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The USA Never Has To Default On Its Debt?

Mister_K
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7/23/2016 10:26:49 PM
Posted: 4 months ago
Lately, I have been interested in the problem of the United States National Debt. I came across an interesting article apparently claiming that it is impossible for the US to ever default on this debt due to the fact that the debt is held only in dollars - a currency only the USA manufactures. Because of this, any debt could be repaid "with a keystroke."

The article concludes by conceding that there could be economic or political consequences for continuing to run up the debt, but none of these consequences have yet appeared.

What I am wondering, is if the statement made by this article is accurate? It just seems so irresponsible to me for the government to continue to run up such a huge amount of debt with zero consequences in the foreseeable future.

Here is the link to the article if you are interested:

http://www.forbes.com...

(The article is pretty old but still relevant, I think.)
twocupcakes
Posts: 2,748
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7/23/2016 10:35:44 PM
Posted: 4 months ago
At 7/23/2016 10:26:49 PM, Mister_K wrote:
Lately, I have been interested in the problem of the United States National Debt. I came across an interesting article apparently claiming that it is impossible for the US to ever default on this debt due to the fact that the debt is held only in dollars - a currency only the USA manufactures. Because of this, any debt could be repaid "with a keystroke."

The article concludes by conceding that there could be economic or political consequences for continuing to run up the debt, but none of these consequences have yet appeared.

What I am wondering, is if the statement made by this article is accurate? It just seems so irresponsible to me for the government to continue to run up such a huge amount of debt with zero consequences in the foreseeable future.

Here is the link to the article if you are interested:

http://www.forbes.com...

(The article is pretty old but still relevant, I think.)

While all else equal, it is better for the government debt to be small, the problem of the national debt is extremely exaggerated, and is no where near as big of a problem as the Fiscal conservatives claim.
TBR
Posts: 9,991
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7/23/2016 10:48:01 PM
Posted: 4 months ago
At 7/23/2016 10:26:49 PM, Mister_K wrote:
Lately, I have been interested in the problem of the United States National Debt. I came across an interesting article apparently claiming that it is impossible for the US to ever default on this debt due to the fact that the debt is held only in dollars - a currency only the USA manufactures. Because of this, any debt could be repaid "with a keystroke."

The article concludes by conceding that there could be economic or political consequences for continuing to run up the debt, but none of these consequences have yet appeared.

What I am wondering, is if the statement made by this article is accurate? It just seems so irresponsible to me for the government to continue to run up such a huge amount of debt with zero consequences in the foreseeable future.

Here is the link to the article if you are interested:

http://www.forbes.com...

(The article is pretty old but still relevant, I think.)

Yes, that information is correct. We could (we use a fiat currency) print as much money as we wish - we could "pay" the debt.

This gets complex fast, but bonds (treasury bills, treasury notes, treasury bonds) are out debt. Debt is not, as I suspect many people seem to think, like a bill we owe to... say China. We don't get a statement like its a credit card bill.

Regardless, in short, because we operate using our own currency, and ALL bonds (of all types) mature, we COULD be debt free in a very few years. It would be terrible for the world and MUCH worse for our own country and people, but it is very possible.
MakeSensePeopleDont
Posts: 1,104
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7/23/2016 11:44:10 PM
Posted: 4 months ago
At 7/23/2016 10:26:49 PM, Mister_K wrote:
Lately, I have been interested in the problem of the United States National Debt. I came across an interesting article apparently claiming that it is impossible for the US to ever default on this debt due to the fact that the debt is held only in dollars - a currency only the USA manufactures. Because of this, any debt could be repaid "with a keystroke."

The article concludes by conceding that there could be economic or political consequences for continuing to run up the debt, but none of these consequences have yet appeared.

What I am wondering, is if the statement made by this article is accurate? It just seems so irresponsible to me for the government to continue to run up such a huge amount of debt with zero consequences in the foreseeable future.

Here is the link to the article if you are interested:

http://www.forbes.com...

(The article is pretty old but still relevant, I think.)

Ah, a great topic. I would love to provide some factual data if you would allow and have time to review:

First, let's start with the elephant in the room; the article cited. In reading this article, there is absolutely no fact, economics or science in the entire article; only pure opinion at best. The only quotes in this piece are opinions given by others who failed to cite any legitimate, verifiable facts. This can be seen by the lack of any mathematical equations, no precedents sighted, no economic agencies or texts cited, no...anything. Personally, I would never take financial advice from the author.

Second, the national debt is indeed structured in U.S. dollars; however, this is because the U.S. dollar is the currency that the global markets are currently measured off of -- all conversions are made by U.S. dollars. The reason the U.S. dollar is used as the global currency is because it is viewed as the most stable currency in the global economy. It is viewed this way due to America's balanced GDP, level of transparency of financials, regulations in place to protect from revenue fraud and counterfeiting, strength of economy backing the U.S. dollar, and much more.

Third, numerous markets have made plays to overtake the U.S. dollar as the global standard in the past couple decades; most notably was the Euro of the EU and the Yen of China. The Euro lost their bid completely as Greece collapsed and the economic futures of almost all other EU nations have come into question due to their socialist-like economic policies. A few of these are nationalized healthcare systems that are self-projected as unsustainable, tax payer subsidized living wages for every citizen, mandatory wage hikes, laws maxing work weeks at 32 hours, increased number and payout to social welfare programs. The Yen made a hard press at the top spot over the past five years but failed as it became blatantly clear that they are artificially inflating their currency and falsifying their economy in order to fake a strongly backed currency.

Now the way that currency works, even the U.S. dollar, is the currency itself, whether in paper form or numbers on a screen, must be back by good old fashioned Au -- gold. Let's say the U.S. owns one bar of gold, 27.34 lbs. Instead of breaking it up and handing it out, they keep it in a treasury and create a currency equivalent; let's say $100 per lb. This means they can print $2,734.00 U.S. which is fully backed by their owned gold. Easy right?

Let's keep this simple, I can go into further detail if you need me to. In comes a lending system where you go to a bank and ask for a loan of $100. They award you with the loan, along with a 5% interest rate. In one year, you return the $100 plus $60 interest; the bank now owns $160 worth of gold -- but wait, where did the extra $60 in gold appear from? It didn't, the bank actually just created it within it's own screen of numbers. In order to offset this creation, the nation must lower $100 per lb of gold to say $98 per lb; this is the basic idea of "inflation".

Well what happens when the government can't pay its bills and requires huge sums of money? It can't just print more money. Actually it does, but for this post, let's ignore that fact. The U.S. starts selling bonds to other nations to pay its bills: Bonds are basically IOU promissory notes backed by land, real estate or any items of value the federal government owns. Nations buy these up for gold which is converted into U.S. dollars upon delivery.

This is where default on debt comes in. These bonds are sold between nations or held for future return to owner for collection. Additionally, interest must be paid annually on the bonds still held by other nations. If the U.S. does not have the gold to pay their interest payment and is unable to sell any bonds to do so, the major credit rating agencies for nations (S&P, Moody's, and Fitch) may drop their credit rating as S&P did to the U.S. in 2011. This increases interest rates.

Here is the key part: At any point in time, while behind on payments, the owners of the U.S. bonds can demand repayment or forfeiture of assets backing the bonds; land, real estate, etc. If unable to pay, the assets can be taken over legally. This is your default. China threatened to do this back in 2011-2014 until they found a buyer of U.S. bonds.

Understand that the only reason the U.S. is able to have the $20 trillion current debt and $120 - $217 trillion in unfunded liabilities over the next 10 years is because of the influence we have around the world. We have built a ton of good will and favors over the decades with all of the military, economic and political assistance we provide globally. But there is a breaking point and we see the world getting there with the U.S. very quickly with the way we have increased our spending and debt since 2008; more than the previous 232 years of our existence combined.
MakeSensePeopleDont
Posts: 1,104
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7/24/2016 12:09:30 AM
Posted: 4 months ago
At 7/23/2016 10:48:01 PM, TBR wrote:
At 7/23/2016 10:26:49 PM, Mister_K wrote:
Lately, I have been interested in the problem of the United States National Debt. I came across an interesting article apparently claiming that it is impossible for the US to ever default on this debt due to the fact that the debt is held only in dollars - a currency only the USA manufactures. Because of this, any debt could be repaid "with a keystroke."

The article concludes by conceding that there could be economic or political consequences for continuing to run up the debt, but none of these consequences have yet appeared.

What I am wondering, is if the statement made by this article is accurate? It just seems so irresponsible to me for the government to continue to run up such a huge amount of debt with zero consequences in the foreseeable future.

Here is the link to the article if you are interested:

http://www.forbes.com...

(The article is pretty old but still relevant, I think.)

Yes, that information is correct. We could (we use a fiat currency) print as much money as we wish - we could "pay" the debt.


This is not true. Printing currency devalues its worth which creates inflation. If the U.S. printed currency to pay its debts, the price of EVERYTHING would skyrocket; A loaf of bread would suddenly cost $400 or more and the bonds being held by other nations would become absolutely worthless as U.S. assets would plummet in value. This has been seen in many instances throughout history including Germany post WWI.

A loaf of bread in 1922 cost 163 marks; by the end of 1923, due to their printing of currency, the price of a loaf of bread was 200,000,000,000 (200 billion) marks.

Printing currency without backing is the absolute worst idea possible.

This gets complex fast, but bonds (treasury bills, treasury notes, treasury bonds) are out debt. Debt is not, as I suspect many people seem to think, like a bill we owe to... say China. We don't get a statement like its a credit card bill.


Yes we absolutely do get a bill annually. What do you think the debt ceiling fight in congress was about? Conservatives wanted Obama to cut spending to pay for the interest and principal on our national debts, Obama wanted congress to raise the approved national debt limit so he could increase spending and still pay our interests in order to not default.

Regardless, in short, because we operate using our own currency, and ALL bonds (of all types) mature, we COULD be debt free in a very few years. It would be terrible for the world and MUCH worse for our own country and people, but it is very possible.

Yes bonds do mature, but it's up to the holder of the bonds to decide if they wish to gamble that the economy will grow back to at least break even, or if they wish to sell to another nation for a loss or submit for reimbursement from the owner (U.S.). This was the big fight with China from 2011-2014; if China demanded reimbursement, they could have bankrupt the U.S. and/or assumed control of the backing assets. That action would have tanked China however, due to their dependence on U.S. companies operating domestically and the amount of exports transferred to the U.S. annually.
TBR
Posts: 9,991
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7/24/2016 12:12:04 AM
Posted: 4 months ago
At 7/23/2016 11:44:10 PM, MakeSensePeopleDont wrote:
At 7/23/2016 10:26:49 PM, Mister_K wrote:
Lately, I have been interested in the problem of the United States National Debt. I came across an interesting article apparently claiming that it is impossible for the US to ever default on this debt due to the fact that the debt is held only in dollars - a currency only the USA manufactures. Because of this, any debt could be repaid "with a keystroke."

The article concludes by conceding that there could be economic or political consequences for continuing to run up the debt, but none of these consequences have yet appeared.

What I am wondering, is if the statement made by this article is accurate? It just seems so irresponsible to me for the government to continue to run up such a huge amount of debt with zero consequences in the foreseeable future.

Here is the link to the article if you are interested:

http://www.forbes.com...

(The article is pretty old but still relevant, I think.)

Ah, a great topic. I would love to provide some factual data if you would allow and have time to review:

First, let's start with the elephant in the room; the article cited. In reading this article, there is absolutely no fact, economics or science in the entire article; only pure opinion at best. The only quotes in this piece are opinions given by others who failed to cite any legitimate, verifiable facts. This can be seen by the lack of any mathematical equations, no precedents sighted, no economic agencies or texts cited, no...anything. Personally, I would never take financial advice from the author.

Second, the national debt is indeed structured in U.S. dollars; however, this is because the U.S. dollar is the currency that the global markets are currently measured off of -- all conversions are made by U.S. dollars. The reason the U.S. dollar is used as the global currency is because it is viewed as the most stable currency in the global economy. It is viewed this way due to America's balanced GDP, level of transparency of financials, regulations in place to protect from revenue fraud and counterfeiting, strength of economy backing the U.S. dollar, and much more.

Third, numerous markets have made plays to overtake the U.S. dollar as the global standard in the past couple decades; most notably was the Euro of the EU and the Yen of China. The Euro lost their bid completely as Greece collapsed and the economic futures of almost all other EU nations have come into question due to their socialist-like economic policies. A few of these are nationalized healthcare systems that are self-projected as unsustainable, tax payer subsidized living wages for every citizen, mandatory wage hikes, laws maxing work weeks at 32 hours, increased number and payout to social welfare programs. The Yen made a hard press at the top spot over the past five years but failed as it became blatantly clear that they are artificially inflating their currency and falsifying their economy in order to fake a strongly backed currency.

Now the way that currency works, even the U.S. dollar, is the currency itself, whether in paper form or numbers on a screen, must be back by good old fashioned Au -- gold. Let's say the U.S. owns one bar of gold, 27.34 lbs. Instead of breaking it up and handing it out, they keep it in a treasury and create a currency equivalent; let's say $100 per lb. This means they can print $2,734.00 U.S. which is fully backed by their owned gold. Easy right?

Let's keep this simple, I can go into further detail if you need me to. In comes a lending system where you go to a bank and ask for a loan of $100. They award you with the loan, along with a 5% interest rate. In one year, you return the $100 plus $60 interest; the bank now owns $160 worth of gold -- but wait, where did the extra $60 in gold appear from? It didn't, the bank actually just created it within it's own screen of numbers. In order to offset this creation, the nation must lower $100 per lb of gold to say $98 per lb; this is the basic idea of "inflation".

Well what happens when the government can't pay its bills and requires huge sums of money? It can't just print more money. Actually it does, but for this post, let's ignore that fact. The U.S. starts selling bonds to other nations to pay its bills: Bonds are basically IOU promissory notes backed by land, real estate or any items of value the federal government owns. Nations buy these up for gold which is converted into U.S. dollars upon delivery.

This is where default on debt comes in. These bonds are sold between nations or held for future return to owner for collection. Additionally, interest must be paid annually on the bonds still held by other nations. If the U.S. does not have the gold to pay their interest payment and is unable to sell any bonds to do so, the major credit rating agencies for nations (S&P, Moody's, and Fitch) may drop their credit rating as S&P did to the U.S. in 2011. This increases interest rates.

Here is the key part: At any point in time, while behind on payments, the owners of the U.S. bonds can demand repayment or forfeiture of assets backing the bonds; land, real estate, etc. If unable to pay, the assets can be taken over legally. This is your default. China threatened to do this back in 2011-2014 until they found a buyer of U.S. bonds.

Understand that the only reason the U.S. is able to have the $20 trillion current debt and $120 - $217 trillion in unfunded liabilities over the next 10 years is because of the influence we have around the world. We have built a ton of good will and favors over the decades with all of the military, economic and political assistance we provide globally. But there is a breaking point and we see the world getting there with the U.S. very quickly with the way we have increased our spending and debt since 2008; more than the previous 232 years of our existence combined.

I just take issue with your first bit dismissing
Alan Greenspan
Peter Zeihan, Vice President of Analysis for STRATFOR
Mike Norman, Chief Economist for John Thomas Financial

and a host of other economists cited in the article
TBR
Posts: 9,991
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7/24/2016 12:15:54 AM
Posted: 4 months ago
At 7/24/2016 12:09:30 AM, MakeSensePeopleDont wrote:
At 7/23/2016 10:48:01 PM, TBR wrote:
At 7/23/2016 10:26:49 PM, Mister_K wrote:
Lately, I have been interested in the problem of the United States National Debt. I came across an interesting article apparently claiming that it is impossible for the US to ever default on this debt due to the fact that the debt is held only in dollars - a currency only the USA manufactures. Because of this, any debt could be repaid "with a keystroke."

The article concludes by conceding that there could be economic or political consequences for continuing to run up the debt, but none of these consequences have yet appeared.

What I am wondering, is if the statement made by this article is accurate? It just seems so irresponsible to me for the government to continue to run up such a huge amount of debt with zero consequences in the foreseeable future.

Here is the link to the article if you are interested:

http://www.forbes.com...

(The article is pretty old but still relevant, I think.)

Yes, that information is correct. We could (we use a fiat currency) print as much money as we wish - we could "pay" the debt.


This is not true.
You are just wrong.

Printing currency devalues its worth which creates inflation.
This is true. That is an adverse effect, it says nothing about the ability to do it.

If the U.S. printed currency to pay its debts, the price of EVERYTHING would skyrocket; A loaf of bread would suddenly cost $400 or more and the bonds being held by other nations would become absolutely worthless as U.S. assets would plummet in value. This has been seen in many instances throughout history including Germany post WWI.
Again, effect not saying that we can't.


A loaf of bread in 1922 cost 163 marks; by the end of 1923, due to their printing of currency, the price of a loaf of bread was 200,000,000,000 (200 billion) marks.

Printing currency without backing is the absolute worst idea possible.

This gets complex fast, but bonds (treasury bills, treasury notes, treasury bonds) are out debt. Debt is not, as I suspect many people seem to think, like a bill we owe to... say China. We don't get a statement like its a credit card bill.


Yes we absolutely do get a bill annually. What do you think the debt ceiling fight in congress was about? Conservatives wanted Obama to cut spending to pay for the interest and principal on our national debts, Obama wanted congress to raise the approved national debt limit so he could increase spending and still pay our interests in order to not default.
This is... well a more complex subject than you are giving credit. Further, you are mixing politics with economic theory.


Regardless, in short, because we operate using our own currency, and ALL bonds (of all types) mature, we COULD be debt free in a very few years. It would be terrible for the world and MUCH worse for our own country and people, but it is very possible.

Yes bonds do mature, but it's up to the holder of the bonds to decide if they wish to gamble that the economy will grow back to at least break even, or if they wish to sell to another nation for a loss or submit for reimbursement from the owner (U.S.). This was the big fight with China from 2011-2014; if China demanded reimbursement, they could have bankrupt the U.S. and/or assumed control of the backing assets. That action would have tanked China however, due to their dependence on U.S. companies operating domestically and the amount of exports transferred to the U.S. annually.
All bonds mature. If we simply paid the bonds (as we have done forever) didn;'t issue more, and printed our way out of debt, we would be debt free. Good idea? Hell no.
MakeSensePeopleDont
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7/24/2016 12:16:56 AM
Posted: 4 months ago
At 7/24/2016 12:12:04 AM, TBR wrote:
At 7/23/2016 11:44:10 PM, MakeSensePeopleDont wrote:

I just take issue with your first bit dismissing
Alan Greenspan
Peter Zeihan, Vice President of Analysis for STRATFOR
Mike Norman, Chief Economist for John Thomas Financial

and a host of other economists cited in the article

I most definitely did NOT dismiss the persons cited within the article. I dismissed the article itself as lacking any factual data, and instead being a complete opinion piece. If they had provided any actual data to backup their claims, I could have reviewed the data, fact checked, cross checked with differing factual articles and come to an intellectual conclusion based on both sides. However, there are no facts, only opinions in that article.
MakeSensePeopleDont
Posts: 1,104
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7/24/2016 12:26:35 AM
Posted: 4 months ago
At 7/24/2016 12:15:54 AM, TBR wrote:
At 7/24/2016 12:09:30 AM, MakeSensePeopleDont wrote:
At 7/23/2016 10:48:01 PM, TBR wrote:
At 7/23/2016 10:26:49 PM, Mister_K wrote:
Lately, I have been interested in the problem of the United States National Debt. I came across an interesting article apparently claiming that it is impossible for the US to ever default on this debt due to the fact that the debt is held only in dollars - a currency only the USA manufactures. Because of this, any debt could be repaid "with a keystroke."

The article concludes by conceding that there could be economic or political consequences for continuing to run up the debt, but none of these consequences have yet appeared.

What I am wondering, is if the statement made by this article is accurate? It just seems so irresponsible to me for the government to continue to run up such a huge amount of debt with zero consequences in the foreseeable future.

Here is the link to the article if you are interested:

http://www.forbes.com...

(The article is pretty old but still relevant, I think.)

Yes, that information is correct. We could (we use a fiat currency) print as much money as we wish - we could "pay" the debt.


This is not true.
You are just wrong.


Please provide details on why I am wrong here.

Printing currency devalues its worth which creates inflation.
This is true. That is an adverse effect, it says nothing about the ability to do it.


You are correct; however, if the U.S. were to massively devalue its currency to attempt to pay its debts, the payment would not be accepted by the holder of the bonds; this because the bond was originally worth say 20 tons of gold, but after inflation due to devaluation, is only worth 100 pounds of gold. Instead, backing assets would be claimed -- best case scenario.

If the U.S. printed currency to pay its debts, the price of EVERYTHING would skyrocket; A loaf of bread would suddenly cost $400 or more and the bonds being held by other nations would become absolutely worthless as U.S. assets would plummet in value. This has been seen in many instances throughout history including Germany post WWI.
Again, effect not saying that we can't.


Devaluation of currency via printing of currency beyond gold backing does not effect value of currency domestically alone. The largest toll felt by the nation is within the international community.


A loaf of bread in 1922 cost 163 marks; by the end of 1923, due to their printing of currency, the price of a loaf of bread was 200,000,000,000 (200 billion) marks.

Printing currency without backing is the absolute worst idea possible.

This gets complex fast, but bonds (treasury bills, treasury notes, treasury bonds) are out debt. Debt is not, as I suspect many people seem to think, like a bill we owe to... say China. We don't get a statement like its a credit card bill.


Yes we absolutely do get a bill annually. What do you think the debt ceiling fight in congress was about? Conservatives wanted Obama to cut spending to pay for the interest and principal on our national debts, Obama wanted congress to raise the approved national debt limit so he could increase spending and still pay our interests in order to not default.

This is... well a more complex subject than you are giving credit. Further, you are mixing politics with economic theory.


National debt goes hand-in-hand with politics; it's unavoidable. This is especially true within the U.S. system of separation of powers. The House must approve all monetary requests by the President, the Senate and any other requester.

But yes, it is much more complex, which is why I offered further details upon request in my initial post.


Regardless, in short, because we operate using our own currency, and ALL bonds (of all types) mature, we COULD be debt free in a very few years. It would be terrible for the world and MUCH worse for our own country and people, but it is very possible.

Yes bonds do mature, but it's up to the holder of the bonds to decide if they wish to gamble that the economy will grow back to at least break even, or if they wish to sell to another nation for a loss or submit for reimbursement from the owner (U.S.). This was the big fight with China from 2011-2014; if China demanded reimbursement, they could have bankrupt the U.S. and/or assumed control of the backing assets. That action would have tanked China however, due to their dependence on U.S. companies operating domestically and the amount of exports transferred to the U.S. annually.
All bonds mature. If we simply paid the bonds (as we have done forever) didn;'t issue more, and printed our way out of debt, we would be debt free. Good idea? Hell no.
TBR
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7/24/2016 12:28:11 AM
Posted: 4 months ago
At 7/24/2016 12:16:56 AM, MakeSensePeopleDont wrote:
At 7/24/2016 12:12:04 AM, TBR wrote:
At 7/23/2016 11:44:10 PM, MakeSensePeopleDont wrote:

I just take issue with your first bit dismissing
Alan Greenspan
Peter Zeihan, Vice President of Analysis for STRATFOR
Mike Norman, Chief Economist for John Thomas Financial

and a host of other economists cited in the article

I most definitely did NOT dismiss the persons cited within the article. I dismissed the article itself as lacking any factual data, and instead being a complete opinion piece. If they had provided any actual data to backup their claims, I could have reviewed the data, fact checked, cross checked with differing factual articles and come to an intellectual conclusion based on both sides. However, there are no facts, only opinions in that article.

There is no math to show. The simple fact - as pointed to in the article - is we COULD print as much money as we like. If you don't acknowledge this, then you are missing the point OF the article. Good policy? No one is saying that.
TBR
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7/24/2016 12:31:59 AM
Posted: 4 months ago
This is not true.
You are just wrong.


Please provide details on why I am wrong here.
Because you are. We can print as much money as we like. Our bonds can be paid in our own currency.


Printing currency devalues its worth which creates inflation.
This is true. That is an adverse effect, it says nothing about the ability to do it.


You are correct; however, if the U.S. were to massively devalue its currency to attempt to pay its debts, the payment would not be accepted by the holder of the bonds; this because the bond was originally worth say 20 tons of gold, but after inflation due to devaluation, is only worth 100 pounds of gold. Instead, backing assets would be claimed -- best case scenario.
Right. No damn argument. The fallout would be devastating. You just keep dancing around the simple fact that we COULD, and simply keep posting the EFFECT!


If the U.S. printed currency to pay its debts, the price of EVERYTHING would skyrocket; A loaf of bread would suddenly cost $400 or more and the bonds being held by other nations would become absolutely worthless as U.S. assets would plummet in value. This has been seen in many instances throughout history including Germany post WWI.
Again, effect not saying that we can't.


Devaluation of currency via printing of currency beyond gold backing does not effect value of currency domestically alone. The largest toll felt by the nation is within the international community.
So. Still possible.



A loaf of bread in 1922 cost 163 marks; by the end of 1923, due to their printing of currency, the price of a loaf of bread was 200,000,000,000 (200 billion) marks.

Printing currency without backing is the absolute worst idea possible.

This gets complex fast, but bonds (treasury bills, treasury notes, treasury bonds) are out debt. Debt is not, as I suspect many people seem to think, like a bill we owe to... say China. We don't get a statement like its a credit card bill.


Yes we absolutely do get a bill annually. What do you think the debt ceiling fight in congress was about? Conservatives wanted Obama to cut spending to pay for the interest and principal on our national debts, Obama wanted congress to raise the approved national debt limit so he could increase spending and still pay our interests in order to not default.

This is... well a more complex subject than you are giving credit. Further, you are mixing politics with economic theory.


National debt goes hand-in-hand with politics; it's unavoidable. This is especially true within the U.S. system of separation of powers. The House must approve all monetary requests by the President, the Senate and any other requester.

But yes, it is much more complex, which is why I offered further details upon request in my initial post.
And you have some right, and still can't accept the part you are wrong. We CAN print out way out of debt.



Regardless, in short, because we operate using our own currency, and ALL bonds (of all types) mature, we COULD be debt free in a very few years. It would be terrible for the world and MUCH worse for our own country and people, but it is very possible.

Yes bonds do mature, but it's up to the holder of the bonds to decide if they wish to gamble that the economy will grow back to at least break even, or if they wish to sell to another nation for a loss or submit for reimbursement from the owner (U.S.). This was the big fight with China from 2011-2014; if China demanded reimbursement, they could have bankrupt the U.S. and/or assumed control of the backing assets. That action would have tanked China however, due to their dependence on U.S. companies operating domestically and the amount of exports transferred to the U.S. annually.
All bonds mature. If we simply paid the bonds (as we have done forever) didn;'t issue more, and printed our way out of debt, we would be debt free. Good idea? Hell no.
MakeSensePeopleDont
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7/24/2016 12:34:57 AM
Posted: 4 months ago
At 7/24/2016 12:28:11 AM, TBR wrote:
At 7/24/2016 12:16:56 AM, MakeSensePeopleDont wrote:
At 7/24/2016 12:12:04 AM, TBR wrote:
At 7/23/2016 11:44:10 PM, MakeSensePeopleDont wrote:

I just take issue with your first bit dismissing
Alan Greenspan
Peter Zeihan, Vice President of Analysis for STRATFOR
Mike Norman, Chief Economist for John Thomas Financial

and a host of other economists cited in the article

I most definitely did NOT dismiss the persons cited within the article. I dismissed the article itself as lacking any factual data, and instead being a complete opinion piece. If they had provided any actual data to backup their claims, I could have reviewed the data, fact checked, cross checked with differing factual articles and come to an intellectual conclusion based on both sides. However, there are no facts, only opinions in that article.

There is no math to show. The simple fact - as pointed to in the article - is we COULD print as much money as we like. If you don't acknowledge this, then you are missing the point OF the article. Good policy? No one is saying that.

I agree that it is a theory, just as one could theorize that transferring all criminal prisoners from the U.S. to China for labor would relieve our debts. But that is not even a good theoretical proposition. Even the most fictional and fantastical of stress tests applied to the idea would result in complete failure due to even the most basic laws of economics.
MakeSensePeopleDont
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7/24/2016 12:45:08 AM
Posted: 4 months ago
At 7/24/2016 12:31:59 AM, TBR wrote:
This is not true.
You are just wrong.


Please provide details on why I am wrong here.
Because you are. We can print as much money as we like. Our bonds can be paid in our own currency.


OK, we owe $20 trillion in debt. Let's say we print all of it today. We go to hand it over and suddenly, IF our assets somehow miraculously do not devalue, our $20 trillion in debt now goes through a process of inflation and increases to $20 quadrillion. Now what? Print more? Inflate it $200 quintillion?

Following the laws of economics, there is no possible way to break even using this method.


Printing currency devalues its worth which creates inflation.
This is true. That is an adverse effect, it says nothing about the ability to do it.


You are correct; however, if the U.S. were to massively devalue its currency to attempt to pay its debts, the payment would not be accepted by the holder of the bonds; this because the bond was originally worth say 20 tons of gold, but after inflation due to devaluation, is only worth 100 pounds of gold. Instead, backing assets would be claimed -- best case scenario.

Right. No damn argument. The fallout would be devastating. You just keep dancing around the simple fact that we COULD, and simply keep posting the EFFECT!


OK, I see where you're going here now. Yes, we COULD do that, and suffer the consequences. However, the way the article was presented, it portrayed the idea that just printing more currency would solve the issue without negative consequences, and everyone goes home happy.


If the U.S. printed currency to pay its debts, the price of EVERYTHING would skyrocket; A loaf of bread would suddenly cost $400 or more and the bonds being held by other nations would become absolutely worthless as U.S. assets would plummet in value. This has been seen in many instances throughout history including Germany post WWI.
Again, effect not saying that we can't.


Devaluation of currency via printing of currency beyond gold backing does not effect value of currency domestically alone. The largest toll felt by the nation is within the international community.
So. Still possible.


As are leprechauns and gold filled pails at the end of the rainbow. LOL.



A loaf of bread in 1922 cost 163 marks; by the end of 1923, due to their printing of currency, the price of a loaf of bread was 200,000,000,000 (200 billion) marks.

Printing currency without backing is the absolute worst idea possible.

This gets complex fast, but bonds (treasury bills, treasury notes, treasury bonds) are out debt. Debt is not, as I suspect many people seem to think, like a bill we owe to... say China. We don't get a statement like its a credit card bill.


Yes we absolutely do get a bill annually. What do you think the debt ceiling fight in congress was about? Conservatives wanted Obama to cut spending to pay for the interest and principal on our national debts, Obama wanted congress to raise the approved national debt limit so he could increase spending and still pay our interests in order to not default.

This is... well a more complex subject than you are giving credit. Further, you are mixing politics with economic theory.


National debt goes hand-in-hand with politics; it's unavoidable. This is especially true within the U.S. system of separation of powers. The House must approve all monetary requests by the President, the Senate and any other requester.

But yes, it is much more complex, which is why I offered further details upon request in my initial post.
And you have some right, and still can't accept the part you are wrong. We CAN print out way out of debt.


No, you absolutely cannot...at least not outside of theory where all economic laws are non-existent.



Regardless, in short, because we operate using our own currency, and ALL bonds (of all types) mature, we COULD be debt free in a very few years. It would be terrible for the world and MUCH worse for our own country and people, but it is very possible.

Yes bonds do mature, but it's up to the holder of the bonds to decide if they wish to gamble that the economy will grow back to at least break even, or if they wish to sell to another nation for a loss or submit for reimbursement from the owner (U.S.). This was the big fight with China from 2011-2014; if China demanded reimbursement, they could have bankrupt the U.S. and/or assumed control of the backing assets. That action would have tanked China however, due to their dependence on U.S. companies operating domestically and the amount of exports transferred to the U.S. annually.
All bonds mature. If we simply paid the bonds (as we have done forever) didn;'t issue more, and printed our way out of debt, we would be debt free. Good idea? Hell no.
TBR
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7/24/2016 12:45:46 AM
Posted: 4 months ago
At 7/24/2016 12:34:57 AM, MakeSensePeopleDont wrote:
At 7/24/2016 12:28:11 AM, TBR wrote:
At 7/24/2016 12:16:56 AM, MakeSensePeopleDont wrote:
At 7/24/2016 12:12:04 AM, TBR wrote:
At 7/23/2016 11:44:10 PM, MakeSensePeopleDont wrote:

I just take issue with your first bit dismissing
Alan Greenspan
Peter Zeihan, Vice President of Analysis for STRATFOR
Mike Norman, Chief Economist for John Thomas Financial

and a host of other economists cited in the article

I most definitely did NOT dismiss the persons cited within the article. I dismissed the article itself as lacking any factual data, and instead being a complete opinion piece. If they had provided any actual data to backup their claims, I could have reviewed the data, fact checked, cross checked with differing factual articles and come to an intellectual conclusion based on both sides. However, there are no facts, only opinions in that article.

There is no math to show. The simple fact - as pointed to in the article - is we COULD print as much money as we like. If you don't acknowledge this, then you are missing the point OF the article. Good policy? No one is saying that.

I agree that it is a theory, just as one could theorize that transferring all criminal prisoners from the U.S. to China for labor would relieve our debts. But that is not even a good theoretical proposition. Even the most fictional and fantastical of stress tests applied to the idea would result in complete failure due to even the most basic laws of economics.

Its just not theory, it fact.

Answer these questions please.
1) Does the US control its own currency?
2) Is our debt in US currency?

IF the answer to 1 & 2 is TRUE than it is FACT that we could print as much money as we want in 1 to satisfy 2.
TBR
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7/24/2016 12:46:49 AM
Posted: 4 months ago
At 7/24/2016 12:45:08 AM, MakeSensePeopleDont wrote:
At 7/24/2016 12:31:59 AM, TBR wrote:
This is not true.
You are just wrong.


Please provide details on why I am wrong here.
Because you are. We can print as much money as we like. Our bonds can be paid in our own currency.


OK, we owe $20 trillion in debt. Let's say we print all of it today. We go to hand it over and suddenly, IF our assets somehow miraculously do not devalue, our $20 trillion in debt now goes through a process of inflation and increases to $20 quadrillion. Now what? Print more? Inflate it $200 quintillion?

Following the laws of economics, there is no possible way to break even using this method.


Printing currency devalues its worth which creates inflation.
This is true. That is an adverse effect, it says nothing about the ability to do it.


You are correct; however, if the U.S. were to massively devalue its currency to attempt to pay its debts, the payment would not be accepted by the holder of the bonds; this because the bond was originally worth say 20 tons of gold, but after inflation due to devaluation, is only worth 100 pounds of gold. Instead, backing assets would be claimed -- best case scenario.

Right. No damn argument. The fallout would be devastating. You just keep dancing around the simple fact that we COULD, and simply keep posting the EFFECT!


OK, I see where you're going here now. Yes, we COULD do that, and suffer the consequences. However, the way the article was presented, it portrayed the idea that just printing more currency would solve the issue without negative consequences, and everyone goes home happy.


If the U.S. printed currency to pay its debts, the price of EVERYTHING would skyrocket; A loaf of bread would suddenly cost $400 or more and the bonds being held by other nations would become absolutely worthless as U.S. assets would plummet in value. This has been seen in many instances throughout history including Germany post WWI.
Again, effect not saying that we can't.


Devaluation of currency via printing of currency beyond gold backing does not effect value of currency domestically alone. The largest toll felt by the nation is within the international community.
So. Still possible.


As are leprechauns and gold filled pails at the end of the rainbow. LOL.



A loaf of bread in 1922 cost 163 marks; by the end of 1923, due to their printing of currency, the price of a loaf of bread was 200,000,000,000 (200 billion) marks.

Printing currency without backing is the absolute worst idea possible.

This gets complex fast, but bonds (treasury bills, treasury notes, treasury bonds) are out debt. Debt is not, as I suspect many people seem to think, like a bill we owe to... say China. We don't get a statement like its a credit card bill.


Yes we absolutely do get a bill annually. What do you think the debt ceiling fight in congress was about? Conservatives wanted Obama to cut spending to pay for the interest and principal on our national debts, Obama wanted congress to raise the approved national debt limit so he could increase spending and still pay our interests in order to not default.

This is... well a more complex subject than you are giving credit. Further, you are mixing politics with economic theory.


National debt goes hand-in-hand with politics; it's unavoidable. This is especially true within the U.S. system of separation of powers. The House must approve all monetary requests by the President, the Senate and any other requester.

But yes, it is much more complex, which is why I offered further details upon request in my initial post.
And you have some right, and still can't accept the part you are wrong. We CAN print out way out of debt.


No, you absolutely cannot...at least not outside of theory where all economic laws are non-existent.



Regardless, in short, because we operate using our own currency, and ALL bonds (of all types) mature, we COULD be debt free in a very few years. It would be terrible for the world and MUCH worse for our own country and people, but it is very possible.

Yes bonds do mature, but it's up to the holder of the bonds to decide if they wish to gamble that the economy will grow back to at least break even, or if they wish to sell to another nation for a loss or submit for reimbursement from the owner (U.S.). This was the big fight with China from 2011-2014; if China demanded reimbursement, they could have bankrupt the U.S. and/or assumed control of the backing assets. That action would have tanked China however, due to their dependence on U.S. companies operating domestically and the amount of exports transferred to the U.S. annually.
All bonds mature. If we simply paid the bonds (as we have done forever) didn;'t issue more, and printed our way out of debt, we would be debt free. Good idea? Hell no.

Forget it. You are so missing the point. I don't know if its willful or what
TBR
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7/24/2016 12:48:32 AM
Posted: 4 months ago
Wait... I blasted past this

OK, I see where you're going here now. Yes, we COULD do that, and suffer the consequences. However, the way the article was presented, it portrayed the idea that just printing more currency would solve the issue without negative consequences, and everyone goes home happy.

Yea. We all agree there.
MakeSensePeopleDont
Posts: 1,104
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7/24/2016 12:59:35 AM
Posted: 4 months ago
At 7/24/2016 12:45:46 AM, TBR wrote:
At 7/24/2016 12:34:57 AM, MakeSensePeopleDont wrote:
At 7/24/2016 12:28:11 AM, TBR wrote:
At 7/24/2016 12:16:56 AM, MakeSensePeopleDont wrote:
At 7/24/2016 12:12:04 AM, TBR wrote:
At 7/23/2016 11:44:10 PM, MakeSensePeopleDont wrote:

I just take issue with your first bit dismissing
Alan Greenspan
Peter Zeihan, Vice President of Analysis for STRATFOR
Mike Norman, Chief Economist for John Thomas Financial

and a host of other economists cited in the article

I most definitely did NOT dismiss the persons cited within the article. I dismissed the article itself as lacking any factual data, and instead being a complete opinion piece. If they had provided any actual data to backup their claims, I could have reviewed the data, fact checked, cross checked with differing factual articles and come to an intellectual conclusion based on both sides. However, there are no facts, only opinions in that article.

There is no math to show. The simple fact - as pointed to in the article - is we COULD print as much money as we like. If you don't acknowledge this, then you are missing the point OF the article. Good policy? No one is saying that.

I agree that it is a theory, just as one could theorize that transferring all criminal prisoners from the U.S. to China for labor would relieve our debts. But that is not even a good theoretical proposition. Even the most fictional and fantastical of stress tests applied to the idea would result in complete failure due to even the most basic laws of economics.

Its just not theory, it fact.

Answer these questions please.
1) Does the US control its own currency?
2) Is our debt in US currency?

IF the answer to 1 & 2 is TRUE than it is FACT that we could print as much money as we want in 1 to satisfy 2.

1) Does the US control its own currency? --

Yes and No. The U.S. indeed controls its ability to print its own currency, as little or as much as it wishes.

The U.S. also has the ability to set the DOMESTIC value of its currency in relation to the value of gold: This however, would only effect the cost / profit ratios of products and services provided 100% domestically.

The U.S. does NOT have control over the INTERNATIONAL valuation of its currency. The global market decides this based upon the international community's determination of the U.S. dollar's value compared to gold. This is where the three major global stock markets come into play; which the U.S. has no control over.

2) Is our debt in US currency? --

No, U.S. debt, as with any other debt, is valued in gold.
TBR
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7/24/2016 1:02:30 AM
Posted: 4 months ago
2) Is our debt in US currency? --

No, U.S. debt, as with any other debt, is valued in gold.

What? We were close to something here, but this is just so damn wrong.

Show any source on this please. I think you understand the basics, but this seems to show you know nothing.
MakeSensePeopleDont
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7/24/2016 1:02:49 AM
Posted: 4 months ago
At 7/24/2016 12:46:49 AM, TBR wrote:
At 7/24/2016 12:45:08 AM, MakeSensePeopleDont wrote:
At 7/24/2016 12:31:59 AM, TBR wrote:
This is not true.
You are just wrong.


Please provide details on why I am wrong here.
Because you are. We can print as much money as we like. Our bonds can be paid in our own currency.


OK, we owe $20 trillion in debt. Let's say we print all of it today. We go to hand it over and suddenly, IF our assets somehow miraculously do not devalue, our $20 trillion in debt now goes through a process of inflation and increases to $20 quadrillion. Now what? Print more? Inflate it $200 quintillion?

Following the laws of economics, there is no possible way to break even using this method.


Printing currency devalues its worth which creates inflation.
This is true. That is an adverse effect, it says nothing about the ability to do it.


You are correct; however, if the U.S. were to massively devalue its currency to attempt to pay its debts, the payment would not be accepted by the holder of the bonds; this because the bond was originally worth say 20 tons of gold, but after inflation due to devaluation, is only worth 100 pounds of gold. Instead, backing assets would be claimed -- best case scenario.

Right. No damn argument. The fallout would be devastating. You just keep dancing around the simple fact that we COULD, and simply keep posting the EFFECT!


OK, I see where you're going here now. Yes, we COULD do that, and suffer the consequences. However, the way the article was presented, it portrayed the idea that just printing more currency would solve the issue without negative consequences, and everyone goes home happy.


If the U.S. printed currency to pay its debts, the price of EVERYTHING would skyrocket; A loaf of bread would suddenly cost $400 or more and the bonds being held by other nations would become absolutely worthless as U.S. assets would plummet in value. This has been seen in many instances throughout history including Germany post WWI.
Again, effect not saying that we can't.


Devaluation of currency via printing of currency beyond gold backing does not effect value of currency domestically alone. The largest toll felt by the nation is within the international community.
So. Still possible.


As are leprechauns and gold filled pails at the end of the rainbow. LOL.



A loaf of bread in 1922 cost 163 marks; by the end of 1923, due to their printing of currency, the price of a loaf of bread was 200,000,000,000 (200 billion) marks.

Printing currency without backing is the absolute worst idea possible.

This gets complex fast, but bonds (treasury bills, treasury notes, treasury bonds) are out debt. Debt is not, as I suspect many people seem to think, like a bill we owe to... say China. We don't get a statement like its a credit card bill.


Yes we absolutely do get a bill annually. What do you think the debt ceiling fight in congress was about? Conservatives wanted Obama to cut spending to pay for the interest and principal on our national debts, Obama wanted congress to raise the approved national debt limit so he could increase spending and still pay our interests in order to not default.

This is... well a more complex subject than you are giving credit. Further, you are mixing politics with economic theory.


National debt goes hand-in-hand with politics; it's unavoidable. This is especially true within the U.S. system of separation of powers. The House must approve all monetary requests by the President, the Senate and any other requester.

But yes, it is much more complex, which is why I offered further details upon request in my initial post.
And you have some right, and still can't accept the part you are wrong. We CAN print out way out of debt.


No, you absolutely cannot...at least not outside of theory where all economic laws are non-existent.



Regardless, in short, because we operate using our own currency, and ALL bonds (of all types) mature, we COULD be debt free in a very few years. It would be terrible for the world and MUCH worse for our own country and people, but it is very possible.

Yes bonds do mature, but it's up to the holder of the bonds to decide if they wish to gamble that the economy will grow back to at least break even, or if they wish to sell to another nation for a loss or submit for reimbursement from the owner (U.S.). This was the big fight with China from 2011-2014; if China demanded reimbursement, they could have bankrupt the U.S. and/or assumed control of the backing assets. That action would have tanked China however, due to their dependence on U.S. companies operating domestically and the amount of exports transferred to the U.S. annually.
All bonds mature. If we simply paid the bonds (as we have done forever) didn;'t issue more, and printed our way out of debt, we would be debt free. Good idea? Hell no.

Forget it. You are so missing the point. I don't know if its willful or what

The point is, the article attempted to outline the reason in which the U.S. debt being so massive and such a big issue in politics is -- in the author's view -- not a problem at all. It is simply a figment of our imaginations, created by some group of all powerful people for some unknown reason.

This is all completely wrong and is an injustice to media and the population reading it.
MakeSensePeopleDont
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7/24/2016 1:04:20 AM
Posted: 4 months ago
At 7/24/2016 12:48:32 AM, TBR wrote:
Wait... I blasted past this

OK, I see where you're going here now. Yes, we COULD do that, and suffer the consequences. However, the way the article was presented, it portrayed the idea that just printing more currency would solve the issue without negative consequences, and everyone goes home happy.

Yea. We all agree there.

I'm glad we found grounds of agreement here. It's a rare thing to do. Friendly shake?
TBR
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7/24/2016 1:05:23 AM
Posted: 4 months ago
At 7/24/2016 1:04:20 AM, MakeSensePeopleDont wrote:
At 7/24/2016 12:48:32 AM, TBR wrote:
Wait... I blasted past this

OK, I see where you're going here now. Yes, we COULD do that, and suffer the consequences. However, the way the article was presented, it portrayed the idea that just printing more currency would solve the issue without negative consequences, and everyone goes home happy.

Yea. We all agree there.

I'm glad we found grounds of agreement here. It's a rare thing to do. Friendly shake?

I knew it was in there.
MakeSensePeopleDont
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7/24/2016 1:17:16 AM
Posted: 4 months ago
At 7/24/2016 1:02:30 AM, TBR wrote:
2) Is our debt in US currency? --

No, U.S. debt, as with any other debt, is valued in gold.

What? We were close to something here, but this is just so damn wrong.

Show any source on this please. I think you understand the basics, but this seems to show you know nothing.

I know, I know, I'm sorry. the U.S. claims to be on a "fiat system" these days. But anyone that studies the fiat system even in its most basic form, understands that it's smoke and mirrors to hide the disaster politics has created in the past 50 years.

Here's what one needs to continually ask himself while researching the fiat system: "How does the U.S., or any other nation, pay for its currency?" This is where national / federal government's drive in social welfare systems are defined; for most modern nations, not just the U.S. It's to control as much of the nation's economy as possible in order to artificially inflate GDP which somehow results in an increased currency value. This is simply a system to hide the global economic bubble forming, just as the housing bubble was hidden for so long behind so many nonsensical systems that nobody understood. But now we're getting off track.

But still...how do nations back their currency in reality....in tangibility? It's still gold. When we send funds to third world nations, they don't accept some imaginary currency they don't participate in; they accept shiny gold bars.
xus00HAY
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7/24/2016 5:15:44 PM
Posted: 4 months ago
If you take into consideration all the land that is owned by the U.S. government, the net worth of the USA's assets must be like over a trillion dollars or something like that.
TBR
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7/24/2016 5:18:49 PM
Posted: 4 months ago
At 7/24/2016 5:15:44 PM, xus00HAY wrote:
If you take into consideration all the land that is owned by the U.S. government, the net worth of the USA's assets must be like over a trillion dollars or something like that.

This was figured (as best as possible) not long ago

http://blogs.wsj.com...

Just shy of 30 trillion just for the land.
xus00HAY
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7/24/2016 5:19:00 PM
Posted: 4 months ago
The Euro has devistated the economy of Italy. When they were using Lire, there were more millionaires in Italy than any other country. The situation is nothing like that today.