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OffspringHead
10-30-2008, 10:05 AM
Hypothetically speaking.. What would happen if the United States completely wiped out the National Debt to 0 and just picked up from there? What exactly would happen? We're always going to be in debt anyway so why would it hurt to start over?

wheelchairman
10-30-2008, 10:22 AM
Essentially we use the money when the government spends more than it earns. If we were to simply wipe out the debt assumeably we would never get a loan again. (and it's hard to call this debt really, it's not like there is an interest on it) However this means that if we were to wipe out the debt we would be cutting ourselves off from a source of capital (MONEY) which allows the government to do things.

It would also severely disturb the world economy in that many nations would suddenly lose an income (payments from the united states to them). Essentially the money would just disappear. It would hurt the world economy severely.

I can see this and I've only ever had basic economics, and I never went to that class. (I did however read the textbook.)

RickyCrack
10-30-2008, 04:05 PM
however if we were to hypothetically pay off the national debt. would this cause a major economic boom ( not because of the money generated to equal the debt) but our debtor allies would have an increase in income as well our economy would have an influx of more ready available money for dispersement. this could however lead to inflation though right? im really bad at economics.

Slim Pickens The Bomb Rider
10-30-2008, 04:30 PM
http://www.youtube.com/watch?v=ge2J2lNusJs

This is gonna happen

T-6005
10-30-2008, 05:10 PM
however if we were to hypothetically pay off the national debt. would this cause a major economic boom ( not because of the money generated to equal the debt) but our debtor allies would have an increase in income as well our economy would have an influx of more ready available money for dispersement. this could however lead to inflation though right? im really bad at economics.

Inflation isn't necessarily a bad thing. It's just a way for the credit system to keep growing. Banks are the key to the creation of new money, and the balance between the money being created and the population (plus a few important bits of fluff along the way) is essentially the reason for inflation.

I read somewhere that most developed countries try to keep inflation to between 1 and 3 percent a year. Hyperinflation (over 10 percent a year) is where it gets dangerous.

It isn't in itself a bad thing, but the way in which it reacts to certain stresses upon the economy can let you know things about the state of the economy as a whole.

jacknife737
10-30-2008, 06:49 PM
http://www.youtube.com/watch?v=ge2J2lNusJs

This is gonna happen

Do you often get your information from a white supremacist?

wheelchairman
10-30-2008, 08:15 PM
What Thi said.

Now as I said before I'm no expert on the economy, there are many variables I am probably not aware of, and what I say should be taken with a grain of salt.

I would imagine however that if America paid off it's debts in a steady manner it would not create inflation (or hyper-inflation as Thi correctly called it) because most likely the money would be re-invested in something else which means it would not necessarily flood the economies of these countries.

However if we paid it all off at once in one gigantic spurt of capital (sperm), that would be stupid.

Paying off our debts would also free up government capital which may or may not increase inflation. If the government just kept the money in its coffers and it didn't enter the market it would not create inflation. If they air-dropped it over most major cities it would. Things like creating jobs or investing in infrastructure would probably not.

Now I just want to underline that it's 3 am for me, and this is not really my area of expertise. There are people on this board who are probably better able to answer the question, Vlad or Jesus or someone else who has a hidden economics degree. I just happened to reply first with my big ignorant mouth.

Slim Pickens The Bomb Rider
10-31-2008, 04:43 AM
Do you often get your information from a white supremacist?

rarely. But don't be too naive

JoY
10-31-2008, 05:30 AM
I know I'm a retard for watching Sicko & taking Michael Moore remotely seriously, but is it true that America borrows so much cash, mainly from China, that even the interest alone is 2 billion dollar a day?

Jebus
10-31-2008, 06:53 AM
rarely. But don't be too naive
Maybe you should watch one of the related videos (http://www.youtube.com/watch?v=TI_6S7RVpxo&watch_response). I can't believe anyone would actually believe anything coming out of Turner's mouth.

_Lost_
10-31-2008, 10:06 AM
All I've got to say on this point is that a good solid economy is good. BUUUT, and economy on hyper-drive is bad. What goes up must come down essentially. While yes, it seems that the economy is going to dog shit right now, it had to happen. People get into the "it must go up and up and up and up and..." type of mentality, but a hyper-inflated economy is just as bad. So even if, in theory, paying off our debt as a country 100% boosted the world economy a bunch for a time, it would inevitably crash again, the states would spiral back into debt, and we'd all be cursing about it again.

OffspringHead
10-31-2008, 10:23 AM
I've heard about the Amero and the North American Treaty Act (I believe that's what it's called) before. And I don't really believe that this will happen. If the American dollar collapses, whats the point of merging Canada, U.S and Mexico and creating a new Currency.

I could definitely see a new American Currency eventually happening but the Amero I think is bullshit.

JoY
10-31-2008, 10:57 AM
what goes up, doesn't always need to come down. I've tried to stay updated on the matter & from my understanding (& this is not exactly my field, so someone please correct me if I got it wrong), this whole thing comes down to a virtual fictive cashflow that's been going around & around & around for years, without the money actually existing. the real estate market shifted in a direction, where it had absolutely no solid ground anymore. it used to benefit & stimulate the economy to buy & sell property without the cash actually rolling in & out, but based on a promise that some day that cash would roll in & out. the more you make & take that promise, the more it becomes an empty promise. like fried air (& that joke's on all of us), it was just a hot bubble that was waiting to burst.

_Lost_
10-31-2008, 01:16 PM
this is true. a similar thing happened to cue the crash of the stock market in the 1930s, except it was directly in the stock market itself, not in an outside source like the house market. But the market fluctuates on its own. It can't just go up and up, especially with our declining contribution in industry.

JoY
10-31-2008, 05:29 PM
alright I admit, what comes up, usually must go down, but it's not like it's out of our hands & we don't influence it. better yet, we create the entire market. I think we can all agree that it didn't have to come crashing down like it did. to be frank, I think it's absolutely retarded & no wonder it blew up in everyone's face.

normally there's some kind of balance. after up comes down, but after down also comes up. right now I don't really see when that last part is going to happen.

HornyPope
11-09-2008, 10:36 PM
Debt is repaid through collecting taxes from the consumers' income, so repaying the debt in its entirety (like really repaying it) would simply increase the consumers' disposable income (since the taxes collected to repay the debt will now be redundant).

But if the U.S. just wiped it off, well that would destroy everybody who relies on steady payments for their loans, and this includes financial intermediaries, foreign governments who own U.S. debt and of course individuals like ourselves (or our parents). Like if you own 5000$ in U.S. bonds in your portfolio but suddenly it gets wiped out, well then you just became 5000$ poorer.

On the other hand, everybody who is indebted (whose total net worth is negative) has just become relatively richer.

So basically, this would be a "distribution of wealth" of most catastrophic proportions, to say the least, because the implications of such 'wealth transfer' would carry extremely far. Too many individuals, firms and financial institutions would be bankrupt overnight. This means less buying, less producing, higher prices... and I don't know what else.


I know I'm a retard for watching Sicko & taking Michael Moore remotely seriously, but is it true that America borrows so much cash, mainly from China, that even the interest alone is 2 billion dollar a day?

Yes, beautiful, this sounds about right. The U.S. national debt today stands at over 10 trillion, so a monthly compounding payment calculated at 5% interest is something like 40 billion. Divide this number by 30 days and you get between 1 and 2 billion.