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Will US economy collapse under its own debt?

 
 
Reply Tue 2 Jul, 2013 04:55 pm
A) Sixteen trillion plus in debt
B) Fewer than eighty million wage earners
Divide B into A
Don't tell me. I can't bear to look.
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Type: Question • Score: 3 • Views: 1,807 • Replies: 34
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roger
 
  1  
Reply Tue 2 Jul, 2013 06:39 pm
@neologist,
You would have had a better question if you had asked when instead of will.
0 Replies
 
engineer
 
  1  
Reply Tue 2 Jul, 2013 07:44 pm
@neologist,
Nope, not even close. If you look at the percentage of the budget spent on debt service, you will see that it is pretty much the same today as it has been over the last 70 years.

http://www.gao.gov/special.pubs/longterm/debt/budgetdebt.html#affectbudget
0 Replies
 
farmerman
 
  1  
Reply Tue 2 Jul, 2013 09:02 pm
@neologist,
we sell a lot of commercial time to the rest of the world
0 Replies
 
maxdancona
 
  1  
Reply Tue 2 Jul, 2013 10:25 pm
@neologist,
$16 trillion / 80 million wage earners is equal to $200,000 per wage earner.

What's your point?

cicerone imposter
 
  1  
Reply Tue 2 Jul, 2013 11:10 pm
@neologist,
The US debt is manageable unlike many countries. The reasons are simple; our debt is going down relative to our GDP, and our economy is on the mends. More people are buying homes and cars; that translates into more jobs for US factories, and tax revenues for all levels of government.

The fear tactics of the Tea Party/GOP are nothing but fear tactics without much basis. The top 10% owns 80% of the wealth. What that means is that inflation is controlled by the rich; they have investments and cash that they do not spend willy-nilly. Their spending is not outstripping supply. The US economy is being maintained by the middle class and the poor - which produces 70% of our economy.

More manufacturing are returning to the US, because of higher productivity, efficiency of production, and cheaper energy costs.

Even Apple computer is producing their MAC computers here in Silicon Valley and the US, and I'm sure more high tech companies will begin to produce their products at home.

The only countries with debt that will collapse are those countries whose economy cannot support their debt service are Greece and Spain. Their unemployment is in the 20%+ range, and they don't product much to export.




0 Replies
 
neologist
 
  1  
Reply Tue 2 Jul, 2013 11:34 pm
@maxdancona,
Sounds like a huge burden; but I'm no expert.
That's why I posted
maxdancona
 
  1  
Reply Wed 3 Jul, 2013 05:03 am
@neologist,
$200,000 is the size of a typical mortgage. It is certainly manageable.

Most of us who manage a family budget don't mind that taking on responsible debt to get things like a house or education.

Personally, I think that higher taxes would be a good idea to lower the cost of interest. On the other hand, right now, with interest pretty near 0% it is foolish for our government to not take advantage for responsible lending on things we need like infrastructure projects.

cicerone imposter
 
  1  
Reply Wed 3 Jul, 2013 09:11 am
@maxdancona,
Here, in our area, homes are selling for one million plus, and values are increasing at double-digits every year.
0 Replies
 
neologist
 
  1  
Reply Wed 3 Jul, 2013 01:32 pm
Mortgages are backed by real property, are they not?
What is collateral for the national debt?
engineer
 
  1  
Reply Wed 3 Jul, 2013 01:40 pm
@neologist,
The huge output of the US economy and the taxes it generates. If you wonder how good that collateral is, consider that a house loan has such good collateral that you can borrow at 3-4% The US government's collateral is such that it can borrow for 30 years at the same rate, around 3.5%. A typical US household will spend 20-40% of its income on debt service. For most of us that means the mortgage, car payments and maybe some credit cards. Even prosperous upper middle class families have 10%+ of their budgets dedicated to debt service. The US government spends 7% of its income on debt service. It was much higher in the 90's.
cicerone imposter
 
  1  
Reply Wed 3 Jul, 2013 01:46 pm
@engineer,
I guess we are not considered a "typical US household." Our household debt is <1%, and our FICO score is 800+.
neologist
 
  1  
Reply Wed 3 Jul, 2013 01:46 pm
@engineer,
engineer wrote:
The huge output of the US economy and the taxes it generates. . . .
I see . . .
0 Replies
 
neologist
 
  1  
Reply Wed 3 Jul, 2013 01:49 pm
@cicerone imposter,
cicerone imposter wrote:
I guess we are not considered a "typical US household." Our household debt is <1%, and our FICO score is 800+.
Prove it! PM me your SSN and I'll check it out. Very Happy

Actually, I'm happy for you, CI.
engineer
 
  1  
Reply Wed 3 Jul, 2013 01:50 pm
@cicerone imposter,
I guess not. My home is the only debt I have but my monthly interest bill is still over 10% of my income. I do aspire to your debt free state though.
cicerone imposter
 
  1  
Reply Wed 3 Jul, 2013 02:28 pm
@neologist,
I'm not sure when our score went below 800 because we're never delinquent on payments.

Here's the results I got today:
Quote:
CreditXpert® Credit Scores™

Experian - 790

Equifax - 775

TransUnion - 782


They all rate me as EXCELLENT.

cicerone imposter
 
  1  
Reply Wed 3 Jul, 2013 02:29 pm
@engineer,
Our home doesn't have a mortgage, and our cars don't have any loan balance.
neologist
 
  1  
Reply Wed 3 Jul, 2013 04:28 pm
@cicerone imposter,
cicerone imposter wrote:
. . . They all rate me as EXCELLENT.
I rate you excellent as well, CI,

Except where we disagree; and on those points, I . . Well. ..
cicerone imposter
 
  1  
Reply Wed 3 Jul, 2013 04:34 pm
@neologist,
There's nothing wrong with disagreements; we all have them with other people - and some times with ourselves. Some times the devil makes me do it! LOL
0 Replies
 
engineer
 
  1  
Reply Wed 3 Jul, 2013 06:39 pm
@cicerone imposter,
No mortgage; I'm jealous. I hope to get there one day. That said, I'll stick to my assertion that most households can't meet that standard.
 

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