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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (490964)	11/11/2003 4:34:19 PM
From: Wayners	Read Replies (1) \| Respond to of 769670

The bond marke would be toast like you said with incredibly high interest rates. Most treasury bonds are not indexed for inflation, so the treasury bond holders will be out a lot of money based on devalued dollars. But some bonds are indexed for inflation. Domestic holders of treasuries would riot, which is a lot of Americans. Savings and Checking and retirement accounts could be wiped out with worthless paper. Hmmm sounds a lot like the early 30s in Germany. Political, social and economic unrest could follow. There would be a lot of really angry people. The teetering edge is based on how much of the revenue is used to service the debt. Isn't it around 30% now including social security liabilities? If I make $75000 a year and paid $22,500 to credit companies per year in interest and no principle, I am not in good financial shape but not near bankruptcy yet. The teetering edge is when you can't borrow any more money (sell bonds), and you don't have quite enough revenue coming in to make the interest payments and also provide some basic semblance of Govt services. What could cause the fall over the teetering edge? A downturn in the economy reducing tax revenues signifcantly, inability to sell enough in bonds to expand the debt further, or as the debt increases and interest rates rising the debt goes exponential and even if you took the entire tax revenue its not enough to service the intereswt payment alone.