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Companies are able to attract investors and lenders because of the reasonable expectation of future profits. For the US there is no expectation of ever breaking

Companies are able to attract investors and lenders because of the reasonable expectation of future profits. For the US there is no expectation of ever breaking out of our debt. There's a term for private entities whose only means of ever being able to pay off old investors and lenders is from the funds of new investors and lenders.

rayiner 9y ago
You’re mixing two different things (“future profits,” “breaking out of debt”). Companies get loans because lenders have an expectation that the company will have future revenue with which to make debt payments. The US government is virtually guaranteed to have a future income stream. Lenders don’t care if the borrower ever pays off all their other loans. Indeed, companies roll over and refinance their debt all the time. Look at it another way. Our debt is like a 2% mortgage that we can pay off in 30 years using just 18% of our revenue. Back in boom times people could get interest only mortgages with those parameters.
- indubitable 9y ago
  Your numbers are both technically wrong and misleading. The federal government is currently spending 120% of our annual revenue. Even if we somehow cut enough programs that 18% of our revenue became disposable (which is itself completely unrealistic) you'd be making 0 progress. You need to not only start paying off the principle + interest, but also drop our spending to 100%. That's already about 40% of gross federal revenue. The misleading aspect is because 40%, and even 18%, don't sound as absurd as they really are. Even cutting spending modestly is incredibly difficult. Cutting it by 18% is arguably impossible without completely reshaping government as we know it. Cutting it by the 40% required to actually make progress on the debt is completely unrealistic at any point in the foreseeable future. And these numbers are getting worse each year, with the difficulty of getting out of debt continuing to increase. And of course this repayment pretends we will both maintain or increase income while never increasing spending beyond growth in said income - for 30 years. No, no private company is getting a loan in these conditions. Drowning in debt with the only means of possible repayment, both short and longterm, being to hope they can find other lenders to pay off you, as a new lender? That's like a mental version of something between a ponzi and pyramid scheme.

rayiner 9y ago

You’re mixing two different things (“future profits,” “breaking out of debt”). Companies get loans because lenders have an expectation that the company will have future revenue with which to make debt payments. The US government is virtually guaranteed to have a future income stream. Lenders don’t care if the borrower ever pays off all their other loans. Indeed, companies roll over and refinance their debt all the time. Look at it another way. Our debt is like a 2% mortgage that we can pay off in 30 years using just 18% of our revenue. Back in boom times people could get interest only mortgages with those parameters.

indubitable 9y ago
Your numbers are both technically wrong and misleading. The federal government is currently spending 120% of our annual revenue. Even if we somehow cut enough programs that 18% of our revenue became disposable (which is itself completely unrealistic) you'd be making 0 progress. You need to not only start paying off the principle + interest, but also drop our spending to 100%. That's already about 40% of gross federal revenue. The misleading aspect is because 40%, and even 18%, don't sound as absurd as they really are. Even cutting spending modestly is incredibly difficult. Cutting it by 18% is arguably impossible without completely reshaping government as we know it. Cutting it by the 40% required to actually make progress on the debt is completely unrealistic at any point in the foreseeable future. And these numbers are getting worse each year, with the difficulty of getting out of debt continuing to increase. And of course this repayment pretends we will both maintain or increase income while never increasing spending beyond growth in said income - for 30 years. No, no private company is getting a loan in these conditions. Drowning in debt with the only means of possible repayment, both short and longterm, being to hope they can find other lenders to pay off you, as a new lender? That's like a mental version of something between a ponzi and pyramid scheme.