Debt Is (Mostly) Money We Owe to Ourselves

[Tansy_Gold]

3. Well, that's pretty much what I meant

If the ones who borrowed it were the ones paying it back, that would be one thing.

I mean, what is "government debt" really? What are "government securities"?

Again, I have no formal education in this at all, so I'm going by what makes logical sense to me, and that could be totally wrong.

But suppose I go out and buy a "Savings Bond." That's a "government security" isn't it?? And what it really is is a loan to the government that they will repay at a specificed time with a specified amount of interest. If I demand they pay back the loan early, they pay me less interest. That bond is, in effect, a loan I made to the government, which in turn is a debt the government owes to me.

But the government isn't in the business of making money. (Printing it? Yes. Making it? No.)

The government only obtains money by taking it away from those who earn it, through taxes, fines, fees for services (postage, passports, use of public lands, visiting national parks, etc.).

The only reason the government would even have to borrow money from someone else -- someone who has the money to lend in the first place -- is if the government is spending more than it's taking in in revenue. And since its only sources of revenue are the taxpayers and users of government property and services -- uh, that would be us, folks, and our children and grandchildren -- then the repayment of the debt WITH INTEREST will fall to us, and we aren't paying ourselves back at all.

Now, it seems to me that all this does is put more and more burden of debt on the taxpayers, but more and more $$$ in the hands of those who already have plenty of $$$. And since the bankers, etc., aren't getting taxed at the same RATE as the rest of us, they're getting a much better deal. They earn income from the interest on the loans PLUS they pay less in taxes on that income.

Obviously this is all very simplified, and I've probably made a lot of errors, but what it boils down to is this whole business of the national debt is actually a way for the haves to get more and more and more of what they already have too much of.

So, by moving manufacturing jobs to China, the corporations make more money, China gets to lend money back to the US and make more money off the American taxpayer, tax revenues go down, the government has to borrow more, the lenders make more in interest, etc., etc., etc.


Does that all mean that a stock market crash (a big, serious one, not the kind that last for a day or so) and resulting deflation would be catastrophic for the American economy? Would that put the US on the same financial footing as Greece? Would the best solution in that kind of scenario be default? If there's no default, would the entire population become slaves to the creditors? Is that what's happening in Greece right now? And Italy? And Spain?

Or did I get something wrong?


TG, who is flying blind because 1.) she really doesn't know a thing about economics and 2.) she hasn't put her contacts in yet this morning, so forgive the typos!