The question all americans should ask themselves.
The question all Americans need to ask themselves is, why with all the business schools, all the books on business management, that teach how to run a successful business and all management teams working to run their companies in the black, all the families that work so hard to earn a living all seeming to generate a profit which the government demands it gets about 20%. How in the world did we get over $57 trillion in debt with only a $7.7 trillion money supply.
Host of The Money Talk Show
Could you please give me a more detailed explanation?
I don’t mean to sound rude but I’m sure you have been following this whole financial disaster as I have. Thus, to me, my one word answer speaks for itself. It’s also not too surprising why the word "banksters" has come into vogue.
Can you tell me how greed has put a $57 trillion dollar interest bearing debt on our country while leaving us with only a 7.7 trillion dollar money supply?
I’m really curious to hear your answer.
Host of The Money Talk Show
sub-prime, Alt-A, option ARMS, Ninja, etc.
AIG, Lehman Bros., Goldman Sachs, Bear Stearns, JPM, Citi, TARP (plus all other alphabets), Toxic assets (where are those anyway – they seemed to just fade into the background. How curious.)
If you’re looking for a scholarly dissertation on the causes of our financial disaster, you’ve come to the wrong fellow.
If you haven’t taken Dr. Martenson’s Crash Course – that would be a good place to start.
If you have, then, with all due respect, I’m not sure why you’re asking the question.
I think that is an excellent question and really needs to be asked. I would just like to add to that question.
Who produced the 57 trillion dollars worth of goods and services that we still owe on? Anyone out there want to try and quantify that.
Secondly, exactly who do we owe this money too?
[quote]Who produced the 57 trillion dollars worth of goods and services that we still owe on? Anyone out there want to try and quantify that. [/quote]
Nobody did. Yet.
Just like a money is a claim on future labor, debt is an obligation of future labor. We owe those $57 trillion in goods and services to our creditors and will have to produce the goods and services they represent or (more likely) print them.
$57T comes from the addition of the unfunded liabilities like Social Security, Medicare, etc. to the Federal Deficit wich is currently $11.4T.
The USgov has been collecting on behalf of these entities for years and the extra income that was not needed to fund the programs at the time of collection was funneled off and used for other expenditures, like the military. I disagree with Patrick that nothing has been purchased or produced, however a significant portion of that debt is interest for which nothing was generated.
This money was also loaned to us from foreign sources like China via a trade imbalance where actual hard objects have changed hands. Treasuries are sold in order to pay for these goods and services, often sold to the nation with which the US has a trade imbalance. Think China and OPEC.
The US has been living outside of it’s means for a very long time, and using debt to fund it’s lifestyle. This is true both publicly and privately. Using our houses as an ATM while they are in bubble mode is just one symptom / example of a very sick economy and way of life.
We have done this to ourselves with greed, keeping up with the Jones’, and expecting the future to always be bigger and better than today, and knowing that the US will be on top forever. We were wrong.
As a talk show host, I am sure you know this already… so what are you getting at? The core of all these isssues are addressed quite well in the crash course, have you viewed it?
The bulk of the 57 trillion obligation is simply a present value calculation of projected benefits to be paid out for social security and medicare netted against the present value of projected revenues (taxes) to be collected for those benefits. It is a huge number and can get much worse depending on what is used for revenue, interest and cost projections into the future. I hope this helps.