Topic: US National Debt / Deficit - How does it end? (Read 8985 times)

Exactly. On a NPV basis US government bonds offer some of the best returns as there is essentially zero risk of not being repaid verses a positive chance that other bonds investors could buy would suffer some kind of impairment.

There are no other alternatives (similar risk-higher return profile) to US bonds.Even though the return is negative in real terms, it is tough to find another low risk asset which has higher returns.

Any portfolio has a risk target, not just a return target. Allocating a proportion to U.S. bonds are a way to bring down risk (and also return), so it's perfectly rational.

No country has ever defaulted after 30 years of being downgraded from a AAA rating by any of the major credit ratings agencies.

World reserve currencies come and go, things change.

This thread title is "Re:  US National Debt / Deficit - How does it end?", here's one possible scenario, I think it makes for better reading/conversation than "It never ends".

I believe the wars never finished, we are still in the cold war era, the game will continue until a winner is found.

For a competing nation to trash the USD; it would cost that nation for sure, all the labor/resources they expended to collect those USD and bonds would vanish into nothingness in the blink of an eye.

If America enters a hot war against a large nation then they KNOW that nation would dump all US securities, obviously they would do that as a person fighting with you has no intention of repaying their debts to you. A global polarization would occur involving both currencies of the nations involved, the USA would soon be in a bad way on the economic global stage, they'd still be in fairly good shape with regard to resources and labor force though.

America cannot harm the Russian RUB, but Russia (certainly with the help of China) can kill the USD, this is simply the math of the situation because America has far more external debt as a percentage of GDP than Russia or China (the have written more IOUs).

I think we can all agree that US/Russia relations are quite tense at the moment, what with the recent trade sanctions imposed upon Russia etc. I find Americas recent move of disconnecting Russia from the SWIFT system as a worrying sign for the USD, it seems as if America is not afraid of conflict and thus not afraid of the USD crashing.

If america pre-empts hot war (they are acting like the are) then they will crash their own USD, strategically it is correct to do that before the war goes hot, otherwise you'd have two shitstorms to contend with.

The US is no longer AAA rated, at least by S&P.

http://en.wiktionary.org/wiki/for_all_intents_and_purposes

Scores of countries are screwed more than the US and the United States also are able to benefit from the USD being a world reserve currency. No foreign government will screw the US till the moment he can reap a bigger gain by doing so.

US government bonds are purchased because they are essentially risk free. For all intensive purposes there is zero chance the US government will default on it's debt so investors can be certain they will receive principle + interest as agreed. The same cannot be said with any other investment.

The external US debt to gdp ratio is currently 100%, the internal is 77%.
source: http://www.usdebtclock.org/world-debt-clock.html#

I don't understand people that keep buying US bonds... In the best scenario they get a very small return, negative in real terms.

Elections exist only to give voters the illusion of choice, and to give the world the illusion of a progressive system.

But The people who make important decisions are not swapped out, it would be a foolish strategy to swap out real government (military and finance) every few years.

If a president ever tries to exert their own control and deviates from the script then he will be murdered. As happened to JFK after he tried to throw a spanner in the private bank corp known as the FED.

Obama makes no decisions, he's just a relatively good public speaker, put in place so that Africa warms to America. Africa is next on the US TODO list.

Besides that... unlimited ecenomic expansion, yes that's what's required to keep a debt based money afloat, but that is impossible to achieve as the world is a finite place.

The federal debt burden as a percentage of GDP will decrease as long as the economy is rising faster then the deficit (as measured by percentage of GDP). The problem is that Obama has demanded that we see higher spending levels, especially on welfare-like programs, which has resulted in higher overall debt levels. As a more conservative president is elected, we will see much more prudent fiscal policies which should result in lower debt levels

Still, net private saving has increased dramatically, thanks to government deficit spending.
http://research.stlouisfed.org/fred2/series/W202RC1Q027SBEA

not decreased, risen:

Yes. Right now USA economy is in rising, so their debt should decrease. How many it decreased from 2010 to 2014?

Norway
http://www.tradingeconomics.com/norway/government-budget-value

Russia
www.tradingeconomics.com/russia/government-budget-value

Switzerland
http://www.tradingeconomics.com/switzerland/government-budget-value

Perfect answer!

Does the Rothschild family count as a privately owned country yet?

It doesnt end.. What country right now has no debt?