Debt, Debt, Debt.
Out of context: Reply #15
- Started
- Last post
- 56 Responses
- formed0
The money has been spent, on food, on wars, on salaries, on pensions, on roads, on bridges....it has been "spent" to keep people employed, fed, armed, etc.
If you borrow $1mill from the bank to build a house, the money goes to all those carpenters, construction crews, loan officers, etc. If you default, the bank gets screwed and anyone trying to get a loan later on won't be able to, which screws those carpenters out of work, which will starve their little babies.
Same thing, just a bigger scale. Our "bank" is primarily China. If we were to "default", it would send the world into chaos, which would ruin the financial world in a millisecond. They buy our debt because it is a "safe" investment, just like if you bought a local bond. If the local bond issuer were to 'default', that would make their credit worthless, which would make it impossible to do anything in the future (think everything from bridges to stadiums).
The world would stop buying our debt, just like if a bank couldn't sell their debt, it would stop the big money wheel and we'd end up stagnating everything and anything (the world moves on credit and debt, without it everything from your supermarket to Microsoft to Halliburton would die)That will not happen. Regardless of what the R's are threatening, it will not happen (and everyone knows it).