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Title: National Debt Tops $18 Trillion: Guess How Much You Owe?
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URL Source: http://www.forbes.com/sites/mikepat ... how-much-you-owe/#9e54b005ebda
Published: May 8, 2016
Author: Mike Patton
Post Date: 2016-05-08 11:35:23 by BTP Holdings
Keywords: None
Views: 234
Comments: 6
National Debt Tops $18 Trillion: Guess How Much You Owe? by Mike Patton I provide analysis on the economy, investing and financial planning. Opinions expressed by Forbes Contributors are their own. The availability of credit in the U.S. was a major catalyst in the economic boom of the twentieth century. However, too much of a good thing can also be a problem. Is the U.S. too reliant on debt? Is the federal government mortgaging the future earnings of an entire generation? In this article, we’ll explore these and other issues as we take a look at the debt cycle in America. The Impact of Debt on Economic Growth In the early part of the twentieth century, if people didn’t have the money to purchase an item, they would save for it. With the introduction of credit terms, high-dollar items became much more affordable. It also changed the way we view debt. For example, rather than think of a new car in terms of its total price, we began to focus on the amount of the monthly payment. And, as the use of debt increased, the American standard of living rose with it. Excessive debt was also one of the primary catalysts for the economic boom of the 1980s, 1990s, and part of the 2000s. However, when debt is used in excess, it steals from the future since it must be repaid. This is because a dollar borrowed today necessitates that a dollar plus interest be repaid in the future. This reduces the amount of money available for future spending. If the amount of debt accumulated is significant and the period of accumulation is long, the required debt payments will negatively impact economic growth. What about government debt? How does it impact the future and the economy? Poster Comment: Lots of charts at source on two pages. We had better knuckle under or we will all perish from the massive debt created by our government.
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#1. To: BTP Holdings (#0)
I see these two as contradictory. Use of debt will only temporarily raise the "standard of living" of the person going into debt, but the interest payments in the future generally means the person's "standard of living" will then stall at that level. Without use of debt there's no interest payments, and the person's standard of living will grow more slowly but not stall. Arguably in some cases, like a home mortgage, debt can be beneficial as one is not losing money to rent payments but instead retaining some in the home equity. But for non-essentials, that's not a potential advantage.
Yes, but you do know what "fractional reserve banking" is, and how it works? ;) "When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke
Yes, but loans are possible with or without FRB, so the ability to loan money is itself, and the debt it creates, is not directly related to FRB.
BUMP into the daylight of the main forum. It's NOT a secret PM conspiracy topic only! Peons and the silent majority, feel free to speak up. True, but the loans our local banks make can only be done with our "fractional reserve" system of banking. This means that for every $1,000 on deposit that the bank can loan multiples of what they have on deposit. Here is a sample balance sheet from Wikipedia: "When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke
Agree completely, discussions like this should be available in open forum to all members/lurkers/everyone.
“The most dangerous man to any government is the man who is able to think things out... without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, intolerable.” ~ H. L. Mencken
And, as the use of debt increased, the American standard of living rose with it.
...
a dollar borrowed today necessitates that a dollar plus interest be repaid in the future. This reduces the amount of money available for future spending.
#2. To: Pinguinite (#1)
Arguably in some cases, like a home mortgage, debt can be beneficial as one is not losing money to rent payments but instead retaining some in the home equity.
#3. To: BTP Holdings (#2)
(Edited)
#4. To: BTP Holdings (#0)
How does it impact the future and the economy?
Printing money promotes inflation, it's a stealth tax. The gov gets money to waste which they pass out in contracts, and the polls get their kickbacks/campaign donations. You used to be able to buy something with a penny, but not anymore.
"We (government) need to do a lot less, a lot sooner" ~Ron Paul
#5. To: Pinguinite (#3)
(Edited)
Yes, but loans are possible with or without FRB, so the ability to loan money is itself, and the debt it creates, is not directly related to FRB.
#6. To: hondo68 (#4)
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