The deficit imposes a net burden on future generations. This was a major theme of Ross Perot when he was running for the Presidency in 1992. There is some truth to this statement, but not much. This statement conjures up an image that the younger generation(s) has this huge tax bill hanging over their heads which must be paid off entirely. But countries never die (or at least they never plan on dying). Therefore, there is no reason why our children and their children’s children cannot keep passing on the debt forever. In fact, so long as the economy continues to grow, future generations can continue to pass on ever-larger debts. Simarlarly, if I lived forever, I would never have to pay off my credit card debt entirely – just service the monthly interest payments.

Moreover, payers and recipients of the debt are both primarily U.S. citizens, so income is simply redistributed from one group to another. Suppose Ross Perot was elected President and decided to pay off the national debt once and for all over a period of say, 5 years. How would he do it? He would have to raise taxes and cut spending so that we ran significant surpluses (on the order of $1 trillion per year). The government would then take the funds directly from the tax payers and indirectly from the citizens who lose the benefits they used to receive from government services, and pay off the bond holders. Does the money leave the country? No. It is simply transferred from all tax payers to the bond holders. In fact, many bond holders may find that the value of their bonds were offset by the higher taxes and/or lower level of government services.

There is one case where the net burden argment may hold some weight. Right now, about 15% of US debt is held by foreign investors. To the extent that future generations must pay off this debt, and the income leaves the country, future generations are burdened with the current generation’s run-up in debt. Fortunately for the US, the foreign-owned portion of the debt is still fairly small.

The national debt will bankrupt the nation. Huge debts have bankrupted some nations, but we are far from that scenario. The main difference is that most of our debt is internally owned. Also, the government never has to pay the entire debt off at one time since the government never “dies.” Furthermore, the government has an enormous power to raise revenue via taxation.

How can other countries compete against a country that does not charge interest to use it’s money? Another country? North Korea.

a solution:
Banking :
http://www.youtube.com/watch?v=nNumEm2NzQA

Clowns: S.S. is what we paid in, it is a “Trust Fund” and buddy, keep your ******* hands off my money.

“Debt”, it was you “top 25% income earners” that got 90% of the tax cuts…now you whine after accepting it and putting us in a $12 trillion hole because of it (lost revenue since it was enacted, geniuses.)

Poor widdle reddog….poor widdle puppy.

And there´s another problem, quite known in the UK: the quality of the debt. Most of US debt is structural, and therefore cannot be simply eliminated.

The most important factor that holds the US together in economic terms is this: it controls dollar emissions. Since the dollar is globally accepted as an exchangeable currency, it can get heavily indebted, because it can print the money to pay the bills!

Surely the US is heading towards a very rough way, but the rest of the world is not free from some bumps along the path too. Maybe there is some karma in this world after all (as a consequence of leading USSR to bankruptcy…).