How much is $17 trillion? Visualized for reference.

[parsonsj]

There is a big problem with those numbers, and those that are not saving for a Rainy Day may be sorry..

Let's use your number: $17T. It's only a number, and is actually smaller relative to GDP than it has been in the past. What scenario do you see playing out in the future that has you concerned? What is the apocalypse? I'm not being argumentative, just curious.

[parsonsj]

Here's another link about the history of Federal government debt back to the 18th century. It has some nice charts to compare our current situation with our past:

http://www.usgovernmentdebt.us/debt_deficit_history

[GregWeld]

Originally Posted by parsonsj

Here's another link about the history of Federal government debt back to the 18th century. It has some nice charts to compare our current situation with our past:

http://www.usgovernmentdebt.us/debt_deficit_history

Just look across the pond at Europe if you'd like to see where we're headed... Debt and an entitled population...

If it wasn't for the Chinese buying our paper - we'd already be out of business.

[parsonsj]

Are you referring to the slow growth and possible looming recession in central Europe? Or the high unemployment and sovereign debt crisis in southern Europe?

(probably not the solid growth exhibited by northern European social democracies with their cradle-to-grave government programs )

To be fair: Portugal, Ireland, and Spain do have similar problems to the U.S., in that much of their current issues can be traced to a de-leveraging private sector after their housing bubble burst.

But we're talking about government debt, and there is a huge difference between the U.S and Europe: currency. The U.S. has its own currency and can borrow at historically low rates. European governments cannot (due to their shared currency), and borrowing costs are sky-high for them since there is no European bond that would correspond to U.S Treasury bonds.

Anyway, here's the point of my ramble: the UK and much of southern Europe have been on government austerity experiments for the past 2.5 years. And the results have been very disappointing: cutting government spending has reduced growth, reducing tax receipts, resulting in more debt. It's proved to be self-defeating. Recent elections there seem to be pointing to more "growth" policies with more government spending. In fact, many economists and politicians there have started to point to the US as a model. Even though our economy is way below optimum and our unemployment rate is way too high, our growth has been better, in part because we did do some (not that much, but some) stimulus, rather than austerity.

Whew. I need a nap.

[GregWeld]

Originally Posted by parsonsj

But we're talking about government debt, and there is a huge difference between the U.S and Europe: currency. The U.S. has its own currency and can borrow at historically low rates. European governments cannot (due to their shared currency), and borrowing costs are sky-high for them since there is no European bond that would correspond to U.S Treasury bonds.

Debt is a "product" -- which, when offered, needs a buyer... when the buyer is afraid of the product - he'll demand a higher premium or he won't buy.

It's the oldest market in the world... Our debt is "cheap" (Low coupon rates) because we are seen as having the ability to pay back the debt with the interest. Europe's debt carries a high coupon rate because there is a far higher risk of default.

As a buyer of bonds and corporate bonds etc... I wouldn't care if Europe paid 15% - I wouldn't touch it. It wouldn't make me a buyer even if all of Europe backed the bonds, because their problems are so systemic that issuing more bonds to cover their current crisis is only adding to their problems.

It's like getting pregnant to save a marriage - or borrowing a third mortgage on your house because you have a debt problem... either way - it's going to end badly.

The real issue is - whether you're a household, or a government - you can't spend more than you earn.

The problem is fixing what got you here in the first place...

[parsonsj]

Originally Posted by Greg

It's the oldest market in the world... Our debt is "cheap" (Low coupon rates) because we are seen as having the ability to pay back the debt with the interest. Europe's debt carries a high coupon rate because there is a far higher risk of default.

Originally Posted by Greg

Just look across the pond at Europe if you'd like to see where we're headed... Debt and an entitled population...

Just a couple of points here.
1. "Europe" can't sell debt government debt. Only sovereign governments can, and there's a big difference in yields between Spanish yields and German yields in bond markets. That's a significant problem in how the euro is set up. Shared currency, but not a shared ability to raise money via bond auction.

2. I agree with you about why the yields are so different between the US and Spain, or the US and Italy. The markets see the US as the safe place to invest their funds, with little risk of default or future inflation. That's why yields are so low, and they are low on 10 year bonds too. IOW: the market disagrees with your assertion (and BucketList's) that the US is headed for debt difficulties similar to that in southern European governments within the next decade.

[GregWeld]

Originally Posted by parsonsj

Just a couple of points here.
1. "Europe" can't sell debt government debt. Only sovereign governments can, and there's a big difference in yields between Spanish yields and German yields in bond markets. That's a significant problem in how the euro is set up. Shared currency, but not a shared ability to raise money via bond auction.

Well - exactly - and think of it this way.... you pay your bills and have a low mortgage rate (Germany)... would you consider guaranteeing your neighbors (Greece/Spain/Italy) debt when you know he's out of work, and owes everyone in town, and spends money like a fool??

[Bucketlist2012]

The market ? You mean the "free" market ?

The one artificially propped up with worthless dollars ? Pumping money into the markets and the government by the Federal Reserve only prolongs the agony.

You do not see a Debt crisis ? Well you are entitled to your opinion, but there is a Debt crisis, now and in the future.

The Market is feeding on the stimulus money.Take that away and let the market settle to where it should be..

I have set my Investments for "stimulus" for the last 4 years. If it continues, you will be left with the Rich and the Poor, the middle will be hollowed out.

Stimulus without Debt reduction is madness..And the only way to prove it is to let the next few years play out...Charts and opinions mean nothing and time to let it play out is the true way to see who is right. I will bet on the debt crisis..I bet on the 2008 Crisis and was right, so I will follow my gut on this debt crisis..Our opinions are just that, and the true test is Time.

[Bucketlist2012]

Originally Posted by parsonsj

Let's use your number: $17T. It's only a number, and is actually smaller relative to GDP than it has been in the past. What scenario do you see playing out in the future that has you concerned? What is the apocalypse? I'm not being argumentative, just curious.

The only time the debt was higher is World War One and World War Two.

And The printing and spending will only devalue our currency more.. I don't see any apocalypse for me, I am ready.

I see that the continued spending, printing, and entitlements will weaken this country . You cannot spend that kind of money, and not expect consequences..

I don't thing you are arguing at all, just asking..I feel people can do what they want, and I have prepared with the Investments and assets that I have..I do not buy into the media hype and by being prepared, I just don't have to worry..

I just think that people who are not properly deleveraged, and don't have access to liquid cash, and are not invested for the long term, are in trouble...

Also those charts do not show the Interest payments due on Fannie and Freddie, so I do not rely on the charts at all..Maybe from the past, but today's charts can be manipulated for political gain.

I don't see armageddon, just a really long rough patch(10 years plus), for the non prepared..