Is the united states really in DEBT?

Question

I heard on the radio that the US owes China and other countries trillions and millions of dollars. They said that the US is not a rich country anymore.

Answer 1

Its complicated, but for a simplified version the only revenue the USA gets or for any country as a matter of fact is its revenue from taxation. If a country needs to spend more then they get, they have to borrow money from others countries that are willing to give it to them. As of most recently the USA has a debt of a little more than 9 trillion (9,000,000,000,000) dollars. Thats about $30,000 for every man, woman, and child in the country. Having debt is nothing to worry about EVERY country has some sort of debt. What most people worry about is the USA's Debt to GDP ratio, which is actually high at about 65% Debt/GDP

Answer 2

In simple words, the over consumption of goods and services, expecially imported ones have caused major current account deficits. Couple with weak dollar now, the situation could not be any worse.

Traditionally, the government fund this by selling debt instruments: Treasury Bonds. The largest buyer is Japan. This relationship worked for many years.

Problem is the weak dollar now makes such insturment unattractive and there are talks in many countries to reduces U$ denominated investment. So who will lend USA $$$ to cover the deficit?

I think the real problem is a culture one. Americans live on borrowed time. They borrow money to consume, consume and consume. You guys have so many wants!

Answer 3

The United States economy was worth $13.25 trillion USD in 2006. Our nation is hardly poor.
Debt is issued in the form of treasuries, which yield a relatively low interest rate because they are considered to be some of the safest investments in the world. That debt may be borrowed from domestic or foreign persons. Eventually, each portion of debt issued must be repaid. Our nation's debt is over $9 trillion USD, but it's about 65% of our GDP. That is favorably comparable to most other developed nations, some of which have debt more than the actual size of their economies.
If people in future begin to stop buying US treasuries as much as they do today, interest rates would rise, making it more expensive to borrow money. This would probably lower confidence in the US dollar, weakening its value relative to other currencies. US exports would be more favorable abroad, which would most likely offset the situation of more expensive capital.

What's important to note here is that the US economy attracts so much foreign investment (their savings or surpluses) to finance it because it is the most efficient supplier of capital to the correct places, which produces the most value. This makes the United States a favorable place for people to invest their savings in order to yield interest.

Answer 4

The US Federal Reserve, in a recent report for public use concluded:

Countries can and do go bankrupt. The United
States, with its $65.9 trillion fiscal gap, seems
clearly headed down that path. The country needs
to stop shooting itself in the foot. It needs to adopt
generational accounting as its standard method
of budgeting and fiscal analysis, and it needs to
adopt fundamental tax, Social Security, and
healthcare reforms that will redeem our children’s
future.

The United States is dangerously in debt. This administration, in particular, has added tremendous obligations to the United States debt. We may be one of the most indebted countries in the world.

Answer 5

Yes, it's called a government deficit. But it's considered by some to be a healthy way to keep money flowing through an economy. A stagnate economy is the worst kind, inflation and stagnation= stagflation, which happened in Germany after WWII when their German marks were worthless and inflation made them even more worthless everyday. Yes, many, many countries operate under huge deficits.

The US is still a rich, stable country. Check and see, many other countries also operate under deficits. What determines a countries "richness" is measured by GDP, not whether or not they're government chooses to operate under a deficit. Government,ent spending is a part of GDP, but many other factors contribute to it as well. GDP incorporates y=C+G+NX+I Consumption, government expenditures (including net taxes) Next exports (total exports-total imports) and Investment. So don't get worried that we're suddenly a poor country, because we definitely are not. :-) Hope that helps!

Answer 6

Yes, US is in enormous debt. The crisis which hit now may only be the beginning of really serious problems.

Ask yourself-why is US constantly borrowing? Answer is simple... unlike Americans, Europeans have savings, so they borrow to Americans who have NO savings.

The reason to do that is simple... Europeans live comfy, save money, have social countries, have 6+ weeks of vacation, unlimited sickdays, and high quality of lives and outlive everyone but Japanese.

They borrow money to US because it works fine... in US, no guaranteed vacation, no HI, no maternity, NOTHING. They know that US workers- closer to slaves or working drones will PAY off that money- because US will raise taxes to milk money off them.

The BASIC problem is that US people are living over their standards. Like getting one salary, but consuming two...
this is often because everything costs- childcare, tuition, healthcare.

If you are sick, you may be spending your entire salary even insured. Infant care is 10 000$ per year. In Europe, you would be playing with your kid on leave 1+ year, and GET MONEY for it, in US you
are forced to spend on this.

It's a rat race. Why? People in Europe enjoy more and more, as they get richer... Americans work more and more. Middle class and poor are not getting their share of growing US economy- rich have it all.

Social security is ALMOST non existant... it shows. Poverty, child poverty, crime etc. are BEYOND control.

Next time WHEN you go to the mall, don't forget to go with bulletproof vest and a pair of Uzis... in case someone nutjob doesn't put a bullet in your head, maybe some of 2 million(!!) people in jail will.

DID you know that per capita, US has SEVERAL TIMES mores prisoners than any other country? Prisoner population in US is in fact bigger than some entire small countries in Europe!!

Answer 7

This is plain maths.

When, as is the case in the US, the government,
as well as consumers, spend more than they earn,
they increase their debt, or they deplete and sell
their assets

Seems the two things are working simultaneously now.
.