Paying down the debt is not mathematically possible

[Balog]

http://www.zerohedge.com/news/2014-12-12/paying-down-debt-now-almost-mathematically-impossible

I know I know, not the most credible source in the world.

But it does raise an interesting point. Taking into account the acknowledged debt as well as "unfunded liabilities" is it even physically possible to pay off the US's obligations?

[brimic]

Paying down the debt was theoretically impossible from the day the first Federal Reserve NOTE was printed.
Think about it- If you simply handed the FRN back, you would have to borrow at least a fraction of another to pay the interest on the first.

[MechAg94]

So could we actually pay the debt we owe other countries and sit on what we owe ourselves?

[HankB]

Since 2012, we've been spending over one trillion dollars a year - $1,000,000,000,000.00 - on unearned, means-tested programs (i.e., welfare), so I know where I'd START looking to find money to pay down the debt. (Note that this does NOT repeat NOT include Social Security.)

It IS NOT mathematically impossible. Politically impossible, maybe; but NOT mathematically impossible.

[Headless Thompson Gunner]

You don't eliminate your national debt by paying it down.  You let economic expansion and inflation nibble it away into nothingness. 

That's what happened to the debt from WWII, which was on the same order as our national debt today. 

[Balog]

You don't eliminate your national debt by paying it down.  You let economic expansion and inflation nibble it away into nothingness. 

That's what happened to the debt from WWII, which was on the same order as our national debt today. 

I'm sure that'll work out well.

[Headless Thompson Gunner]

Don't think that can work out?  Do the math.  

Assume 2% inflation and 2% annual growth, both fairly cautious assumptions.  What's the relative size of a given debt after 50 years?  75 years?

[Balog]

Don't think that can work out?  Do the math.  

Assume 2% inflation and 2% annual growth, both fairly cautious assumptions.  What's the relative size of a given debt after 50 years?  75 years?

People making assumptions like that is what's gotten us into this mess.

[Headless Thompson Gunner]

So, you're conceding that the math works out...?

[Balog]

So, you're conceding that the math works out...?

Are you a physicist? Spherical chickens in a vacuum are awesome and all, but not as helpful for someone trying to start an egg ranch.

[Balog]

Don't think that can work out?  Do the math.  

Assume 2% inflation and 2% annual growth, both fairly cautious assumptions.  What's the relative size of a given debt after 50 years?  75 years?

Actual inflation http://www.shadowstats.com/alternate_data/inflation-charts

[tokugawa]

It has been easy, as long as they can keep lowering interest rates so they can buy more debt everytime they need to refinance. Not going to take much of an increase in rates to blow that easy money out of the water- leverage works both ways.

 It is going to collapse, sooner or later. They can only tax so much up front, and the reduction of freebies is political suicide. The real growth in the economy is about zip, as far as I can see. The market is up, but it is not based on anything other than a speculative frenzy of easy low interest money. Main street is not doing well at all.  The idea that we will grow our way out of this does not seem to be born out by examples like Japan.

[TommyGunn]

  
What do we do?   Does the nation collapse?   When does the party begin?




(I knew those dolts in Washington could never be trusted...)

[Brad Johnson]

Are you a physicist? Spherical chickens in a vacuum are awesome and all, but not as helpful for someone trying to start an egg ranch.

Cool your jets, hoss. HTG gave you a legit scenario. If you don't like facing the financial math then don't post financial-math-centric threads.

Brad

[Balog]

Cool your jets, hoss. HTG gave you a legit scenario. If you don't like facing the financial math then don't post financial-math-centric threads.

Brad

Lol.

Scenario is not legitimate, and those kind of pie in the sky assumptions by central economic planners are a big part of the problem.

Hoss.

[Brad Johnson]

Lol.

Scenario is not legitimate, and those kind of pie in the sky assumptions by central economic planners are a big part of the problem.

Hoss.

2% growth and 2% inflation are far from assumptions. More like historic financial precedent. Again' if you don't like your math challanged, don't post financial threads unless you've done your homework on the facts.

I know you like to stir the pot, especially here in Politics, but there are times when there's nothing in the pot to stir. The math works. The financial precedent is set. Let it be and stop taking everything so personally.

Brad

[Balog]

I see. So the science is settled and I should stop being a denier? Got it. And pot stirring? Taking it personal? Lol. Whatever you say hoss. I posted an article and disputed an assumption. Nobody getting spun up or making it personal here but you.

[griz]

Spherical chickens in a vacuum are awesome and all...........

bazinga

[Ron]

The problem is we just haven't got the right folks in charge, make sure you vote!

There is no reason for concern, everything is just peachy.

[just Warren]

1. Stop issuing debt.

2. Retire all debt that is held by banks that got bailouts and the 34% that is owned by various US gov't entities.

3. Take the rest of the debt and put it into a 100 year, gold-linked bond issue.

4. Pay it down slowly with normal tax revenues.

OR

1. Allow all the current states to secede into a new entity called The United States of Another America (or Bmerica or whatever), leaving Wash. D.C. behind as the Official United States of America that owes all the debt.  

2. Abandon Wash. D.C.

3. Don't ever issue debt again.

[Headless Thompson Gunner]

Actual inflation http://www.shadowstats.com/alternate_data/inflation-charts

I take it you haven't done the math yet.  Spoiler alert: higher inflation eliminates debt faster.

 

[MicroBalrog]

Failing everything else, it's entirely possible to default on the debt. Naturally the economy will take a hit, but nations have defaulted before and bounced back rapidly (check out Russia after its 1998 default, how swiftly did they move to being a creditor state?).

[Fly320s]

I take it you haven't done the math yet.  Spoiler alert: higher inflation eliminates debt faster.

 

How does that work? Seriously, I don't understand it.

Use small words and big pictures; I went to public school.

[griz]

Basically, inflation makes money worth less.  So that makes debt "worth" less, in other words you owe less.  A small scale example would be if I owed you 40 dollars and inflation was 100 percent overnight, I would still owe you 40 dollars but it would only be worth 20 dollars in real (yesterday's) value.

[brimic]

I take it you haven't done the math yet.  Spoiler alert: higher inflation eliminates debt faster.

 

The way the math works out looks exactly like weimar republic or zimbabwe inflation.

All fiat money eventually ends on an exponential inflationary curve.

We are beyond the event horizon on this one.