Elizabeth Barrette (ysabetwordsmith) wrote,
Elizabeth Barrette
ysabetwordsmith
  • Mood: busy

Who Holds the American Debt

Anyone you owe money to has power over you. America owes money to a lot of other countries, many of whom don't like us very much. This is not good. Here is an image of "who holds the American debt."
Tags: economics, news, politics
Subscribe

  • Fieldhaven as Habitat

    If you follow my posts on gardening, birdfeeding, and photos, then you know that I garden for wildlife. Looking at the YardMap parameters, here…

  • A Little Slice of Terramagne: YardMap

    Sadly the main program is dormant, but the YardMap concept is awesome, and many of its informative articles remain. YardMap was a citizen science…

  • Goldenrod Gall Contents

    Apparently all kinds of things go on inside goldenrod galls, beyond the caterpillars who make them. Fascinating. I've seen the galls but haven't…

  • Post a new comment

    Error

    switch
    default userpic

    Your IP address will be recorded 

    When you submit the form an invisible reCAPTCHA check will be performed.
    You must follow the Privacy Policy and Google Terms of use.
    Help
  • 4 comments
xiphias

xiphias

September 15 2009, 20:22:30 UTC 11 years ago

It depends.

If you owe someone a whole heck of a lot of money -- then YOU have power over THEM. To a certain extent.

My father taught me, "If you owe someone a thousand dollars, they have power over you. But if you owe someone ten million dollars, you have power over them."

At a certain point, the person who holds the debt has a vested interest in working for the success of the person who is in debt. And our relationship with China has an element of that -- China dares not completely trash our economy, which they probably could, because we owe them so much money that it's not in their best interest to do so.
ysabetwordsmith

Hmm...

ysabetwordsmith

September 15 2009, 20:36:26 UTC 11 years ago

That's an interesting point. It may hold true if you owe someone more than they can afford to lose, so that you're entangled and neither can get free.

One problem is that, beyond a certain point, debt becomes largely meaningless because it cannot be repaid -- particularly if the interest causes it to grow beyond all hope of earning enough to pay it off. People will break themselves trying to repay a debt that is almost within their reach. But if it's obviously too much, they will often shrug and say, "Screw it. There is no way to pay this off, so I'm not going to waste my effort trying." That applies to nations as well as individuals; plenty of countries have defaulted on loans. I expect America to do that eventually, as absurd as the national debt has grown.
xiphias

Re: Hmm...

xiphias

September 15 2009, 20:49:41 UTC 11 years ago

That's just the entaglement you're talking about. We continue to pay the interest on our debt, which is a MAJOR source of revenue for China.

If we default -- it causes a level of disaster which, while not unprecidented certainly hasn't happened in the past few centuries. If the US defaults on loans, it changes EVERYTHING.

It changes everything to such an absurd degree that it's not even worth worrying about. If the US defaults on its loans, basically, society shakes up in almost unpredictible ways. My way of dealing with it would be to be good friends with my neighbors, have a hunting rifle, be a generally nice guy, and be a member of a local CSA (community supported agriculture, not Confederate States of America). There would still be as much FOOD as before, as much fuel, as many trucks and trains and people to load and run them, but the economic collapse would be so shocking that it would take a few days, even weeks, to get everything moving. The United States would certainly survive as a country, and I suspect that most of us would come through it just fine -- but our days as a world power would be over, our Federal government's ability to fund useful programs would be severely hampered, and money itself would be vastly, vastly devalued.

Basically, if the United States defaults on any of its loans, money breaks. The United States' money breaks, and any other country which is dependent on US dollars' money also breaks.

There are people who are hoarding Euros for this purpose. Not me; I don't have enough cash to make it worthwhile -- and I don't think it's likely to happen.
christinaathena

christinaathena

September 15 2009, 22:26:25 UTC 11 years ago

That's a good point about China. Especially considering that so much of the debt they hold is in US dollars, so if the US economy were to go downhill, the dollar would crash, and the value of their holdings would crash, so that even if they did eventually get the money paid back, it would be worth far less than it was previously.