kids and grand kids are going to get stuck with having to pay the bills. The sooner we stop digging the hole deeper the better.

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  • 6 years ago

    I agree, it is a phony issue, That's how the banks got even more money, and now are refusing to make loans because of the low interest rates. Basically and unfortunately, together with the Military Industrial Complex the banks run the country.It's beyond my understanding how people can believe this type of propaganda. I think the Banks should be nationalized because they are parasites, starting with abolition of the Federal Reserve, which despite it's name is a private outfit

    Hope this helps

  • Jim B
    Lv 6
    6 years ago

    Yep. Soon to be 17 trillion dollars. but if Obama's spending had not been stopped it would have been 20 trillion by now. Look at Detroit running a government on borrowed money will one day come to an end and when it does we are going to be in a world of hurt. When the value of a dollar bottoms out and a loaf of bread cost $100. people will finally wake up to reality.

  • So you're super-rich and got that way by borrowing money then borrowing other money to pay it back . . .and so on and so forth . . .

    There IS an $11 trillion dollar line at the Treasury window, at least according to YOU. the actual number is about an order of magnitude larger than that and EXACTLY ONE WAY exists to pay it. Some would argue there are FOUR ways, but they all amount to the same thing.

    > Suck money out of YOUR wallet (taxes) to fund bond redemption.

    > Monetize the debt (aka inflation) - which leaves the cash in your wallet in your wallet, but transfers its VALUE to the "new money" paying the bonds - and so is really the same thing as sucking money out of your wallet.

    > Sell more bonds to fund bond redemption (you can see this is really just a delay, right?)

    > Sell more bonds to fund bond redemption and KEEP DOING IT FOREVER. If you aren't retarded, it should be fairly obvious that this amounts to "monetizing" it, which I'll remind you is the same as taxing you for it.

    I'm sure YOU are confused. "How is taxation and inflation the same thing," you ask? Easy.

    If you have enough cash to buy 2 hamburgers and I TAX half from from you, you NOW have enough to buy ONE.

    If you have enough cash to buy 2 hamburgers and INFLATION doubles the price, you NOW have enough to buy ONE, even though you have the same amount of cash.

    Either way, ALL of that debt WILL come OUT of the economy YOU and YOUR KIDS try to live in. It is literally IMPOSSIBLE to avoid that - "so lets party and pass the problem to my children," you say, no doubt.

  • 6 years ago

    And banks and savings-and-loans have never gone under because they made bad loans and couldn't collect? Those 30 year bonds have to be paid off either by borrowing more or by raising taxes.

    Government is the last standing pillar of society, once we kill government the corporations rule. Margaret Thatcher proudly proclaimed the death of Society.

  • Anonymous
    6 years ago

    Much of 0bama's multiple Trillions in debt are borrowed from China .

    They will want their money back as well as the 100 million a day in interest it costs us to owe them that money .

    Either they are repaid or they will seize the assets the loans are backed by.

  • 6 years ago

    You obviously don't understand what a Bond IS. It's basically an IOU from the government. Every time you by a Bond, you're loaning them money. And it's a DEBT that is paid back upon maturity.

  • 6 years ago

    Nonsense. The debt affects our credit rating and banks become stingy about handing out loans.

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