The US Debt

Discussion in 'Economics' started by Sky123987, Apr 13, 2008.

  1. I just saw the youtube video on US debt. I did some research

    US Debt: $9,447,414,783
    US Households: 112,362,000
    Average Income / HouseHold: $46,000

    If the interest rate to finance the debt is 5%, that means that it'll cost the average household $4,204 to finance the debt.

    So how much income does the federal government receive in taxes from a household making $46,000. According to, it is $7,924.

    So the average household is paying 53% to finance the US Debt!

    how can we not eventually go bankrupt?
  2. Check out the rest of the world. The hole world is in trouble.
  3. Because you fail to take account of not only the US cashflow picture (GDP), but US wealth itself:

    Evaluate it like any business. Balance Sheet (showing assets and liabilities), Cashflow, income statement.

    We've certainly eroded quite a bit of our asset base (that is already reflected by our currency weakening almost equal to what we've eroded in the past few years), but still have quite a bit to still work off of.
  4. balda


    Imagine if your credit card would accept your own money that you print inside your house, would you go bankrupt?

    USA will go bankrupt only if outside world will stop using US Dollars. Will this ever happen? Will USA let this happen? I do not think so.

    USA can and will buy any government with US Dollars which cost us nothing (just cost of paper and paint) as long as they will use this dollars outside of USA. The only question is how much? One billion? Two, Tree,....? Here you go, destroy other countries economies with our worthless dollar, but is it that worthless if people outside of USA are willing to accept US dollars in exchange for practically anything?
  5. Unless Arabic, Chinese are stopping purchasing US debts.

    What if Chinese exports its "revolution" ideas again, do You think India can send its troop and fight with Chinese again?

    I want to see India fight with Chinese for the idea of freedom and democracy.:D
  6. I'd glad you posted this. Thank you very much. Interesting point.

    The video does talk about the fact that we are in trouble as soon as other countries don't lend us their money as we'll have no one to borrow from.

    So I guess the question I have are...

    1) Will it ever come to a point that other countries are going to stop lending us their money?

    2) So say that they stop lending us their money... how are we going to pay? Are we really going to sell our assets in order to pay? or is what is going to happen is that the government is going to print $s like no other in order to pay?
  7. I couldn't find the net worth for the average american household but...

    let's just say it is $100,000. The average debt per household is about $80,000.

    So we know that the cash flow of the US economy is negative. and as soon as we get more into debt. We are going to have more debt that assets. And couple that with the fact our cashflow is negative how we are not doomed for bankruptcy???

  8. As of 2000 according to my previous post, per capita wealth was $145000. Assume it peaked much higher due to the housing boom, and lets say its all been given back, back to 145k. Also realize GDP was nearly half what it is now, so I don't think its a stretch to think we've at least maintained our wealth level between now and then. Those numbers are NET after deducting household debts (according to the methodology of that document).

    Then divide the national debt (not the portion we owe ourselves to earn interest for medicare and social security though) of 5T over 300M citizens. That is our collective debt to account for (mis)management of the govt. That is $16.6K per person.

    So minus all personal and govt debt, the US is 130K in the black per person. A few good years of government policy get us back on track and we're even better off. Add to that a current GDP of 13T. I'll give you a recession, and say we get it back down to 11T. Still over a 2:1 GDP:debt ratio, plenty of assets per capita ... not too bad.
  9. very good explanation

  10. #10     Apr 14, 2008