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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Sunny Jim who wrote (44838)	11/5/2005 10:57:33 PM
From: mishedlo	Read Replies (3) \| Respond to of 110194

One could make the argument that we are already there at the Federal level. The interest on the debt is $352 billion for 2005, which is about the amount of the deficit. In other words, the Federal budget is not able to cover the interest payments on the debt. Granted, the Bush administration would like us to believe that it is a temporary problem and that they will cut the deficit in half, but the fact is, at the present time, we are unable to cover interest on the debt. Period! Under any circumstances, we're a lonnng way from paying down any debt, and the FORCE is not with us. One can make an argument that the federal level does not matter, or it's time to matter is not nearly close if it does. Japan went from being a creditor to having a federal deficit of 150-250% of GDP depending on who you believe. Did it matter? The US will not matter until it does and we are a mere 75% of GDP (if you believe the GDP numbers whisch of course is another story). In short, the US in conjunction with Japan China and Europe can all agree to do something (aka ignore) public debt and loans. The US consumer is another story. Consumers owe "real fiat money" as opposed to "fake fiat money" to each other and to small businesses and to banks. Sheesh what a concept (real fiat money vs fake fiat money). At any rate, governments can do whatever they want as long as consumers do not bring the banks down by defaulting. The FED will never default. Consumers can and will default. It is consumer debt that is the biggest problem not federal debt. Mish