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Post by Baloo on Feb 7, 2004 20:09:40 GMT -5
Sagan, or anyone reading this, I need some info. This is going to be strange to admit, but I don't know and I want to know. OK, here it is. I know we have a huge "national debt", but who do we owe this debt to? It might sound like a strange question, but I've always heard about the debt and how it gets bigger and what-not, but I've never understood exactly who that debt is to. Is it a debt to 'ourselves'? Please inform me.
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Post by Sagan on Feb 9, 2004 16:17:02 GMT -5
I will try to answer as non-politically as possible.
Ok, first of all, it is important to differentiate between the deficit and the national debt. The deficit is the annual shortfall between money and spending. So if we have a $500 billion dollar deficit this year, that's JUST for this year ALONE. That deficit gets added to the national debt, which is in the area of 7 trillion dollars right now.
We do owe this debt to "ourselves" in a sense. When the US government goes into debt, it sells bonds to finance that debt. Banks buy the bonds and make money on the interest paid by the government and also sell them on to investors. However, a lot of foreigners buy these bonds as investments as well, which is why a weak dollar is a scary prospect.
In any case, we do owe the debt to ourselves, but a very large part of the debt is in the hands of foreign banks and investors as well. The U.S. needs a constant inflow of foreign investment to stay afloat.
This is one of the reasons why the "fuck the rest of the world" philosophy held by some is dangerous and stupid.
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Post by Baloo on Feb 9, 2004 17:46:33 GMT -5
I see, said the blind man. I get it now (sort of).
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Post by Sagan on Feb 9, 2004 17:58:54 GMT -5
Is there one particular part that you want to know more about?
I'm no financial wizard, but I'll do my best. Maybe someone else will jump in, to boot.
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Post by Tammi on Feb 10, 2004 8:39:10 GMT -5
Dumb question from the dingleberry..... Why is the government allowed to spend more money than it has.........and obviously never pay it back.........and the rest of us arent? Just a dumb question from the dingleberry
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Post by racingfan on Feb 10, 2004 21:35:21 GMT -5
I know I am still new to the board but I have to say, Tammi and I seem to think a lot alike. How is our country's credit rating, I wonder?
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