Is America bankrupt?

[brianw]

From South Africa- i have been following the national debt burden America is accumulating with foreboding. Not if, but when will the chickens come home to roost?

"Wiki- The total market capitalization of all publicly traded companies in the world was US$51.2 trillion in January 2007[4] and rose as high as US$57.5 trillion in May 2008[5] before dropping below US$50 trillion in August 2008 and slightly above US$40 trillion in September 2008.
[5] Us Debt is around 19 trillion 2015"
Are these figures roughly correct? because if they are things sound particularly pernicious 

views please

[Glenstache]

This is a subject of much debate within the United States. The severity of debt is often looked at throught eh GDP to debt ratio, which has recently passed the 100% mark for the US (GDP somewhere around $17 trillion). I expect this thread to spiral into many tangents, someone will mention the Austrian school of economics, maybe the gold standard, role of inflation, apply a microeconimic framework to what is a decidedly macroeconomic issue, and so on. I expect there will be some argument over just how much of the federal budget is entitlements.

My personal take, without supporting analysis, the debt is too high but is not catastrophic at this point. I'm okay with some amount of debt and we are fine as long as the US remains the default reserve currency. If creditors lose faith and our interest rates climb, then we have a problem.

Much of the debate comes down to how to reduce our debt. I think we need to reduce our military spending, go to a single payer health care system to reduce the economic stranglehold of our current system (yes, this will increase federal spending, and yes our taxes will have to adjust this... on an individual level it is still much better IMHO). We also need to accept that if we are to be serious about reducing the debt, it will take taxes. I don't think getting rid of the debt entirely is necessary or wise, but we should shoot for a number that, at a minimum, is below that 1:1 debt to GDP ratio. 

[Left]

we just need to tax companies on world wide income just like individuals :D

[johnny847]

America is only bankrupt when it is no longer able to borrow money.

[mxt0133]

And if we can't borrow money we can just cause a proxy war that will make both parties buy our military exports. 

But seriously in the grand scheme of things our GDP is only a measure of economic activity and not a measure of economic value of a country.  Yes our debt is greater than our yearly activity but this does not take into account the value of assets of the country.  Think of the value of our natural resources, infrastructure, buildings, and most importantly human capital.  All those assets taken into account easily dwarf our national debt, that is also mostly owned by it's own people.  Of the 18 trillion only 6.156 trillion is owned to international inverstor, the rest is from domestic private investor, the federal reserve(which is a private entity), and federal accounts (other agencies like the Social Security fund)*.




*https://www.nationalpriorities.org/campaigns/us-federal-debt-who/

[Bardo]

Right now America can sell as much debt as it wants to, in its own currency, at what are by historical standards nominal interest rates.  If the debt markets had any concern about the level of debt than this wouldn't be the case.  So I fail to see any particular problem when the markets obviously don't.

[beltim]

From South Africa- i have been following the national debt burden America is accumulating with foreboding. Not if, but when will the chickens come home to roost?

"Wiki- The total market capitalization of all publicly traded companies in the world was US$51.2 trillion in January 2007[4] and rose as high as US$57.5 trillion in May 2008[5] before dropping below US$50 trillion in August 2008 and slightly above US$40 trillion in September 2008.
[5] Us Debt is around 19 trillion 2015"
Are these figures roughly correct? because if they are things sound particularly pernicious 

views please

You're roughly correct of total US debt.  You're way off on other numbers.  The total worldwide market cap of publicly traded companies is about $70 trillion, and the total worldwide financial assets is about $300 trillion. 

The percentage of US debt to total worldwide government debt is about equal to the percentage of the US economy as a percentage of the world economy.  So it makes no sense to worry about US debt unless you're worried about several dozen other countries as well.

[vern]

As long as we can keep printing money to pay the Chinese, we're fine!

[PKFFW]

It was my understanding the US went bankrupt, and is still technically in a state of bankrupt, after the 1929 stockmarket crash and subsequent depression.  Part of the bankruptcy settlement entailed all future personal income tax collected being paid directly to the privately owned Federal Reserve bank.

Is that not accurate?

[beltim]

It was my understanding the US went bankrupt, and is still technically in a state of bankrupt, after the 1929 stockmarket crash and subsequent depression.  Part of the bankruptcy settlement entailed all future personal income tax collected being paid directly to the privately owned Federal Reserve bank.

Is that not accurate?

Are you serious?  Is it actually April Fools Day and not Thanksgiving?

No, that's not accurate. No part of that is true. Including the easily verifiable paying taxes, which are paid to the United States Treasury.

[johnny847]

It was my understanding the US went bankrupt, and is still technically in a state of bankrupt, after the 1929 stockmarket crash and subsequent depression.  Part of the bankruptcy settlement entailed all future personal income tax collected being paid directly to the privately owned Federal Reserve bank.

Is that not accurate?

Where in the world did you "learn" this?

[Cathy]

The blatantly bogus claims described by PKFFW above are commonly associated with persons that Justice Rooke calls "Organised Pseudolegal Commercial Argument Litigants". See Meads v. Meads, 2012 ABQB 571. The Meads opinion is a comprehensive work on this flavour of claims. It has been been cited by dozens of courts in the United States and Canada in the last few years when litigants make similar arguments.

[PKFFW]

The blatantly bogus claims described by PKFFW above are commonly associated with persons that Justice Rooke calls "Organised Pseudolegal Commercial Argument Litigants". See Meads v. Meads, 2012 ABQB 571. The Meads opinion is a comprehensive work on these claims. It has been been cited by dozens of courts in the United States and Canada in the last few years when litigants make such arguments.

I'm guessing I "learnt" this from such bogus claims made by Organised psuedo etc etc etc, which to someone who is not a trained lawyer seemed like well reasoned arguments. 

My apologies for asking such a question regarding such an easily verifiably bogus claims, and seemingly upsetting some members in the process, but not living in the USA or paying taxes there I had little incentive or interest in checking for judges opinions and case law regarding the claims.  Nor any interest in where taxes are paid to.  Seeing this thread I thought it an easy way to check if the claims were true.

Thanks for the polite clarification Cathy.

[JZinCO]

It was my understanding the US went bankrupt, and is still technically in a state of bankrupt, after the 1929 stockmarket crash and subsequent depression.  Part of the bankruptcy settlement entailed all future personal income tax collected being paid directly to the privately owned Federal Reserve bank.

Is that not accurate?

Where in the world did you "learn" this?

You mean these obviously legitimate web sites don't convince you?
http://www.halexandria.org/dward282.htm
http://usa-the-republic.com/revenue/true_history/Chap8.html
http://anticorruptionsociety.com/the-bankruptcy-of-america-1933/

[johnny847]

It was my understanding the US went bankrupt, and is still technically in a state of bankrupt, after the 1929 stockmarket crash and subsequent depression.  Part of the bankruptcy settlement entailed all future personal income tax collected being paid directly to the privately owned Federal Reserve bank.

Is that not accurate?

Where in the world did you "learn" this?

You mean these obviously legitimate web sites don't convince you?
http://www.halexandria.org/dward282.htm
http://usa-the-republic.com/revenue/true_history/Chap8.html
http://anticorruptionsociety.com/the-bankruptcy-of-america-1933/

Hot damn, I'm a believer now!

[protostache]

The blatantly bogus claims described by PKFFW above are commonly associated with persons that Justice Rooke calls "Organised Pseudolegal Commercial Argument Litigants". See Meads v. Meads, 2012 ABQB 571. The Meads opinion is a comprehensive work on this flavour of claims. It has been been cited by dozens of courts in the United States and Canada in the last few years when litigants make similar arguments.

This is some fine bedtime reading. Thanks Cathy!

[Sibley]

Well, if you ask some groups America is definitely morally bankrupt. But others think the rest of the world is.

Still there's the argument for truthfulness bankruptcy, which may or may not be borne out by Fox News and all the politicians, depending on who you ask. 

Our literary taste seems to have gone down the drain, and our spelling and mathematics went out the window. The science went up in smoke. So say some, but not others. Reason took a hike, and sense of humor paid a visit to the moon. Of course, then there's a Jadoon Platoon upon the Moon, but that may be the UK's fault.

But I think you can bank on Yellowstone erupting at some point in the future. Either now or later, which would probably make the rest of it defunct.

//says me, who's in a silly mood :)

[robartsd]

Right now America can sell as much debt as it wants to, in its own currency, at what are by historical standards nominal interest rates.  If the debt markets had any concern about the level of debt than this wouldn't be the case.  So I fail to see any particular problem when the markets obviously don't.

This argument sounds fine but falls apart if you ask who is buying the debt and the primary answer is the Federal Reserve Bank. That's right, the Federal Reserve buys debt (US Tresury Bonds) with printed money (Federal Reserve Bank Notes). If you trust the Federal Reserve Bank (a privately owned bank), then you are right there is nothing to worry about with the US debt situtation. The Federal Reserve Bank is technically accountable to Congress for it's role in regulating the value of the US Dollar so you might choose to trust Congress's ability to hold the Federal Reserve Bank accountable instead.

[Jeremy E.]

Well, if you ask some groups America is definitely morally bankrupt. But others think the rest of the world is.

Still there's the argument for truthfulness bankruptcy, which may or may not be borne out by Fox News and all the politicians, depending on who you ask. 

Our literary taste seems to have gone down the drain, and our spelling and mathematics went out the window. The science went up in smoke. So say some, but not others. Reason took a hike, and sense of humor paid a visit to the moon. Of course, then there's a Jadoon Platoon upon the Moon, but that may be the UK's fault.

But I think you can bank on Yellowstone erupting at some point in the future. Either now or later, which would probably make the rest of it defunct.

//says me, who's in a silly mood :)

to respond to your Yellowstone erupting comment(not to say you were being super serious, just thought I'd throw this out there anyway),
I'm going to quote Jim Collins,
"The Earth’s been around for some 4.5 billion years.  Multi-celled life has been running around on it for about 1/2 a billion years or so.  Major Armageddon extinction events, like the asteroid that took out the dinosaurs some 65 million years ago, have happened about five times.  So that’s about one every 100 million years or so.

Are we really arrogant enough to think it’s going to happen in the geological eye-blink we’ll be around?  That we’ll be the ones to witness it?  Not likely."
from the following post,
http://jlcollinsnh.com/2012/03/03/armageddon-and-the-value-of-practical-skills/

[beltim]

Right now America can sell as much debt as it wants to, in its own currency, at what are by historical standards nominal interest rates.  If the debt markets had any concern about the level of debt than this wouldn't be the case.  So I fail to see any particular problem when the markets obviously don't.

This argument sounds fine but falls apart if you ask who is buying the debt and the primary answer is the Federal Reserve Bank.

No it isn't.  The Fed has bought a whopping $14 billion in US Treasuries over the last year, out of something like $300 billion in new issues.
http://www.federalreserve.gov/releases/h41/current/h41.htm

[Sibley]

Well, if you ask some groups America is definitely morally bankrupt. But others think the rest of the world is.

Still there's the argument for truthfulness bankruptcy, which may or may not be borne out by Fox News and all the politicians, depending on who you ask. 

Our literary taste seems to have gone down the drain, and our spelling and mathematics went out the window. The science went up in smoke. So say some, but not others. Reason took a hike, and sense of humor paid a visit to the moon. Of course, then there's a Jadoon Platoon upon the Moon, but that may be the UK's fault.

But I think you can bank on Yellowstone erupting at some point in the future. Either now or later, which would probably make the rest of it defunct.

//says me, who's in a silly mood :)

to respond to your Yellowstone erupting comment(not to say you were being super serious, just thought I'd throw this out there anyway),
I'm going to quote Jim Collins,
"The Earth’s been around for some 4.5 billion years.  Multi-celled life has been running around on it for about 1/2 a billion years or so.  Major Armageddon extinction events, like the asteroid that took out the dinosaurs some 65 million years ago, have happened about five times.  So that’s about one every 100 million years or so.

Are we really arrogant enough to think it’s going to happen in the geological eye-blink we’ll be around?  That we’ll be the ones to witness it?  Not likely."
from the following post,
http://jlcollinsnh.com/2012/03/03/armageddon-and-the-value-of-practical-skills/

The chances that it'll erupt in any of our lifetimes is so very small, so I find it pretty amusing that some people seriously believe that it'll erupt. Especially when they live  out west somewhere, where they wouldn't survive if it actually did. What can I say, I'm in a humorous mood today :)

[mrpercentage]

Do we have a problem? Well....

Imagine putting your annual salary on a zero percent credit card. Then imagine that the credit card company has been talking about normalizing its interest rate...

of course we could always just inflate out of it by destroying the personal savings of everyone by printing money while we hold zero percent rates... likely

We need cuts. Military cuts and medicare/healthcare regulations/cuts. Social security is owed-- that is a true entitlement. They have been taking 6% of my money since I started working. I would take a payout roll over now if they let me put it into a personal ROTH IRA. They shouldn't get to tax my taxes-- thats just bullshit. I wouldn't accept that after 40 though. They would need to offer it in the next couple of years. They could probably just "print" their way out of trouble that way. All the money would go into retirement accounts that are (for the sake of argument) not accessible until many years in the future so there wouldn't be inflation because of it.

[brianw]

An Obituary printed in the LondonTimes.....
>Today we mourn the passing of a beloved old friend, Common Sense, who has been with us for many years. No one knows for sure how old he was, since his birth records were long ago lost in bureaucratic red tape. He will be remembered as having cultivated such valuable lessons as:
>
> - Knowing when to come in out of the rain;
> - Why the early bird gets the worm;
> - Life isn't always fair;
> - And maybe it was my fault.
>
> Common Sense lived by simple, sound financial policies (don't spend more than you can earn) and reliable strategies (adults, not children, are in charge).
>
> His health began to deteriorate rapidly when well-intentioned but overbearing regulations were set in place. Reports of a 6-year-old boy charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition.
>
> Common Sense lost ground when parents attacked teachers for doing the job that they themselves had failed to do in disciplining their unruly children.
>
> It declined even further when schools were required to get parental consent to administer sun lotion or an aspirin to a student; but could not inform parents when a student became pregnant and wanted to have an abortion.
>
>
> Common Sense lost the will to live as the churches became businesses; and criminals received better treatment than their victims.
>
> Common Sense took a beating when you couldn't defend yourself from a burglar in your own home and the burglar could sue you for assault.
>
> Common Sense finally gave up the will to live, after a woman failed to realize that a steaming cup of coffee was hot. She spilled a little in her lap, and was promptly awarded a huge settlement.
>
> Common Sense was preceded in death,
> -by his parents, Truth and Trust,
> -by his wife, Discretion,
> -by his daughter, Responsibility,
> -and by his son, Reason.
>
> He is survived by his 5 stepbrothers;
> - I Know My Rights
> - I Want It Now
> - Someone Else Is To Blame
> - I'm A Victim
> - Pay me for Doing Nothing
>
> Not many attended his funeral because so few realized he was gone.