Maybe I am confused...I took basic economics

[RevDisk]

It is economic judo being worked on China, India, Russia, the ME and all of those other suckers who bought our debt (lent us money). They thought they were gonna get a nice return on their investments. Nope. We will just inflate away that possibility. And as we are one of the lowest or lowest saving nations on the planet with the largest economy. It will work until we have to fight the repo man. Then it could go all wobbly. But who cares about that. That is for the next administration to worry about....

Umm....  Perhaps you are unaware of the fact that only 25.52% of the national debt is held by foreign entities.  "All those suckers" happens to be the US citizens.  Think bank reserves, investment trusts, credit unions, etc etc.   It would be unwise to default on the major holdings of every bank and credit union in the US.

Actually, ah, the US government has never once defaulted on a single payment on t-bills.  Fiscal 2008 is projected at $412 Billion in interest payments on t-bills.  Believe it or not, t-bills historically never paid great interest.  No one invests in t-bills to make a great return on their investment.  The primary reason why they are so popular (excluding legally mandatory purchases) is their historical reliability.  Miss a payment, no one is buying them.  And expect lawsuits out the ying yang, that likely would succeed.  Trust me, they'd loot your savings account directly before they miss payments on t-bills.
 
But let's say "soak 'em foreigners".  The top foreign holders of US t-bills are China (652.9b), Japan (585.5b), and UK (360.2b).  Next closest country is Brazil, quite down the list investment wise (134.5b).  Japan and UK are among our closest allies.  Cutting them off would be a bad idea.   China, well...   Cutting off trade with China would be mighty interesting.  Considering how much money they're kicking back to the politicians.

Not sure why you think India (12.2b), Russia (80.9b) are major holders.  They're not even close.  Heck, Luxembourg has almost more in holdings than India and Russia put together.  OPEC holds 187.7b, but that includes 6 non-ME countries. 

[Balog]

I still don't understand how the fed.gov can expect to spends billions more than it takes in every year, and think that will never catch up to them.

[Headless Thompson Gunner]

I still don't understand how the fed.gov can expect to spends billions more than it takes in every year, and think that will never catch up to them.

People keep buying their debt. Heck, right now the buying public can't get enough.  US FedGov debt is the safest investment in the world. 

[Werewolf]

People keep buying their debt. Heck, right now the buying public can't get enough.  US FedGov debt is the safest investment in the world. 

In both economics and finance whatever the going interest rate on Gov Debt is is considered the RISK FREE rate.

I imagine that that is going to change in the next 20 years or so and is really going to screw up a whole lot of economic and financial models.

[ELSORDO]

Newbie here....I probably shouldn't attempt to quote this as I can't recall the source, but it was so sobering as to bring me up short when I heard it.  Paraphrasiing it went like....."If all the US Government debt came due tomorrow, there would literally not be enough money collectively between all the US citizens and US businesses to make the payment."   Sorry I can't quote the source but maybe someone else heard it as well.

[Balog]

People keep buying their debt. Heck, right now the buying public can't get enough.  US FedGov debt is the safest investment in the world. 

Well, yeah, but they have to repay the debt right? And to finance the ever increasing debt obligations they.... sell more debt? Do you honestly think this can be continued forever?

[Headless Thompson Gunner]

Well, yeah, but they have to repay the debt right? And to finance the ever increasing debt obligations they.... sell more debt? Do you honestly think this can be continued forever?

Continued forever?  Maybe, maybe not. 

Continued for the foreseeable future?  Abso-fricken-lutely.

FedGov is the primo financial powerhouse in the world.  They have the single most valuable asset ever known to man: the power to tax the American economy.

[Balog]

But the more they tax, the worse the economy. It's like cannabalizing yourself. Sure, you can cut your leg off and eat it, but that's hardly a good strategy. And just saying "Well we're tough, we can take it!" Isn't much of an answer either. America is not invincible. The more the things that make us different and special are taken away the closer we come to ruin. I'm not suggesting TEOTWAWKI per se, but there is only so much damage even the American economy can take before it implodes and we become another 2nd or 3rd world country.

Our avowed socialist climate czar (Kyoto anyone?), plus bailouts, plus New New Deal social programs, plus socialized medicine, plus baby boomers starting to call in their Social Security........ I think just saying "We're America, we can never run out of money!" is a naïve and foolhardy thought process.

[Tallpine]

Well the benefit is when its all over with your home loans and student loan payments should be dirt cheap.

Yep, you can make the choice between buying lunch and paying your monthly mortgage payment