The national debt is the largest national security threat!

[Freiwillige]

Or so they say here.

http://www.defense.gov/news/newsarticle.aspx?id=60621


Well it isn't like we didn't see this coming, Politicians pass the buck tell we are all...........

[Fish In The Water]

It may well be true, but the date on the story is August 27, 2010.

Just saying, it'd be nice to get something a little more up-to-date.

[TLAM Strike]

What is China going to do? Corner us in a alley and bust our kneecaps for not paying up?

[Bakkels]

"We'll make you an offel you can't lefuse!"

[GoldenRivet]

the national financial position is the greatest threat to national security.

eventually - any way you slice it - the Unites States government WILL be doing more or less exactly what the USSR did in 1991.

[Molon Labe]

http://smallwarsjournal.com/blog/201...-of-austerity/

The long war against extremism has cost us well over $2T in direct costs alone and the interest compounds daily. Meanwhile the country’s demographic aging, rising health care costs, and insatiable appetite for entitlements has placed our great Nation’s balance sheet deep in the red. A culture of entitlement over sacrifice and shared obligation has eroded our stature as a great power and our moral standing. A decade of continued economic pressure, unemployment above 12%, coupled with a determined resistance on the part of the nation’s elected officials to come to any serious resolution of the country’s fiscal crisis has brought us to the point of peril.

Worth reading the whole thing.

@TLAM it doesn't matter if they make us pay, what matters is that we won't be able to afford anything and we won't be able to get loans to fill the gap (because they know we can't pay).

[Castout]

Originally Posted by TLAM Strike

What is China going to do? Corner us in a alley and bust our kneecaps for not paying up?

Nah Mr. Hu Jintao only needed to cough a weird cough and every US official in the room would straighten up their posture and quite a number of them would get nervous.


Nightmarish? You bet!

[Torplexed]

Originally Posted by TLAM Strike

What is China going to do? Corner us in a alley and bust our kneecaps for not paying up?

The US debt is generally in paper like Treasury bonds, bills and notes. Bondholders can't suddenly demand payment on bonds. Since bonds are for a fixed term there's no means by which to extract payment prior to the bonds maturation date. The US government pledged no physical assets when these bonds were sold to foreign parties. All T-Bond holders are unsecured creditors. If the US continues to do well economically, the bondholders get repaid with interest. If the US economy falters, the bondholders get stuck with the consequences.

What China COULD do in lieu of kneecapping, is refuse to buy any more paper. Should the US government make a T-bond offer and not all bonds are purchased, then guess what? The budget deficits cannot be financed, and the government runs out of money. Meaning, no more checks sent out to any government workers, any government contractors, no military personnel, no nothing. And no emergency midnight spending bill in Congress is going to make any difference, Congress can authorize additional deficits all they want, but if the investors don't buy the bonds, then the government has no cash to operate.

Another danger is not of “foreclosure” by foreign bondholders (for which no legal venue exists) but of total collapse of the US Dollar. That would immediately erase trillions of dollars of foreign equity (since T-bonds are redeemable only in US Dollars, not UK Pounds, Yen, Euros, or gold bullion).

[mookiemookie]

Originally Posted by Takeda Shingen

I'd say that in the microcosm of recent history, our dependence on oil has been the greatest threat to our national security. It requires us to do business with those that hate us, and also requires that we spend obscene amounts of money in insuring that we are able to mobilize to protect our interests from those very same people.

Spot on. I agree 100%.

Originally Posted by Torplexed

The US debt is generally in paper like Treasury bonds, bills and notes. Bondholders can't suddenly demand payment on bonds. Since bonds are for a fixed term there's no means by which to extract payment prior to the bonds maturation date. The US government pledged no physical assets when these bonds were sold to foreign parties. All T-Bond holders are unsecured creditors. If the US continues to do well economically, the bondholders get repaid with interest. If the US economy falters, the bondholders get stuck with the consequences.

What China COULD do in lieu of kneecapping, is refuse to buy any more paper. Should the US government make a T-bond offer and not all bonds are purchased, then guess what? The budget deficits cannot be financed, and the government runs out of money. Meaning, no more checks sent out to any government workers, any government contractors, no military personnel, no nothing. And no emergency midnight spending bill in Congress is going to make any difference, Congress can authorize additional deficits all they want, but if the investors don't buy the bonds, then the government has no cash to operate.

Another danger is not of “foreclosure” by foreign bondholders (for which no legal venue exists) but of total collapse of the US Dollar. That would immediately erase trillions of dollars of foreign equity (since T-bonds are redeemable only in US Dollars, not UK Pounds, Yen, Euros, or gold bullion).

Spot on as well. What people fail to realize is that our relationship with China is symbiotic - we need them to buy our debt just as much as they need us to buy their manufactured goods. The United States is the largest consumer market in the world, and they have a vested interest in keeping us solvent and keeping our economy healthy.

For a little perspective: China owns less than 10% of outstanding US Treasury debt. US Individuals and institutions own around 42%.

[onelifecrisis]

The US national debt may be the largest by total, but as a percentage of your GDP it's about average, so don't panic.