I'm told the US is in debt for trillions of dollars, but how does that work? Who do they need to pay all this money to? How come they are still allowed to spend so much money on things like the army and Nasa? Who is going to stop them if they decide not to pay off the money?
The consequences of not paying back foregin debt will ultimately be the colapse of the economy, plus no one will lend you any money, people will become disgruntled and vote the ruling party out of office...Well that's the theory in reality if you don't pay not much happens unless you're a third world country then you have to pay every last cent ecen if you don't have enough GDP to pay for it.
It's really a catch22 for third world countries, you can't make money unless you borrow, but you spend all that money you borrow paying off th initial loan...hardly seems fair.
Money comes from the bank. The bank is privatized (or so I'm told). They charge interest on every dollar that is made. Which basically means that the only way to pay off interest is to get more money which itself has interest tagged onto IT. At the end of the day, this (endless) debt is going towards the richest who only get richer. For the record, this is what I keep hearing so for all I know, this is speculative theory.
Other countries will probably attack and the sellers will quit giving U.S. the goods. U.S. has not paid many European countries what they owe, so thats how a country is in debt.
People seem to have the misconception that governments borrow money from each other. Th government borrows money from banks. And banks will always give a loan to the government because the only way they won't get their money back is if the government is abolished. And that won't happen soon.
[QUOTE="honkyjoe"]They will just print more money and Inflation will go to extreme heights.honkyjoe
and the dollar will be worth less then toilet water
Exactely. A prime example of this was in WWII. Inflation was so high that you would need a wheelbarrow full of German Franks to buy a loaf of bread.
You must be refering to the Weimar Republic era. Nazi Germany's economy did much much better. And actually, during the Weimar Republic era, money was so worthless you were better off burning it.
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