Will I.O.U.S.A. affect the markets?

[thriftybob]

Let's just hope the Arabs and Chinese don't see it.

I don't think I'd want to have the U.S. owing me trillions when they also owe everyone else trillions, and are wanting to borrow more each month.

 

[bkveen3]

National debt as a percent of GDP is the same as it has been for almost our entire existence. It is much lower than it was throughout several conflict periods in history. The figure is distorted by using the raw number.

 

[Mvic]

http://zfacts.com/metaPage/lib/zFacts-p318-Gross-National-Debt-GDP.xls
Clearly Debt as a % of GDP has not been constant.

What do you think that chart will look like when we hit a severely recessionary period where GDP is shrinking and we desperately have to accelerate borrowing to avert a depression while dealing with a precipitous decline in tax revenue.

 

[The Kin]

What happens when we load up on Fannie and Freddie debt? Whats the Debt to GDP then?

 

[bkveen3]

http://en.wikipedia.org/wiki/United_States_public_debt

First graph on the left. I don't know what that says to you but it tells me that debt as percent of gdp has remained fairly constant. I'm all for balancing the budget and trying to make that number as low as possible, i'm merely pointing out that its not like we are doing something we haven't been doing for centuries.

 

[Mvic]

You do realize that it is the same chart I posted just a different scale? 50% to 120% to 30% to 70% to 55% and back to 70% a bit of a stretch to call it constant. Regardless, if we hit a deflationary patch carrying the debt we do now it will hurt us rather badly and as it looks like such a deflationary period could be right around the corner I would say that the debt should set off alarm bells.

 

[RiceRocket]

If you're intelligent enough to understand how the world works financially, you will see this current crisis similar to the 89-90 crisis. We are going to have a huge boom in the markets very soon. Maybe 6 months more of deleveraging and then off to the races.

The rest of the world, ie countries financing our debt, have a huge interest in the US continuing to grow. If the dollar reserve collapsed, the rest of the world would suffer just as much, seeing that they own trillions of dollars. It's all a part of an integration system known as the new world order. Don't think that this system is just going to break down by one little crisis.

 

[thriftybob]

$10 or $15 trillion isn't so much unless you are the one that gets stuck paying it off.

All it would take is $100 billion per year for 100 years

 

[gnome]

Quote from bkveen3:

National debt as a percent of GDP is the same as it has been for almost our entire existence. It is much lower than it was throughout several conflict periods in history. The figure is distorted by using the raw number.

The Gummint will explain it away with some self-serving blather as this.

However, the effects are cumulative... and at some point the load gets too heavy to bear.

I know it's always hazardous to claim, "this time it's different"... except in one very big sense, it really is.

I believe it is much more likely that we slog forward with more inflation, slower economy, more unemployment, stagnation, housing woes for years, etc.... rather than, "in 6 months we rocket off again"...

I also think the economic malaise is likely to persist until we Boomers die off... another 30-40 years.

I hope I'm wrong...

 

[RhinoGG]

I'm subscribing to threads like this so when, not if, but when markets take off again, and all these posters come back and say, I told you so, I'll have a link to their posts that say it.