Re: Debt -- Quietly, insidiously, faster and faster our national debt grows far beyond our ability to repay. Congress is in the process of raising the debt ceiling another 800 billion dollars. Our total national debt is growing toward 8 trillion dollars. It must seem like "Monopoly" money, but it is not.
In layman's terms, we are but a paycheck away from catastrophe. If we are borrowing money to pay our bills, then it should be obvious that whoever we are borrowing from must trust our ability to continue paying at least the interest on that loan indefinitely. So far, so good.
I don't believe that most folks understand who we are primarily borrowing from. I also don't believe that most folks understand what the collateral is.
It is true that we, in some measure, are borrowing from ourselves, or at least our progeny. Relative to the total amount borrowed, however, this is small potatoes.
The vast majority of the money comes from foreign investors. From around the world, our debt instruments are gobbled up as fast as we can print them, because we always pay our debt and we pay it on time. It's a good investment for them as long as we pay the best interest and have the best collateral. It's sort of a handshake deal, though, based on trust. There are no hard assets backing it. It is our justification for printing more "money" though.
Our economy is our collateral. Our economy also generates money to pay the interest. With the exception of the 1930s our economy has been the best the world had to offer by far. So far, so good.
Two giant forces are at work to bring new competition to the playing field: The European Common Market and the vast exploding Chinese economy. They need money, too, lots of it. We can offer increasingly higher interest rates, but that hurts our economy, and we start chasing our own tail.
In bad times, you can usually count on your friends and family to help you out. Our American family will probably stay true. We don't seem to care much, however, whether we make (or keep) other friends. Substitute the word "creditor" for "friends," and we may wish to modify our arrogance. Just a thought.
Noble Collins, Payson