What Would Happen If We Had $0 Debt As a Country?

Discussion in 'Politics, Religion, Social Issues' started by bobber205, Jun 1, 2009.

  1. bobber205 macrumors 68020

    bobber205

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    #1
    I know the only way to reduce our nation's debt is to reduce spending and increase revenue.

    Let's say "that happened". What benefits would be gained by cutting the debt by say 80 or 90%? Or 100%?

    I'm not asking this to start a fight but I am generally ignorant on what a small amount of debt does for a nation versus a medium or large amount of debt.
     
  2. Ugg macrumors 68000

    Ugg

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    #2
    After the US Revolution, the guy on the $20 bill (Alexander Hamilton) pushed to take over the debt of the individual states in exchange for more federal power. By doing so, he helped strengthen the federal government.

    My point being that a federal debt has value by strengthening the ties that bind. If we had no debt, what price would we pay? Would there be enough "glue" to keep the fractious fifty together? Debt isn't merely a matter of money.

    Economically, it makes no sense to have a pay as you go economy. Some debt is necessary. There are very few small businesses that are self financed. Large corporations out of necessity must have debt. Any CEO that suggested a no debt expansion would be put in the loony bin.
     
  3. OutThere macrumors 603

    OutThere

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    #3
    There was a bit of concern towards the end of the Clinton presidency—when the country was running large surpluses—about what would happen if the debt was eliminated entirely, rendering government bonds (one of the most secure investments) unnecessary....clearly this hasn't been a problem. :p
     
  4. Sun Baked macrumors G5

    Sun Baked

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    #4
    Let's see, that would be the day after the court lets the US out of bankruptcy court and the Chinese are boxing up the Statue of Liberty and are re-painting the White House a vibrant color with a new blue tile roof so they can turn it into a hotel.
     
  5. CorvusCamenarum macrumors 65816

    CorvusCamenarum

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    Probably not much. The dollar would regain some lost credibility, and then the following three things would happen in no particular order:

    1) The tax & spend crowd would try their damnedest to crank up their spending.
    2) The borrow & spend crowd would try their damnedest to crank up their spending.
    3) No one in Washington would learn a bloody thing.

    When did Alexander Hamilton get Andrew Jackson's face? And his name for that matter.
     
  6. KingYaba macrumors 68040

    KingYaba

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    A slight error on his part. I've mixed names before, too.
     
  7. Wotan31 macrumors 6502

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    #7
    Not gonna happen. The US is *the most* in debt nation in the world.

    The problem with too much debt, is your ability to repay it. It's the same as you or I with a credit card. Max out your credit cards, start barely making the minimum payments, and you'll see your credit rating drop. Same thing.

    And Obama's solution? Increase that debt to $1.9 Trillion with his "bail out" plan. Brilliant. :rolleyes: In his first 100 days in office, Obama has increased the national debt by more than every prior US President - combined.

    Then you know how he's gonna "fix" that debt problem? Simple! Print more money. Yes, it's that simple. But that has the unfortunate side effect of sending inflation through the roof, making all the hardworking people with 401k's, watch the value of their retirement shrink into nothing, while also sending product prices through the roof. $20 can of soda? $200 for a pair of underwear at Wal-Mart? It'll happen sooner than you think.

    And oh BTW, lets increase ******** gov't handouts and social problems through the literally hundreds of earmaks that were added to the bailout bill. The exact same earmarks that Obama pledged to eliminate as part of his Campaign promise.

    I say Impeach the fool before he does any more damage.

    Does that answer your question? ;)
     
  8. mactastic macrumors 68040

    mactastic

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    #8
    Yup, inflation seems to be raging right now.

    And it's pretty hollow to hear people complaining that inflation will destroy the value of a 401k... when conservative fiscal policy has destroyed more 401k value than inflation ever will.
     
  9. bobber205 thread starter macrumors 68020

    bobber205

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    #9
    What do you suggest we should have done? Just take the depression like a man? Should we raise taxes in a few years to pay this debt off? What would YOU have done? Almost all economists said we had to spend a ton to avoid a disaster.

    Of course you can argue that we shouldn't have spent as *much*. But then there'd be someone like you criticizing you that your amount is still too much.
     
  10. Peace macrumors P6

    Peace

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    #10
    Do what old Israel used to do. Every seven years forget all debt.
     
  11. OutThere macrumors 603

    OutThere

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    #11
    CPI has fallen quite dramatically, reflecting some deflation associated with the recession. Oops.
     
  12. Desertrat macrumors newbie

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    #12
    Sorry, mac, but conservative fiscal policy did not cause the subprime loans and the resultant rise of derivatives and CDOs and all that idiocy which led to the stock market crash.

    The more the national debt, the more tax money goes to paying the interest. The Obama/Congress proposed budgets and commitments are heading us toward an interest payment of some $500 to $600 billion per year.

    Were the US to have zero national debt, the dollar would likely be so strong that our exports would be far less competitive in world markets. We would somehow be forced into other, more economically competitive endeavors to remain debt-free. There would be an impetus to import cheap goods and our balance of payments would remain negative.

    It's sort of a "We're all in it, together" deal. Other countries need to be debt-free in order that there be some parity among currencies and buying power.

    'Rat
     
  13. themoonisdown09 macrumors 601

    themoonisdown09

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    #13
    We'd just wind up putting ourselves back into debt in no time, so it really wouldn't matter.
     
  14. Wotan31 macrumors 6502

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    #14
    Good grief. they haven't started printing money to pay off the debts yet! Inflation will happen in 5+ years if the Obama "solution" comes to fruition. Are you two really that out of touch of economics?? Or did you just not read my post?
    LMAO because you want it to be, does not make it fact. Site a source, or go back to sleep mactastic.
     
  15. yg17 macrumors G5

    yg17

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    #15
    Calling for Bush's impeachment when he was screwing up this country and spending billions of dollars on an illegal war was considered un-American and unpatriotic by the wingnuts. Now Obama's trying to clean up Bush's mess and all the wingnuts start calling for impeachment. You're un-American and unpatriotic. :rolleyes:
     
  16. mactastic macrumors 68040

    mactastic

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    #16
    Deregulation of the markets, Graham-Leach-Bliley style, and Enron loophole style are foundations of the conservative philosophy; thus conservative fiscal policy was at the heart of this fiscal collapse. Conservatives have been fighting since the 1940s to get Glass-Steagal repealed. They were successful in 1998, and within 10 years managed to create the conditions for this situation.

    So then why don't you give Obama 5 years to fix the problem before you go around with your unhinged cries to "impeach the fool"?

    Oh, right. Because you hate the man.

    LMAO see above, or go back to your right-wing parallel universe Wotan.
     
  17. apunkrockmonk macrumors 6502a

    apunkrockmonk

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    #17
    We have a fiat currency...

    If there is no national debt than we as a country have no money.

    At least that is how I understand it.
     
  18. Dmac77 macrumors 68020

    Dmac77

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    #18
    This recession is nothing like the depression. It's much more similar to the early 1980's recession.

    Don
     
  19. gotzero macrumors 68040

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    #19
    This is always a fun chart to trot out at these times.

    There were some artifacts of the Clinton era that are responsible for some of the problems, but regardless of your political affiliation, it is hard to blame anyone but W for the runup to and aftermath of the banking crisis.

    It is even better with 07-08.
     

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  20. OutThere macrumors 603

    OutThere

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    #20
    Whoa there...extended bubble followed by panic, spike in unemployment, effects felt internationally. I certainly wouldn't say it's nothing like the great depression...it could have been quite similar, however today we have lots of controls in place to keep those kinds of panics in check.
     
  21. mactastic macrumors 68040

    mactastic

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    #21
    Did the unbiased reporters at FoxNews tell you that, or did you come to that conclusion independently via your own research or life experience?
     
  22. Dmac77 macrumors 68020

    Dmac77

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    #22
    And we certainly didn't ned to spend the kind of money that we did. The stimulus was just a way for pork barrel projects to get passed en masse.

    Don
     
  23. OutThere macrumors 603

    OutThere

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    #23
    And what would you have proposed? That we sit back, crack a bottle and let it mellow?
     
  24. CalBoy macrumors 604

    CalBoy

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    #24
    I hate to burst your bubble, but that's not how it works.

    If we were to have no debt perpetually, then some interesting things would happen. If we assume that the government runs no deficit and no surplus after the debt is wiped out, then the supply of "safe" investment vehicles will decline considerably because government bonds form the bulk of such safe investments. From an economic point of view, little else would happen.

    If the government continued to run a surplus, then things get interesting. The surplus is in essence the government removing money from the economy because it is taxing but not spending. As a result, the economy will not grow as quickly as it could if the government's surplus was spent or if the tax rate was lower. However, a surplus is not always a bad thing. Surpluses during good economic times help to curb inflation and provide a safety fund for when the economy sours. This is one reason why unemployment insurance should be expanded; the more money you take out for unemployment services, the better you fight inflation during good times and the more money you have for unemployment insurance during bad times.
     
  25. Dr.Gargoyle macrumors 65816

    Dr.Gargoyle

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    #25
    Q:What Would Happen If We Had $0 Debt As a Country?
    A: Another Bush in the White House... You just don't learn.
     

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