I don't know how else to spell this out - This is as much of a currency problem as it is a debt problem. They go hand-in-hand. Our debters are being forced to buy more and more US treasury bonds so as to prevent the US financial system from callapse, and we issue billions of more dollars into the system printed out of thin air. Ironically, that is how they're protecting their savings and investments, by devaluing them.jessep28 wrote:As long as the United States is paying its debt obligations (primarily interest), I don't understand the doom and gloom scenereo that's supposed to take place sometime in the next 60 days to 5 years. Net interest paid as part of the federal budget is actually quite low compared to other periods such as WWII.S33 wrote:Not even comparable. This monetary system is not replacing debt, its gotten so out of hand that it feeds itself massive amounts of additional debt thus requiring an ever growing base of investors. Classic ponzi only on a ridiculous level.
http://www.gao.gov/special.pubs/longter ... tdebt.html
Zoom ahead a little... they're diversifying their investments and export markets so they can abandon the dollar. They've already indicated that they're done buying bonds (loaning us the incredible amount of capital it takes to sustain an insolvent state).
And you're right. We can start monetizing existing debt, flooding the market with additional dollars, and cover our liabilities. At some point the market is going to force the US dollar to represent it's actual value, and that is when your purchasing power nose dives. It's called hyperinflation, and every government in history who has designed their monetary system on this type of model has failed. We are already experiencing incredible inflation values, despite the efforts by the feds to scew the numbers.
This could all happen throughout the course of a single day, and I think this is a conversation every rational American should be having.
Forgot to add, this administration has already begin asking our largest financial institutions to build contingency plans in the case of total market collapse.