1 trillion dept. owed to China

[tanya]

Anybody know why we borrowed 1 trillion from China? 

What is the interst rate on that bill? 

Shouldn't we be paying that debt down instead of bailing out corrupt banks and insurance co's and mutual funds? 

If we paid all the stimulas/bailout money on that loan what would our interest savings be? 

Would it be enough to THEN start with a stimulas package? 

I can't see us pulling out of a recession with a trillion dollar debt hanging over our heads.  I am almost afraid to ask but how much money do we owe the rest of the world and where the hell has it all gone? 

The GAO better get a bunch more auditors and find OUT!!! 

I know in our state the gov. claims the DSHS budget is to big to audit HAHAHA The GAO should let them know if they can't get a proper audit the feds will!!!  I suspect drugs and money laundering, and in a big way!!!  Because it sure isn't going to the people who need it and as for the 176 million additional funds they say they need for the aging and special needs adults?  FIRST let's find out where the money already alloted is going SHALL we? 

[Squirl]

$1,000,000,000,000 is a light figure.  That just sounds like the U.S. Government's debt.  It is not as bad when you put it in perspective that we have 10 trillion dollars of debt so that is only 10%.  The problem is that we have been running a trade deficit of 300 billion for the past 10 years.  The only way we have been able to keep this up without devaluing our currency is by them pumping their dollars back into U.S. investments.  Where do you think the money came from for the housing boom?  From them, the Saudis and everyone else we have been sending dollars for years.  Also read the news articles from the time when the major investment banks started to fail. Who bought the stock?  The actual American debt to China is triple that or more, but it is personal debt, not government debt.   Every time we pay down our credit cards, pay down mortgages, buy actual American product, or use less oil we pay down our debt to these countries.

We have had the national debt rising this much for the past 5 years.  We are at war in two countries.  Wars cost money.  Wars take sacrifice.

[Pox Eclipse]

Shouldn't we be paying that debt down instead of bailing out corrupt banks and insurance co's and mutual funds? 

If we paid all the stimulas/bailout money on that loan what would our interest savings be? 

Would it be enough to THEN start with a stimulas package? 

You cannot pay down the national debt with the bailout money, because the bailout money is being borrowed also.  So paying the chinese instead of the banks will not reduce the debt, because the money is all being borrowed.

[Windpower]

I highly recomend this book if you are interested in how the 'system' works

Part of the debt is monetized in a sort of money laundering set up through Saudi Arabia -- They get money from the oil in return they buy US debt with a good part of hte oil money

[muldoon]

Tanya, I like your posts, but I wanted to comment on some of what you were saying. 

Anybody know why we borrowed 1 trillion from China? 

http://www.treas.gov/tic/mfh.txt which shows the holdings of US treasury debt by other countries shows we owe China 739billion.  Not quite a trillion.  We borrowed it for war mostly.  But really we borrowed it to fill the gap between what our government spends and what our government receives in taxes.  The delta between the two numbers is what we borrow. 

What is the interst rate on that bill? 

It depends on the holdings as differing durations have differing rates.  The 13 week or 3 month bond is tracked by the IRX, currently 0.23%.  The 10 year bond, tracked as the TNX trades at 2.96%.  They vary every day, they were much lower a few weeks back but have trended higher as these bailouts require more and more funding.  That said, around the middle of last week the auctions started going very well.  That gave some confidence in the market in general and money flowed from it. 

Shouldn't we be paying that debt down instead of bailing out corrupt banks and insurance co's and mutual funds? 

Money is debt, the two are interchangeable in our world today.  3 trillion in credit is worth 3 trillion in cash.  If you owe me 3 trillion, I can count that 3 trillion as an asset because it is assumed you will pay me.  Paying down debt or outright defaulting destroys money.  That is the underlying motivator to bailout and continue lending - even when corrupt.  The system has broken internally.  It broke last Fall. 

If we paid all the stimulas/bailout money on that loan what would our interest savings be? 

The stimulus is borrowed, we cant borrow to pay back the borrower.  Much like we cannot borrow and spend our way to prosperity. 

Would it be enough to THEN start with a stimulas package? 

I can't see us pulling out of a recession with a trillion dollar debt hanging over our heads.  I am almost afraid to ask but how much money do we owe the rest of the world and where the hell has it all gone? 

Well, I would say that the debt is a problem, but I don't believe it will stop us from recovery.  Our largest problem in my opinion is that as we borrow our risk of default increases.  As that happens the cost for us to borrow increases and willingness of others to do so decreases.  While we may pay 0.23% today for the short term, what would happen if the US had top pay 5%?  We would need to borrow even more to pay the debt.  Eventually it reaches the point where it is unserviceable and the US must default.  That is my concern.  Until this mess, the concept was considered impossible. 

In treasury debt, we owe 3 trillion. 

The GAO better get a bunch more auditors and find OUT!!! 

To be fair, they do know.  It's published freely and openly on government sites. 

I know in our state the gov. claims the DSHS budget is to big to audit HAHAHA The GAO should let them know if they can't get a proper audit the feds will!!!  I suspect drugs and money laundering, and in a big way!!!  Because it sure isn't going to the people who need it and as for the 176 million additional funds they say they need for the aging and special needs adults?  FIRST let's find out where the money already alloted is going SHALL we? 

Sure, let's drain the swamp and see where the dead bodies are.  I'm all for it. 

[tanya]

Ok, so to much debt appears to be the problem.  So why in the world is our govt. encouraging more credit?  Both lending and borrowing isn't that like leading US to slaughter?  What then is the answer for "We the people" Shouldn't we be taking care of each other instead of relying on the high priced poor services the govt. is providing? I have never been very good with economics so bear with me but it seems like the sooner we pay down the debt the sooner we can live free again.  Don't the Chinese require their citizens to ask govt. permission to even grow a vegetable patch? Forget the right to bear arms in China, Forget the right to trial or presumption if innocence.  I am thinking why is the US govt. putting OUR citizens in this position?  For a stupid war that we could have taken care of with better planning/strategy?  Something fishy is going on here. 

[muldoon]

Tanya,

Your asking the right questions! 

I would like to point you to two videos, to be honest I have some nitpicky details on each of them that I disagree with but overall I think they are correct.

The first is on youtube, money as debt. it is 5 parts long, and describes alot of the relationship between money and debt and credit.  It answers your question about why the government would be pushing for new debt to be created.  Pay attention to the part when they show what happens when loans default.  (I dont recall what part it's in). 
http://www.youtube.com/watch?v=vVkFb26u9g8

The second video is called the crash course, it has 20 parts.  Yes it will take some time to watch. 
http://www.chrismartenson.com/crashcourse

--
The first video makes some errors on the money creation process, both videos make the incorrect assumption that the only debt out there is from the us government, and that we are watching the usg scale the wall.  The reality is that the dollars lent via credit to the government is minimal in comparison to the consumer debt load.   The second video is also heavy on the peak oil concept, which from a scientific viewpoint is irrefutable (a finite resource cannot be used forever), however I do not believe it to be a factor in our troubles today.  (as we have close to 75 years of reserves we know about today, based on current usage numbers). 

This is a bit of a hobby, no ..  it's a passion of mine, so I'd love to have some more dialog about it if you have questions or ideas to talk about. 

[StinkerBell]

This is so easy....

WE print a trillion dollar bill and give it to China. Debt paid.

[tanya]

I will see what I can do about watching those movies.

After further thought I on this comment I wanted to respond.

"Sure, let's drain the swamp and see where the dead bodies are.  I'm all for it." 

At first I sort of took this comment in jest.  BUt after some reflection I realized that there are going to be real bodies!!!! The inept management that I have seen in this agency leaves me no doubt that indeed frail elderly and mentally ill folks do not have the  wherewithal to fight through that huge stonewall of bureacracy.  There will be many casualties brought to light and it is horrific!!! Not to mention incredibly outrageous!!!

[MountainDon]