National Debt reaches $8,000,000,000,000 (8 trillion dollars)

[clambunny]

the world bank last year said the single greatest threat to economic security in the world was US's national debt. anyone want to explain what it is to me? i gather it is our exports minus our imports, but when we import something like if i just bought a kimono from japan online wouldn't i immeadiately have to pay for that product, just like all things we import? so how could a debt accumulate?

[[censored]]

clambunny

I believe it is financed by the importing companies then buying large amounts of the US's issued debt. It is in this way they are financing a trade deficit. Hopefully someone with more specifics will chime in with details.

[BCPVP]

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i gather it is our exports minus our imports

[/ QUOTE ]
That's the trade deficit, not the national debt.

The national debt, I believe, is the total accumulated borrowing that Congress does to meet its shortfalls.

[lehighguy]

Well with GDP growing at 3% and the budget deficiet well over 5% of GDP, and the joke of a retirement system we have....

We're pretty [censored].

[BadBoyBenny]

Meh

It'll probably fix itself in the long run. No one is going to let the US economy collapse.

[FishHooks]

Bingo, its a global economy now, unless our debt becomes extremly high nothing to worry about.

[Il_Mostro]

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

[Darryl_P]

Some info about the national debt

Exports minus imports is just the trade surplus (or deficit if it's negative). This is a figure that applies to a given year only and is part of the calculation of GDP. It is important because of its volatility and impact on currency rates which, in turn, affect the economy.

The national debt, on the other hand, is an accumulated figure that's been accumulating for over 200 years. It is basically the accumulated budget deficit, ie. the amount that the government spent in excess of what it collected in revenues.

The largest chunk of that debt is owed to the Federal Reserve (the Fed), which is a privately owned corporation -- a fact very much downplayed by the government and media. One source of info. about the Fed is here , which some will say is negatively biased but which I personally think is accurate.

[SinCityGuy]

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Bingo, its a global economy now, unless our debt becomes extremly high nothing to worry about.

[/ QUOTE ]

That's not true, and that cavalier attitude has been persistent during the "tax cut and spend" years of Reagan, George H. W. Bush and George W. Bush.

Part of the annual budget is a mandatory payment of the interest on the national debt. Obviously, the higher the national debt, the higher the mandatory payment on the interest, which diverts money from infrastructure, national defense, education, and a host of other necessities.

[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.