When does the national debt become too great?

[Unsane]

ten trillion, eleven trillion, twelve?

Where is Congress getting the money for Obama's stimulus plan? I mean, does it just come out of thin air?

Not to rain on the parade or anything, but doesn't this bother any of you? How long can the U.S. government continue to spend 10 times more than it has? How long will China continue to lend the U.S. money? I can't see how we'd EVER be in a position to pay it back.

[tularetom]

1. We aren't expected to pay it back

What we do have to do is to continue to buy crap from China with the money they "loan" us.

[Thrill]

2. Its not like its ever going to be paid back

So we just keep buying China's shit.

[Joe the Liberal]

3. Maybe if we........

abolished the Federal Reserve and started printing our own interest free money instead of having bankers do it we wouldn't be in such debt.

[IsItJustMe]

4. At some point in the future, probably when China figures out that it's not going to get it's money

back from the bonds they have bought, the US will start defaulting on it's loans. That is when the most of gov't functions will start shutting down and all hell will break loose.

[Unsane]

6. war with Chiina?

[FrenchieCat]

5. Well, that's it! Let's not do anything about the depression....

cause this is such a surprising shock! :eyes:

[Unsane]

7. did I say that?

[FrenchieCat]

10. Well, I'm sure that it bothers the Obama Administration as well.....

that there we are in debt up to our eyeballs, and China owns us.

But what would you suggest? Cause that is the key to your OP making any sense.
What ideas do you have?

[johan helge]

8. Krugman: Strong stimulus will enhance the economy’s long-run prospects

Krugman, Dec. 1 (http://www.nytimes.com/2008/12/01/opinion/01krugman.html):

"But the deficit worriers have it all wrong. Under current conditions, there’s no trade-off between what’s good in the short run and what’s good for the long run; strong fiscal expansion would actually enhance the economy’s long-run prospects.

<..>

What made fiscal austerity such a bad idea both in Roosevelt’s America and in 1990s Japan were special circumstances: in both cases the government pulled back in the face of a liquidity trap, a situation in which the monetary authority had cut interest rates as far as it could, yet the economy was still operating far below capacity.

And we’re in the same kind of trap today — which is why deficit worries are misplaced.

One more thing: Fiscal expansion will be even better for America’s future if a large part of the expansion takes the form of public investment — of building roads, repairing bridges and developing new technologies, all of which make the nation richer in the long run.

Should the government have a permanent policy of running large budget deficits? Of course not. Although public debt isn’t as bad a thing as many people believe — it’s basically money we owe to ourselves — in the long run the government, like private individuals, has to match its spending to its income.

But right now we have a fundamental shortfall in private spending: consumers are rediscovering the virtues of saving at the same moment that businesses, burned by past excesses and hamstrung by the troubles of the financial system, are cutting back on investment. That gap will eventually close, but until it does, government spending must take up the slack. Otherwise, private investment, and the economy as a whole, will plunge even more.

The bottom line, then, is that people who think that fiscal expansion today is bad for future generations have got it exactly wrong. The best course of action, both for today’s workers and for their children, is to do whatever it takes to get this economy on the road to recovery."

[firedupdem]

9. I know saving 10 billion a month by getting the hell out of iraq

would certainly save us some money we could use here! Every time I hear that figure I cringe!

[Double T]

11. The national debt became TOO great ten trillion, eleven trillion...........

twelve trillion ago!!!! The very behavior that got US in this mess is the same behavior bushco and NOW Obamaco have/are/will commit. This kind of crazy insane irresponsible behavior will result in our inevitable demise. No serious problem was ever solved by just throwing $$$$$$$$ at it!!!

[Zynx]

18. We can not possibly balance the budget when the economy is collapsing.

It is quite simply not possible. Revenue falls even faster than economic activity.

[no_hypocrisy]

12. Not dependent on an arbitrary number.

It depends upon when Treasury Bonds become junk bonds, and don't entice bondholders to purchase them. And it depends when creditors ask for their money back, WITH interest.

[mmonk]

13. It doesn't to many in government. It becomes a convenience

for cutting programs that help the voiceless while the spending for the powerful continues.

[HamdenRice]

14. For the US, probably around $20 trillion, so there is still some room

Not that increasing the debt is a good thing, but I think you are asking what is the upper limit to our borrowing. I don't have the calculations handy, but basically a few months ago, I compared Japanese government borrowing and debt during its "lost decade" to ours in relation to GDP.

The amount of debt the Japanese took on was roughly equivalent to us taking on $20 trillion total debt.

The Japanese consumers, however, are big savers and they had a much more vibrant industrial base, so really its anyone's guess when the financial markets would lose confidence in the US Treasury.

Back under Bush I, the financial markets lost confidence in US t-bills at a much lower number, forcing Bush to violate his "read my lips, no new taxes" pledge.

[AngryAmish]

15. It has to do with investor confidence

Whoever is buying US bonds (not Gary "Us" Bonds) has to think they are going to be paid back. right now they are taking US debt for almost no interest (actually negative interest rate because of inflation but that is another story).

So, if investrs think they are not going to be paid back or think it is a risk, they will demand a higher interest rate. When the interest rate gets high enough then people will invest in these bonds instead of in the private sector. This is called the crowding out effect, and that will throw the economy into the toilet.

So short answer is not yet, but watch out.

[lonestarnot]

16. Well I see where Janet was pissed at the pug treasurer for trying to mortgage AZ yesterday.

[Zynx]

17. When publicly held debt exceeds 120% of GDP.

At a point such as that, economies seem to buckle. We are currently at about 55%. The $10 trillion figure counts the debt Social Security holds against the general fund. Publicly held debt is more like $6.5 trillion.

[kentuck]

19. About four years ago...

if truth be known.

[Jennicut]

20. And so that is the quandry we find ourselves in, worry about the debt/deficit or about the economy

If you were president, I think the economy comes first. Cutting spending and the deficit is what Hoover did and he raised taxes as well. That did not work out so well.

[AtomicKitten]

21. It became too great when the Democrats took power, silly.

Most economists agree a huge stimulus is the only way to dig our way out of the hole, and government is the only entity that can do this.

[opihimoimoi]

22. I believe we pay interest on the debt...as it get higher...we pay more...

when does it hurt?...as it impacts on the GDP we will see less monies for other things....we need to reduce/pay off the debt somehow
in the future.

Obama needs to spend money to fix things as a quick way to jolt the economy...better yet...not only roads/bridges, but also projects that return the investment...ie....like advanced farms and growing systems...gets 2 things...more jobs and more food for the coming shortages predicted.

He has mentioned the energy sector...to create jobs by investing into programs which in the end helps our Nation...There is no argument there.

WE need to create wealth in order to pay off debt....Obama has his work cut out...with enormous help from many sectors...yes ...he can and yes,,, he will

[DuaneBidoux]

23. At the end of WWII the debt relative to economy was five times more than this will be.

What I don't know but hope to find out is how we got the debt down from such an astronomical number afterward. Many economist now would say that such a level of debt would lead to run away inflation but somehow we significantly reduced it over the course of the years after WWII.

I do think that solid economic growth and good productivity increases over a number of years can greatly offset the negative impact of the debt.