is the US heading for bankruptency??

Question

US 'could be going bankrupt'
Edmund Conway, Economics Editor.
London Telegraph July 14, 2006.




The United States is heading for bankruptcy, according to an extraordinary paper published by one of the key members of the country's central bank.

A ballooning budget deficit and a pensions and welfare timebomb could send the economic superpower into insolvency, according to research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St Louis, a leading constituent of the US Federal Reserve.

http://www.documentaries.ws/1/news.php?extend.93

Answer 1

It's alarming, our government has borrowed more money in the past five years than it did in its entire history from George Washington up to Clinton. What's even more alarming is that we are borrowing the money from countries such as China and Iran. The past five years we have been lead by the party claiming to be conservative, but they have grown the federal government while cutting taxes. That's like you cutting your income by working part time, and then going on a credit card binge. The sign of danger will be interest rates shooting up. So far the Chinese have be willing to buy notes at a low rate.

Answer 2

No. Zero chance. It's essentially meaningless to talk of bankruptcy, as there is really no reason that a sovereign nation owing debt in its own currency would ever be unable to service the debt. When countries do get into debt trouble, it's because they owe the debt in some other currency they cannot control. (eg, imagine if Mexico owed a lot of debt contracts in US dollars, while the Mexican gov't collects its revenues in Pesos; and then there was a crisis in which the Peso lost a lot of value.)

In any case, the US gov't is in far, far healthier fiscal situation than people often think, and the chance of debt causing any real crisis is remote.

Prof. Kotlikoff choose to use a lot of lurid language in order to get attention to a real issue about the cost of entitlements, but he really foolishly destroyed his credibility by indulging in that kind of nonsense.

The real problem for the future is not bankruptcy, which under no circumstance will happen. It's that, if we don't proactively change some policies regarding social security and Medicare, the government in future is likely to face a choice of reducing entitlement benefits or substantially raising taxes -- either way a tough choice politically that'll piss off either the old people or the young people.

Answer 3

no we are not. we are in a huge amount of debt, but we still have plenty of money.
we are an estemated 1.5 billion dollars in debt.
it will take a long time to pay it off.

Answer 4

i'd say we will be moving back into Britain by 2015 if we keep going the way we are going.

Answer 5

Duh....The u.s. is bankrupt