Understanding Americas debt

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Understanding Americas debt

Rich Hupper
Broker / Investor 路 Tewksbury, MA 路 Member since 2008 路 1k+ posts 路 351 votes

Can someone explain to me what exactly would happen if America defaults on its debt?

If America has never defaulted in the past can you give me an example of another country that has defaulted and what happened to them afterwards.

Who owns the debt?

What happens to the average middleclass worker? Not able to withdraw money from the bank? 401k losses value?

I wish this stuff was taught in school so people could understand it better and make better choices in who represents them.

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant 路 San Diego / Phoenix 路 Member since 2021 路 12k+ posts 路 15k+ votes
    2y

    Good topic. Yes we should teach this to the kids. My son just got married to a German young lady and they teach it over there....her spending/saving habits are incredible.

    Re your questions, I'm far from an economist but from what I hear discussed, the real worry is having this situation get so bad that we are no longer used as the world's reserve currency. (Interesting story of how that happened, involving WWII).

    Looks like China and Japan own a trillion each of our debt, but we own theirs too, so who knows....let's see what the money guys say.

    Thanks for starting out my day with the knowledge that I (as a taxpayer) am $266,000 in debt...that makes my day 馃槀

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  • Rich Hupper
    OP
    Broker / Investor 路 Tewksbury, MA 路 Member since 2008 路 1k+ posts 路 351 votes
    2y

    I am in debt with mostly good debt, a little bit of credit card debt. If I miss one payment I would lose my 800 fico score.  I am assuming something similar would happen to Americas credit rating? 

    If we miss a payment do these other countries penalize us in someway? Because so few people care about this debt it appears that there is no real penalty for a default?

    Is there a relationship between debt and the fiat? 

    If everyone was educated in this I think people would make drastically different decisions in almost all aspects of life. 

    All I know is that as a real estate investor there is good and bad debt, and debt that debt that continues to grow like the US debt clock shows cannot be a good thing. This is like a reverse mortgage on steriods.

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  • Rich Hupper
    OP
    Broker / Investor 路 Tewksbury, MA 路 Member since 2008 路 1k+ posts 路 351 votes
    2y
    Quote from @Bruce Woodruff:

    Good topic. Yes we should teach this to the kids. My son just got married to a German young lady and they teach it over there....her spending/saving habits are incredible.

    Re your questions, I'm far from an economist but from what I hear discussed, the real worry is having this situation get so bad that we are no longer used as the world's reserve currency. (Interesting story of how that happened, involving WWII).

    Looks like China and Japan own a trillion each of our debt, but we own theirs too, so who knows....let's see what the money guys say.

    Thanks for starting out my day with the knowledge that I (as a taxpayer) am $266,000 in debt...that makes my day 馃槀

    Germany has a better income to debt ratio than we do.

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant 路 San Diego / Phoenix 路 Member since 2021 路 12k+ posts 路 15k+ votes
    2y
    Quote from @Rich Hupper:

    Yep. Japan is looking bad....
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