NationStates Jolt Archive

As a nation, the USA has a gigantic debt. And it gets bigger every second!

As individuals, it's not much better. Many of us have $100,000 mortgages or more. Most of us are paying car payments. And huge numbers of us are thousands in credit card debt. People use their CC to pay for everything, from tech toys at Best Buy, to groceries, and even at McDonalds! We also have the lowest savings rate in the civilized world.

How long can it go on? When will the bills come due?

Wasting your money on stuff you don't need is stupid. Borrowing money to buy stuff you don't need is er..

Well for credit cards if you make sure you ALWAYS pay off the bill at the end of the month they're a useful bit of plastic, just always stay a couple months ahead and have some money in the bank just incase 15% apr is a killer.

Debt is superficial. You are naive to believe that a national debt would ever have any impact on the fiscal situation of America or any place for that matter. It's an augmenting number that has little to no meaning anymore, like causalities of war....they are just numbers to us.

It is not going to destroy us because for how long now have we been in a national debt and it has not impacted our sociey's functioning at all?

On an individual level though, you reap the rewards of your own actions and face the consequences of them too. If you want to charge a Big Mac to your credit card....have fun, spend all the money you like even that of which you do not have, you will be the one to pay for it in the end. And when you have no house, food, and clothing, you'll wish you spent your money more wisely.

9 trill baby!

Is debt killing us?

No. That's the obesity.

Wasting your money on stuff you don't need is stupid. Borrowing money to buy stuff you don't need is er..

Well for credit cards if you make sure you ALWAYS pay off the bill at the end of the month they're a useful bit of plastic, just always stay a couple months ahead and have some money in the bank just incase 15% apr is a killer.
Buying Shit you dont need with money you haven't made yet to impress friends you don't have. :headbang:

We need a "Living Wage"! :rolleyes:

No. That's the obesity.

What about people who pay for their obesity with CCs? :D

I'm a college student and I have no debt. No credit cards, no loans, none of the above. Debt isn't killing me.

I'm a college student and I have no debt. No credit cards, no loans, none of the above. Debt isn't killing me.

Congrats! But there's probably less than a dozen college students in the whole US who could say that.

Buying Shit you dont need with money you haven't made yet to impress friends you don't have. :headbang:

We need a "Living Wage"! :rolleyes:

I know. People will just piss it all away on worthless junk. It's like giving a kid a credit card. Then again it is often like giving an adult a credit card. :rolleyes:

Buying Shit you dont need with money you haven't made yet to impress friends you don't have. :headbang:

We need a "Living Wage"! :rolleyes:

Hahah, and low easily accessable interest rates!!

I'm a college student and I have no debt. No credit cards, no loans, none of the above. Debt isn't killing me.
Hey, can I join your club? I'm a debt-free college student as well. :D (well... I do have a credit card, but it's got no balance).

As a nation, the USA has a gigantic debt. And it gets bigger every second!

As individuals, it's not much better. Many of us have $100,000 mortgages or more. Most of us are paying car payments. And huge numbers of us are thousands in credit card debt. People use their CC to pay for everything, from tech toys at Best Buy, to groceries, and even at McDonalds! We also have the lowest savings rate in the civilized world.

How long can it go on? When will the bills come due?

There is a huge difference between a budget deficit and actual consumer debt even though politicians try and make you think otherwise.

As individuals, only fools allow themselves to be enslaved to debtors. What they get, they would probably deserve if it were not for the fact that our educational system does not mandate the most important subject that an American child should be taught. That is finance, and the reason why is because there would be fewer fools. It would be harder for both parties to lie about economic issues, and your loan sharking masters would lose power.

They should be teaching this in high school and college instead of all the bullshit filler.

People should be learning about compound interest, paying themselves first and living within their means.

Consumer credit is out of control-people are living on credit cards-Supermarkets and freaking McDonald's take credit cards!!! Its one thing if you're using it as a debit card, but to charge food AND pay interest on it is as sign you're in trouble.

Carnivorous Lickers #1 rule: Dont use a credit card to pay for something that will literally be shit tommorrow.

Having mortgage debt isnt necessarily bad, as long as you have equity. There is a trend now for home loans that go beyond 30 years and are even for 100% OR MORE. This is asking for trouble.

People need a rude awakening-Live within your means.

Now is a great time for an generation to start off on the right foot- there are still 0% interest car loans -you could actually buy a car or home now and have equity early on. If treated wisely, this equity could be a huge benefit in future car/home purchases.

They should be teaching this in high school and college instead of all the bullshit filler.

People should be learning about compound interest, paying themselves first and living within their means.



<and the crowd roars>

They should be teaching this in high school and college instead of all the bullshit filler.

People should be learning about compound interest, paying themselves first and living within their means.

Consumer credit is out of control-people are living on credit cards-Supermarkets and freaking McDonald's take credit cards!!! Its one thing if you're using it as a debit card, but to charge food AND pay interest on it is as sign you're in trouble.

Carnivorous Lickers #1 rule: Dont use a credit card to pay for something that will literally be shit tommorrow.

Having mortgage debt isnt necessarily bad, as long as you have equity. There is a trend now for home loans that go beyond 30 years and are even for 100% OR MORE. This is asking for trouble.

People need a rude awakening-Live within your means.

Now is a great time for an generation to start off on the right foot- there are still 0% interest car loans -you could actually buy a car or home now and have equity early on. If treated wisely, this equity could be a huge benefit in future car/home purchases.



Unfortunately, people are not as smart as we would like to give them credit for. I wish more people would think like that Carnivorous, but we could only hope, right?

Live within your means.....it seems almost like Greek to most people. Especially to "teenie boppers" and some college students that think it's cool to own 15 credit cards and shop at Abercrombie and buy 30 new pairs of shoes to go with each pair of jeans they own.

Lets ban currency :)!!

Debt is only a problem when you can't afford to pay it off; however, in this time of relatively cheap and plentiful credit it is easy to move from higher-interest payments to lower ones. Taking on debt has its drawbacks, but as long as we can afford to pay for it it isn't an issue and enables us to live beyond our means...and that's good for the economy. A strong economy increase real income, which makes it easier to manage debt further driving growth.

Budget deficits are far different from consumer debt, and in percent GDP terms the national debt (there is a gigantic difference) is still lower than it was in the 1980's...the only real concern is inflation caused by the deficit spending.

If the economy grows faster than the national debt the nominal terms don't mean anything.

Often, a new victim looks at his shiny new CC with a 10K limit and thinks "Oooh! I have $10,000 I can spend". Then the bill comes due.

Unfortunately, people are not as smart as we would like to give them credit for. I wish more people would think like that Carnivorous, but we could only hope, right?

Live within your means.....it seems almost like Greek to most people. Especially to "teenie boppers" and some college students that think it's cool to own 15 credit cards and shop at Abercrombie and buy 30 new pairs of shoes to go with each pair of jeans they own.
And these people will look around one day as adults and realise that they are drowning in debt. They won't be able to get out of it.

I personally think that you should learn to learn to live within your means early on.

I did; but only because I had to pay tuition and I didn't have enough money to pay down the balance on my CC; that was scary. A $500 debt with little money is pretty scary; and boy did that straighten me up quickly.

However, there is necessary debt in life; mortgages are one example. Others aren't and these ones are what kill people.

There is a huge difference between a budget deficit and actual consumer debt even though politicians try and make you think otherwise.
There's also a difference between the national debt and the federal budget deficit. The budget deficit is the amount of money the federal government spends in a year in excess of the amount of money it has in the bank to spend. The national debt is the amount of money owed to holders of government bonds, both domestic and increasingly foreign, especially Chinese, sold to finance that deficit spending.

Unfortunately, people are not as smart as we would like to give them credit for. I wish more people would think like that Carnivorous, but we could only hope, right?


I don't think people are stupid. They are intentionally conditioned to living beyond their means, both by government and financial masters. At some point however, financial education will, whether they like it or not, become part of the educational system. The greedy financial lobby has made sure of that by eliminating the possibility of simply erasing personal debt. It was not their intention, but it will have the same effect none the less. As more people are strapped to the same debts they accrued at a young age, the smaller the pool of individuals they will have to over extend from. These are the people that will demand their children be taught the financial education they were cheated of. It is a fortunate, unintended consequence of unabashed greed.

Hey, can I join your club? I'm a debt-free college student as well. :D (well... I do have a credit card, but it's got no balance).
Credit cards are useful for off the wall emergencies, such as that two week period between paying tuition and your first paycheck. Say you need to pay a visit to the doctor or something like that. Certainly not for pleasure spending.

I'm a college student and I have no debt. No credit cards, no loans, none of the above. Debt isn't killing me.

We're in the same boat. :) 8 years of university, and not a dime in debt. Not to mention substantial savings from my years of working, and scholarships/awards/bursaries.
If you're even just a little bit financially capable, you can do well for yourself. It's the crazy people who buy every little thing that comes along that they might want who get themselves into trouble.
Is a life of moderate spending really so bad?
I don't think so... haven't had to deal with any stress of debt yet! ;)

I have credit card debt all the time. I have two cards that give me miles which I can turn in for travel and other purchases. I spend money on them all month and then pay tem off at the end of every month. :) Not only do I pay very little interest this way, but I've almost earned a free ticket to Las Vegas. :p

As a nation, the USA has a gigantic debt. And it gets bigger every second!

As individuals, it's not much better. Many of us have $100,000 mortgages or more. Most of us are paying car payments. And huge numbers of us are thousands in credit card debt. People use their CC to pay for everything, from tech toys at Best Buy, to groceries, and even at McDonalds! We also have the lowest savings rate in the civilized world.

How long can it go on? When will the bills come due?

They won't. The national debt means about as much as the latest whitehead on my nose.

If China calls it in: "Pay us all the royalty/patent/trademark money you owe us."

The United States does a lot to help the world, and we don't charge money for it. Are we going to tax Iraq for taking down Saddam and helping them set up a voted-for democratic government? No. Their oil remains their oil.

They won't. The national debt means about as much as the latest whitehead on my nose.

If China calls it in: "Pay us all the royalty/patent/trademark money you owe us."

The United States does a lot to help the world, and we don't charge money for it. Are we going to tax Iraq for taking down Saddam and helping them set up a voted-for democratic government? No. Their oil remains their oil.
That's not the way it works. People don't just hold bonds until the day they decide to ask for the money back. The bonds mature at which point the Fed has to pay the money. If they do not, they downgrade all American debt which means we now need to sell more bonds at higher interest rates to less willing customers. It is an unsustainable method of finance. We are now in a position where we are selling bonds just to pay off the bonds that are maturing so we are borrowing money to pay off money we borrowed.

If China calls it in: "Pay us all the royalty/patent/trademark money you owe us."



It's not so much a question of China trying to force us to pay our debt. But what if they just decide to quit financing any new debt? How long could we last? Would we go into hyper-inflation like post WW1 Germany? I'm no expert, but those sound like serious concerns to me.

It's not so much a question of China trying to force us to pay our debt. But what if they just decide to quit financing any new debt? How long could we last? Would we go into hyper-inflation like post WW1 Germany? I'm no expert, but those sound like serious concerns to me.

Why would they? They have much more to gain from an economically healthy US than they ever would by hurting us economically; any trade driven economy will be sure to maintain policies that keep the economies of trading partners strong since they benefit all the more from it.

Why would they? They have much more to gain from an economically healthy US than they ever would by hurting us economically; any trade driven economy will be sure to maintain policies that keep the economies of trading partners strong since they benefit all the more from it.
They have an interest in selling manufactured goods to the American marketplace, but they are not going to finance billions of dollars in federal debt if they think the fed will default. In fact, no one will. Most government bond holders are still domestic. How many government treasury bonds are you going to be buying when they stop paying them off?

Why would they? They have much more to gain from an economically healthy US than they ever would by hurting us economically; any trade driven economy will be sure to maintain policies that keep the economies of trading partners strong since they benefit all the more from it.

True, for now. But what if we get into a conflict over Taiwan? Or what if our ballooning consumer debt makes us unable to buy enough of their goods to be a good trading partner?

They have an interest in selling manufactured goods to the American marketplace, but they are not going to finance billions of dollars in federal debt if they think the fed will default. In fact, no one will. Most government bond holders are still domestic. How many government treasury bonds are you going to be buying when they stop paying them off?


They probably won't stop financing them unless China's savings rate dramatically falls. Remember, bank purchases of government bonds are the equivalent to creating new money via loans; since so much money is saved, the Chinese banking system isn't creating the new money necessary to keep their growth rates up and interest rates low through loaning it out which means they need other means to do the same thing. And at this point in time US Treasury bonds are simply the best investment when it comes to government bonds.

True, for now. But what if we get into a conflict over Taiwan? Or what if our ballooning consumer debt makes us unable to buy enough of their goods to be a good trading partner?

They wouldn't take the risk; China will probably never move on Taiwan simply because they have more to lose from it than anyone else.

The US economy never will fall that far; short of a massive collapse, there would be nothing sufficent to destroy enough demand to derail our trade with China. And in any case, foreign governments would intervene to support our economy much like we and other nations do in the event of a financial crisis like in 1998.

I don't think people are stupid. They are intentionally conditioned to living beyond their means, both by government and financial masters.


I like to call them stupid, it sounds better. ;)

:D

They probably won't stop financing them unless China's savings rate dramatically falls. Remember, bank purchases of government bonds are the equivalent to creating new money via loans; since so much money is saved, the Chinese banking system isn't creating the new money necessary to keep their growth rates up and interest rates low through loaning it out which means they need other means to do the same thing. And at this point in time US Treasury bonds are simply the best investment when it comes to government bonds.
Yes, but they require us to pay them back. If we start to default on our previous obligations the Chinese will look to other currencies to build their foriegn currency holdings, probably the Euro and the Yen. They are, in fact, already buying less US bonds in favor of EU bonds right now because of concern over the debt and we haven't even defaulted, though it took a last minute approval of an additional 700 billion in government bond sales this last week to make sure we didn't default. Also, its not just the Chinese. Most US debt holders are American. Again, once you see people trying to turn in their bonds for payment and the government says "no." How many bonds are you going to be buying? Once we default, the interest rate will go up, probably dramatically, and it will be harder to find buyers and harder to pay off the debt. There's no way around it. You can't just say fiscal responsibility doesn't matter. Woudl you run your household on the premise that your debt doesn't matter because once your credit cards demand payment you'll just get another one to transfer the balance to? Eventually teh credit card companies are going to say, "No, I think you've got just about all the debt you can handle." Bond buyers, both foreign and domestic, are already starting to say that to us now.