American debt situation

[Ross Scott]

This sort of bleeds into other topics, but I think it should have its own thread. This may be old news for some people, but this was certainly news for me. Check out what this guy (director of economic research for the Reason Foundation) says around the 5 minute mark:

 

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He's saying there's not enough American dollars in circulation in the entire world to pay off America's debt. I didn't know this. This sounds like an even bigger mess than I thought. I'm wondering what the most sane way of dealing with a situation like that is. I think printing extra money to inflate the hell out of things is a pretty bad solution, but I'm not sure what the best solution would be. I think you would almost half to completely change or break some laws in order to remedy this, but I'm not an economist either.

[BDown]

Very interesting to consider. One (bad) solution would be for people to just start declaring bankruptcy I guess. I mean, if the state governments are doing it, not not the citizens?

 

Ignoring that train of thought altogether, I read an interesting article in the NYT about a possible way to solve the economic hardships (not necessarily) debt by increasing inflation. I couldn't find the article (I'll keep looking) so I'll try to explain it as best I can remember. Basically, because so many people are unemployed, nobody wants to spend any of their money. People are making any, so they aren't spending any. Causing inflation, albeit very controlled inflation, the American people would then have a reason to spend their money. It's basically like using a defibrillator on the economy, it's very dangerous if used improperly, but in the right circumstances it can save a life.

 

EDIT: Found the article: "Could Every Day Be Black Friday?"

 

It's basically saying that we need people to shop like its black friday every day (ok not THAT crazily, but still) in order to stimulate the economy.

Edited December 4, 2011 by Guest (see edit history)

[Razor235]

Well thats...bad.

That means we are in this pit forever?

If this was sim city I would just raise taxes, deduct services, and zone more, and eventually, I would get out, but it isn't.

 

I agree with BDown. Getting the ordinary person to spend some money would have stores generate more revenue, with more customers they have to buy stock, so manufacturers start making money, and so on down the chain.

[Vapymid]

That may sounds catastrophic but in fact it's totally irrelevant. It's one of these dramatic visualisations often used to impress the punters, like "oh, if we print money to cover all this debt in 1 dollar bills the stack will reach the Moon and back and then some..."

 

In reality it is not a requirement that debt must always be less than the total available money supply - the economy just doesn't work like that.

 

First, not all debt falls due at the same time. Second, moneys are circulating, so a sum of money which has been used to repay one slice of debt can then be used to repay more debt, once it worked its way through the system.

 

What really is important is the value of the assets securing the debt, the ratio of debt to disposable income and the dynamics of their change.

 

The guy is right - the situation is very difficult and the household debt is not much talked about, even though it is that particular issue (and not the bank debt and really not so much the national debt, if we are talking about the US) which is causing the current economic problems.

 

And, yes, there are three solutions - print and hand out more money to people through government spending (and hyperinflate), write off debt (and hurt everybody's long term economic prospects) and find ways to return to economic growth.

 

Somebody needs to invent something that makes life so much better that everyone would want to get it, or find a way to drastically reduce the cost of energy or find an abundance of cheap natural resources. Or go explore the asteroid belt, colonise Mars and Moon etc, which is what I would propose but perhaps we are not quite ready for this just yet...

 

Regards

[Frodo]

I read on a website "The estimated population of the United States is 312,454,280

so each citizen's share of this debt is $49,893.04."

 

"The National Debt has continued to increase an average of

$4.02 billion per day since September 28, 2007!"

 

How is america going to pay off this huge debt?

What really bugs me is that they have this huge $15 589 292 765 978 debt, and they just continue to spend, when you or me goes into debt, the bank normally blocks off our account, why hasn't this happened to america? Where are they getting this cash?

 

http://www.brillig.com/debt_clock/

I think america's going to have to do some serious cut backs, maybe stop spending so much money on missiles. In 2011 the US spent $9.9 billion on Ballistic Missile Defenses.

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

 

What's your opinion?

[BTGBullseye]

What really bugs me is that they have this huge $15 589 292 765 978 debt, and they just continue to spend, when you or me goes into debt, the bank normally blocks off our account, why hasn't this happened to america? Where are they getting this cash?

 

http://www.brillig.com/debt_clock/

I think america's going to have to do some serious cut backs, maybe stop spending so much money on missiles. In 2011 the US spent $9.9 billion on Ballistic Missile Defenses.

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

 

What's your opinion?

Well first off, last I checked, there isn't a single government on Earth that isn't in debt. If any 'bank' called in the debt, everything would crumble, mainly because everyone is in debt to everyone, and it would cause a chain reaction of calling in debts. Example:

I'm in debt to a bank, so they tell me to pay. Ok, so I have to call in all my debts in order to pay, but they can't fulfill their debts either, so they call in all of their debts, but their's are in the same situation as they are, and call in their debts, but their's are in the same situation, and call in their debts, but one of those people I owe as well, so I have to call in debts to pay for that, and the cycle continues infinitely.

 

As far as cutting back on defense budget, I don't want that to happen. The country most in debt to the USA is China, and the USA is also most in debt to China, so they would then have only one reason to not invade... Courtesy, and that won't slow them down any.

[Vapymid]

I agree with the above except this:

 

...China, so they would then have only one reason to not invade...

 

I hope you mean "economically". I just can't see anybody even thinking about invading another country the size of the US, amphibiously, across an ocean, even if the target can only defend itself with muskets and 24 pounder muzzle loaders... It's just out of the question militarily (unless you live in COD5).

 

Regards

[BTGBullseye]

China has enough planes and shipping to get over 10 million troops to our west coast all at once. They would have trouble from the civvies with guns, but relatively no one else. Take away our defense stuff, and they won't have nuclear retaliation to hold them back.

[Vapymid]

China has enough planes and shipping to get over 10 million troops to our west coast all at once.

 

I guess, theoretically, it can be done. Provided that:

 

- the US Government will sit on their hands while watching the Chinese go about the years of planning, months of preparation and training, weeks of assembling and loading the ships and planes that any such invasion would require.

- the US CVNs will pretend they are fishing trawlers and turn the blind eye as the whole invasion fleet will sail across the Pacific

- the US SSNs will urgently find something important to do in the Atlantic or elsewhere and their ELFs will mysteriously break down, so they won't be able to intercept the coming armada.

- the US SAC will decide to ground its fleet for maintenance and to consider the satellite images of the approaching Chinese fleet a hallucination.

 

Remember that the largest ever successful amphibian invasion in the world's history to date was the Normandy D-Day and that involved 160,000 troops + 25,000 paras + 200,000 navy crew and 5,000 ships. The distance between the staging and landing area was only a few hundred km. The invasion took place in the middle of a war with the target (Germany) already being engaged on 3 major fronts.

 

To transport 10 million troops the Chinese will need a 1000 ships, each the size of Queen Mary - I am not aware they have nearly as many available. For smaller ships we are talking about maybe 50,000?

 

But even more interesting question is why would the Chinese want to do it all and what will they achieve with the invasion?

 

Imagine that, somehow, they've managed to disembark, unopposed, their 10 million poorly trained teenage conscripts on the shores of California. They will now face the need to fight their way across the continent to seize the seat of the Government on the opposite coast while maintaining a constant supply train across the Pacific. This is not likely to be a great success.

 

But imagine then that they've done it. The US is now under the Chinese occupational authority - now what? Do they use it for lebensraum (Siberia or Australia would make easier targets)? Do they take the oil (better take Indonesia and Malaysia for that or, simpler, - just buy the stuff in the Middle East)? Do they enslave the population to assemble iPads in horrible conditions (they have plenty of workforce for that)?

 

At the same time they will devalue a large portion of the foreign currency reserves they are sitting on, will kill the cash cow which feeds their export-oriented economy, will not make any friends in the world (well, may be some but who needs friends like that?). And, last but not least, with all these troops away from the homeland - who is going to keep the local population in check? It just does not add up.

 

I think, no matter how tough it is, but the Americans are just going to have to learn to live with the thought that no one in the world wants to invade their country (other than the illegal immigrants, that is).

 

Regards

[BTGBullseye]

Since this is getting off topic, I won't continue this here. You're welcome to PM me to continue it, but I think it should get back to the issue of US debt.

[Brian234]

Just to bring the debt back up, this is the website I usually go to after watching a sad movie. It is pretty depressing. After that I usually go to youtube.

 

http://www.usdebtclock.org/

[ProHypster]

China has enough planes and shipping to get over 10 million troops to our west coast all at once.

 

I guess, theoretically, it can be done. Provided that:

 

- the US Government will sit on their hands while watching the Chinese go about the years of planning, months of preparation and training, weeks of assembling and loading the ships and planes that any such invasion would require.

- the US CVNs will pretend they are fishing trawlers and turn the blind eye as the whole invasion fleet will sail across the Pacific

- the US SSNs will urgently find something important to do in the Atlantic or elsewhere and their ELFs will mysteriously break down, so they won't be able to intercept the coming armada.

- the US SAC will decide to ground its fleet for maintenance and to consider the satellite images of the approaching Chinese fleet a hallucination.

 

Remember that the largest ever successful amphibian invasion in the world's history to date was the Normandy D-Day and that involved 160,000 troops + 25,000 paras + 200,000 navy crew and 5,000 ships. The distance between the staging and landing area was only a few hundred km. The invasion took place in the middle of a war with the target (Germany) already being engaged on 3 major fronts.

 

To transport 10 million troops the Chinese will need a 1000 ships, each the size of Queen Mary - I am not aware they have nearly as many available. For smaller ships we are talking about maybe 50,000?

 

But even more interesting question is why would the Chinese want to do it all and what will they achieve with the invasion?

 

Imagine that, somehow, they've managed to disembark, unopposed, their 10 million poorly trained teenage conscripts on the shores of California. They will now face the need to fight their way across the continent to seize the seat of the Government on the opposite coast while maintaining a constant supply train across the Pacific. This is not likely to be a great success.

 

But imagine then that they've done it. The US is now under the Chinese occupational authority - now what? Do they use it for lebensraum (Siberia or Australia would make easier targets)? Do they take the oil (better take Indonesia and Malaysia for that or, simpler, - just buy the stuff in the Middle East)? Do they enslave the population to assemble iPads in horrible conditions (they have plenty of workforce for that)?

 

At the same time they will devalue a large portion of the foreign currency reserves they are sitting on, will kill the cash cow which feeds their export-oriented economy, will not make any friends in the world (well, may be some but who needs friends like that?). And, last but not least, with all these troops away from the homeland - who is going to keep the local population in check? It just does not add up.

 

I think, no matter how tough it is, but the Americans are just going to have to learn to live with the thought that no one in the world wants to invade their country (other than the illegal immigrants, that is).

 

Regards

 

Regarding all this, you are right in most things, except not all wars are Total Wars, where a country completely surrenders it's whole territory and people, there is still the possibility of a war with unfavourable treaty conditions, and you also forgot two military statistics, the navy is much better then in WW2, and the special operations units are much much better then in WW2. Then there is Nuclear Warfare. And there is a third and used even now during peace time, it is Espionage and Sabotage, with countless arsenal added in this category since WW2.

 

So USA shouldn't expect a full on invasion, but smaller skirmishes, espionage/sabotage and events like 9/11 might happen realistically, there however is no trigger for this yet, and if USA doesn't pay off debt to China, it is not going to be a very good reason for an invasion on USA especially while USA still has many countries on it's side who would not like China to invade it. We've seen a similar scenario before when the Russian Empire decided to attack the Ottoman Empire but didn't expect both Britain and France go on the Ottoman side, it ended up with an unfavourable treaty for Russia.

[Vapymid]

Well, that kind of was my point - that no one is going to start an all-out war with the US even if they have enough men, tanks and the US would lose their briefcase with the nuclear codes (as they already did at least once, during Clinton administration, I seem to remember).

 

In general, it is pointless to invade a country which owes you money, it's like shooting oneself in the foot. Now, if *you* owe a lot of money to another country, that may be a different matter

 

Regards

 

P.S. There is a great novel by Philip K Dick about the universe where Germany and Japan have won the WW2 and occupied the US, it's called "The Man in the High Castle". A very good read.

[ProHypster]

Germany and Japan have won the WW2.

I don't even need to read anything, looking at today's world I quite often say (with a grim) to people that Germany and Japan have won WW2.

 

It's because the Rus' countries are horrible at treaties. Every time we win we don't because someone signs a stupid treaty, for example in WW1 while the Military situation was much more favourable for Russia then Germany, Ukraine, Belarus and even West Russia was surrendered to Germany for peace.

[ThePest179]

 

 

 

Imagine that, somehow, they've managed to disembark, unopposed, their 10 million poorly trained teenage conscripts on the shores of California. They will now face the need to fight their way across the continent to seize the seat of the Government on the opposite coast while maintaining a constant supply train across the Pacific. This is not likely to be a great success.

 

So you say there aren't 10 million adults in China that can be trained to fight in an army? Out of 1.3 billion Chinese in China? Invading a country because they owe debt to you has been done before. The Gulf War is my evidence. Anyway, the US debt situation is just unsolvable, especially if Obama keeps pissing away our money.

[Axeldeath]

What're they gonna do? If they stop lending everyone's economy crashes. And China or any other country would not be able to start a land invasion of the USA, it's almost impossible.

[ThePest179]

What're they gonna do? If they stop lending everyone's economy crashes. And China or any other country would not be able to start a land invasion of the USA, it's almost impossible.

 

So you're saying it is just 100% impossible to do such a thing? How naive must you be? If China stops lending, everyone crashes. If the US stops lending, everything crashes. Too bad! this may be the ONLY solution, and I dare you to think of a better one!

[Vapymid]

So you say there aren't 10 million adults in China that can be trained to fight in an army?

 

No, merely that they can't be trained properly and most will only play the role of cannon fodder in a war.

 

Invading a country because they owe debt to you has been done before.

 

I think you'll find that it is mostly the other way around.

 

The US owes China US Dollars. If China destroys the US the value of the US dollars owed to China will become 0, the debt effectively written off. The Chinese are too shrewd to do something stupid like that.

 

Regards

[ThePest179]

So you say there aren't 10 million adults in China that can be trained to fight in an army?

 

No, merely that they can't be trained properly and most will only play the role of cannon fodder in a war.

 

Invading a country because they owe debt to you has been done before.

 

I think you'll find that it is mostly the other way around.

 

The US owes China US Dollars. If China destroys the US the value of the US dollars owed to China will become 0, the debt effectively written off. The Chinese are too shrewd to do something stupid like that.

 

Regards

 

I'm fairly certen that they can train 10 million people to fight in a war. they already have half that number ready to fight. Yes, countries have invaded other countrys because of various debt situations. My whole point was that the Chineese could do it, as long as they were prepared to do it.

[Vapymid]

I believe the Chinese army is based on conscription. Being Russian, I can say from experience that armies made of conscripts are inferior to professional forces. The level of training is low, motivation is even lower.

 

Saddam had one of the largest armies in the world, relatively well equipped, yet it unraveled in the 1st Gulf War just as easily as in the 2nd.

 

Massive conscript-based army is OK for defence if you have to defend a *large* country from a land invasion. It is not good for invasion itself.

 

Firstly, they will never be able to cross the ocean in a massive armada required for transporting that number of men and materiel. Secondly, if any will still manage to reach the other shore, they will be mowed down on the beaches, where they will be defenceless, coming out of the water. By the way, the paratroops will all be dead by that stage, feeding the fishes, most will never have a change to open their chutes, poor sods. In the meantime the world will watch in disbelief, then laugh hysterically at the stupidity of those who attempted such a moronic feat

 

Regards