Does anyone have some concrete data on the maximum debt the US can sustain without serious consequences?

Answer 1

The net future value of our debt is 30 trillion dollars. THat means if we had 30 trillion dollars right now in a bank and stopped deficient spending the US govt could pay back everyone who loaned it money, and all the social security obligations, and all the military retirement obligations, etc.

The net present value is right around 9 trillion.

As for the break even point, a doomsday scenario, I think as long as we have the ability to tax & borrow to pay that 30 trillion dollars we won't go "bankrupt".

Suppose we could add more money to the supply of money to pay these obligations, which of course is inflation and the amatuer economist knows this is bad.

I don't know what percentage becomes too much, and if we got the countries best 100 economicists and asked them, saying we get to a point where we can't borrow anymore or tax anymore, and we need to add money to the supply of money, and how much of this inflation would be acceptable, that would give you an answer.

In terms of economists, I'm like probably # 4 million on the list cause I had a B in advanced MarcoEconomics in college.

I would look right now to the Gross Domestic Product of the American economy and ask what is that dollar amount?

http://education.yahoo.com/reference/factbook/us/econom.html
GDP (purchasing power parity):
$11.75 trillion (2004 est.)

GDP — real growth rate:
4.4% (2004 est.)

GDP — per capita:
purchasing power parity: $40,100 (2004 est.)

GDP — composition by sector:
agriculture: 0.9%
industry: 19.7%
services: 79.4%
(2004)

Labor force:
147.4 million (includes unemployed) (2004 est.)


So at 4% a year we're roughtly around 12-13 trillion in 2007,

So the Net Future Value of our debt is 30 Trillion right now, and all the income that Americans get is rougly 12-13 trillion,

We're taxing around 10-20% in the low tax brackets and 20-25% in the higher, so,

Theres lots of people on Earth willing to loan money to the government,

http://brillig.com/debt_clock/
The Outstanding Public Debt as of 29 Sep 2007 at 08:24:28 PM GMT is:



The estimated population of the United States is 303,119,727
so each citizen's share of this debt is $29,610.30.

The National Debt has continued to increase an average of
$1.28 billion per day since September 29, 2006!
Concerned? Then tell Congress and the White House

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So I make about 40-50k, My share of the debt is 29k,

I would just spitball here that I am paying about 2-3k a year in federal tax,

so ultimately, if we don't stop this deficiet spending and that 1.12 billion a year keeps going,

I guess we're in a hole but - as long as we can tax people to pay off this debt, i guess the reality is you can't tax people 100% of their income cause then they can't pay rent or buy food,

so . . ..

I think the reality is there is a doomsday scenario, its just I can't accurrately calculate it, its obvious to you and me that if we keep this deficient spending and have to keep borrowing and that measure of debt grows and the measure of how much each persons share of it is grows, we aren't growing as a population,

Then we have to increase money supply,

at some point the value of the dollar drops and at the point that the cost of goods exceeds what people are able to afford it becomes a sort of dystopia with an economy in a toilet . . .

BOTTOM LINE: STOP BORROWING MONEY FROM CHINA SO YOU CAN GIVE IT TO HALIBURTON FOR THE IRAQ DISASTER

Answer 2

The more the USA produces in goods and services, the more debt we can sustain. The US Dollar, and US Treasury Bills are considered the WORLD'S SAFEST investments. If there were ever any world doubt about the continuing value of the dollar, all the world's banking systems would collapse,and we would live in a world where only BARTER (exchange of goods) and SPECIE (gold and silver) would be acceptable payment means.