This is a vast misrepresentation. National debt is literally bank loans the government has taken out and promissory notes like Treasury bonds. They owe investors, banks, and individuals money - only 1/5th of the national debt is held by intergovernment bodies (meaning money the government has loaned itself and ‘owes themselves’). 80%+ of the debt is owed to non-internal groups. Even the self-owed debt must be repaid, or the government would be defaulting on a loan from one department to pay the other - robbing Peter to pay Paul.
Yes but the banks are a part of the US Financial System and Governance. For better or worse, the Federal Reserve System is tiered in a way that each private bank adheres to their regional reserve bank, of which there are 12 total, which adheres to the US federal reserve board. The private banks can also elect representatives to the board of their own regional reserve bank, while the federal reserve board members are appointed by presidents.
That’s not even mentioning the FOMC.
But the debt is still of the USA to the USA at the end of the day. If third parties like China or Russia buy bonds from those of the USA who hold the value in the form of promissory then that’s fine but they have no power to enforce a payout in case of a “default”. The notes just lose a little value, to the holder’s detriment.
Your whole first paragraph is irrelevant. The banks that the US owes are part of the US banking system. Ok so?
This is another misrepresentation. You think it’s no big deal if treasury bills “lose a little value”?
If treasury bills lose value, that will begin a mass sell-off, which will cause the US dollar value to plummet. If there was a default, the US would lose its credit rating and not be able to get future loans. That would grind your government and industries to a halt.
Back on the initial point, foreign counties currently own almost a third of the US national debt, it is not “debt of the USA to the USA” - many of the additonal institutions (beyond the 1/3rd) that hold the debt (banks and investment groups) are also either foreign or international and not headquartered in the US.
In summary, the national debt is loans owed to many groups, a very large portion of which are foreign to the US. “They aren’t actually borrowing from anybody” is wildly inaccurate.
Lmfao yeah ok pal, the banks are going to start denying the federal government loans. Yeah right. I bet the Fed won’t even use their authority to set bank interest rates as a response, will they? Or maybe all the banks will just stop giving out all loans forever? What a crock of shit.
How on earth would the federal reserve adjusting interest rates improve the US’s situation if they were defaulting on loans? For starters, big loans like the ones the govt borrow are generally are not variable interest, they’re fixed rate. Second treasury bills have guaranteed maturity rates based on their yield, that’s why they’re generally considered a safe investment - again, the fed adjusting rates would do what? Zip. Except maybe make groups panic sell their bonds out of increased concerns of US stability.
The US was already downgraded by all the major credit rating firms, in 2011 and the most recent downgrade was May this year - they mostly came on the heels of debt ceiling raises by congress. Its not likely to happen anytime soon, but yes - if the US’ credit rating dips further, bankers and investors will not want to buy US treasury bonds. This has already affected the interest rate the US govt must pay on loans (increased them). Eventually if it gets low enough, the government will not be able to secure loans because the banks will consider them too risky, that’s how the banking system works. Somehow you seem to think the US govt runs the banks, or owns them? It don’t. It must pay back every cent it borrows, or the financial system of the US will circle the drain - just ask Greece, or Spain… Or… https://en.wikipedia.org/wiki/List_of_sovereign_debt_crises
This is a vast misrepresentation. National debt is literally bank loans the government has taken out and promissory notes like Treasury bonds. They owe investors, banks, and individuals money - only 1/5th of the national debt is held by intergovernment bodies (meaning money the government has loaned itself and ‘owes themselves’). 80%+ of the debt is owed to non-internal groups. Even the self-owed debt must be repaid, or the government would be defaulting on a loan from one department to pay the other - robbing Peter to pay Paul.
https://www.marketplace.org/story/2023/05/26/who-does-the-u-s-owe-31-4-trillion
Yes but the banks are a part of the US Financial System and Governance. For better or worse, the Federal Reserve System is tiered in a way that each private bank adheres to their regional reserve bank, of which there are 12 total, which adheres to the US federal reserve board. The private banks can also elect representatives to the board of their own regional reserve bank, while the federal reserve board members are appointed by presidents.
That’s not even mentioning the FOMC.
But the debt is still of the USA to the USA at the end of the day. If third parties like China or Russia buy bonds from those of the USA who hold the value in the form of promissory then that’s fine but they have no power to enforce a payout in case of a “default”. The notes just lose a little value, to the holder’s detriment.
Your whole first paragraph is irrelevant. The banks that the US owes are part of the US banking system. Ok so?
This is another misrepresentation. You think it’s no big deal if treasury bills “lose a little value”?
If treasury bills lose value, that will begin a mass sell-off, which will cause the US dollar value to plummet. If there was a default, the US would lose its credit rating and not be able to get future loans. That would grind your government and industries to a halt.
Back on the initial point, foreign counties currently own almost a third of the US national debt, it is not “debt of the USA to the USA” - many of the additonal institutions (beyond the 1/3rd) that hold the debt (banks and investment groups) are also either foreign or international and not headquartered in the US.
In summary, the national debt is loans owed to many groups, a very large portion of which are foreign to the US. “They aren’t actually borrowing from anybody” is wildly inaccurate.
https://en.wikipedia.org/wiki/National_debt_of_the_United_States#Holders_of_debt
Lmfao yeah ok pal, the banks are going to start denying the federal government loans. Yeah right. I bet the Fed won’t even use their authority to set bank interest rates as a response, will they? Or maybe all the banks will just stop giving out all loans forever? What a crock of shit.
How on earth would the federal reserve adjusting interest rates improve the US’s situation if they were defaulting on loans? For starters, big loans like the ones the govt borrow are generally are not variable interest, they’re fixed rate. Second treasury bills have guaranteed maturity rates based on their yield, that’s why they’re generally considered a safe investment - again, the fed adjusting rates would do what? Zip. Except maybe make groups panic sell their bonds out of increased concerns of US stability.
The US was already downgraded by all the major credit rating firms, in 2011 and the most recent downgrade was May this year - they mostly came on the heels of debt ceiling raises by congress. Its not likely to happen anytime soon, but yes - if the US’ credit rating dips further, bankers and investors will not want to buy US treasury bonds. This has already affected the interest rate the US govt must pay on loans (increased them). Eventually if it gets low enough, the government will not be able to secure loans because the banks will consider them too risky, that’s how the banking system works. Somehow you seem to think the US govt runs the banks, or owns them? It don’t. It must pay back every cent it borrows, or the financial system of the US will circle the drain - just ask Greece, or Spain… Or… https://en.wikipedia.org/wiki/List_of_sovereign_debt_crises
Lol bro doesn’t get it