[frizzfreeling]

At least that is what you people are desperately hoping for.

My thought exactly. Its amazing what people think will just go away or solve itself. For some reason, most people get the idea that the U.S. system is invulnerable to catastrophic failure because...well, because it hasnt happened yet or because the doomsdayers have always been wrong before, etc.

Then you have those who will pull 1945 out like a shining sword and say "look, government debt was much higher then and everything went fine afterwards". In so many ways, this economy is much different and on much more fragile footing than in 1945. Not just the government, but the average citizen is up to their necks in debt now and saving virtually nothing. Its a snowball effect just waiting for the wrong conditions to happen.

There are others who think that the debt is just fine, because interest rates paid on it are low. Some even think that the Fed sets these rates, which is wrong. The interest rate on our federal debt is governed by ALL THE MAJOR PURCHASERS of that debt (including those who do it through government institutions ie grandma and grandpa's savings). If there arent enough people to buy all the bonds, the rate must go up to entice them (this is done through discounting the face value of the bond at sale time). Its an auction. Currently, we are lucky enough that many folks think that our bonds are a good buy. If they change their minds in any drastic fashion, we're screwed. We completely depend on the perception of value investors have in our bonds for them to be sellable at all.

Very shaky ground, at the least.