If huge crushing debt is about to make the USA collapse...?

Question

...into the ash heap of history, the way most of you knuckleheads seem to think, then how come "Net Worth of US Households Skyrockets" to yet another record level?
http://tinyurl.com/2z3nhp

P.S. - make sure you know what "Net Worth" means before you open mouth.

My, what a collection. You guys skipped my warning about understanding net worth, didn't you (Sky, Gregory)? Gregory, debt is not $56 billion, that is the difference between debt and assets. Important, uh, distinction. Also you should look up the definition of "debt" -- hypothetical expectations about possible future outcomes assuming everyone refuses to respond to reality is not "debt".

Dr. Dee, learn what a debt contract is. You can't "call in" a treasure bond. Lenders do not "call in" debts. Debtors are the ones who call in bonds, if the contract allows them to, when they decide they have enough cash to pay them off early.

So far you guys are totally living up to my expectations!

Answer 1

Not in the near future. US Net worth is based on the dollar value of assets in US $. In case all the foreign debt owe by the US is called back by the lenders, there is a possibility that the dollar will depriceate, thus net worth of americans in currencies other that the US $ will drop.

Answer 2

The article said the private debt was $56 trillion and that debt went up. It also said most of the growth was in stocks and not wages. Stocks go up and stocks can go down like we say the past few days. Wages grew 1% which didn't beat inflation and wage increases haven't beaten inflation in several years. Another part of worth is in the price of the house which can go down. That's also happening.

There is also the hidden debt of the national government of $40 trillion (from social security and medicare) that's going to hit the government around 2040. If the U.S. government doesn't curb its growth, the U.S. that could total $100 trillion in national debt, plus state debt, plus city debt and meanwhile wages will probably still not beat inflation to pay for all this debt. Now if wages are not going to go up, then how is anybody going to afford the higher price of housing which is going to go up (even if it's just rent)? Are they all going to huddle together like those in Japan not to mention taking out 100 year loans (you can now get 50 year loans in the U.S.)?

The savings rate is negative right now which means people are paying more than what they are putting in. This has been going on for a year. The last time it was like this was during the Great Depression.

At some point the vast majority of the population and the U.S. government will be upside down in debt vs worth. This means either the governmet is going to have to rev up inflation by printing money and making the debt much worse for the general population, drastically cut services (no more soldiers, hospitals, schools, police, welfare) or just default in mass and start over and be forced to never borrow again (because of lack of trust).

Answer 3

I especially like the last paragraph "One risk facing the economy is that the housing slump will take an unexpected turn for the worse, a development that likely would cause consumers to clamp down. That could spell trouble for overall economic activity."

But even if the housing bubble bursts, the States won't be called on their debt.... It's like the old saying, 'if you have an overdue $50,000 to the bank, you have a problem. If you have a $5 B dollar debt to the bank overdue, the bank has a problem'. No one is going to cut off their nose to spite their face.

Peace (and take a pill ya' knucklehead)

Answer 4

Because "net worth" doesn't mean much when the majority of America is swimming in credit card debt right at this moment.

In 30 years, you will find out whether or not we survive as a nation.

Answer 5

I'm pretty sure that doesn't include the national debt. I believe it does include inflated real estate values which are now in the process of correcting.

Answer 6

As people buy more cheap things because they are strapped for cash, we buy more cheaper goods from China - and THAT will lead to a downward spiral for sure....I think it has already started.
Wait a sec, what did I say? with cash? wait...fewer people are doing that - and using credit waaaay to often, and that has consequences of its own - bad

Answer 7

i agree with Dr Dee, not in the near future. why do you have to be so grumpy, besides i am typing not opening my mouth... unless i want to yawn.