Questions to Ponder

ProofCollection · December 21, 2009 8:50AM

How would you know if the US government was broke?

gecko109 · December 21, 2009 9:11AM

First, we need a clear working defenition of a "broke government". By "broke", what EXACTLY do you mean?

RedHerring · December 21, 2009 9:32AM

<< How would you know if the US government was broke? >>

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Because you are breathing?

But seriously, it does depend on the definition. By the standards of a commercial business, the US government was broke long ago.

Now compared to Japan, things do not look THAT bad.

ProofCollection · December 21, 2009 9:42AM

<< But seriously, it does depend on the definition. By the standards of a commercial business, the US government was broke long ago. >>

Again, how do you know?

ocon4008 · December 21, 2009 9:57AM

As long as the government call sell the debt it won't be "broke"; what happens when it can no longer sell the debt is a better question.

ProofCollection · December 21, 2009 11:35AM

If you were a person, you could argue that you were broke when your credit cards were maxed out and you could not pay them back and you could not get more credit cards. Or you could say it was when your expenses exceeded income and you had net $0 worth of assets. But you will know you are broke when you get to the cash register and you cannot purchase anything - you leave empty handed.

So what will be the "leaving the store empty handed" moment for the US?

secondrepublic · December 21, 2009 11:41AM

The U.S. government will never be broke, so long as (1) its debts are denominated in U.S. dollars, which it alone mints and controls the supply of, (2) its debt can be purchased by the Fed, thus "monetizing" the debt, (3) it maintains its power to raise taxes.

If your question is whether the U.S. government is in bad shape fiscally, the answer is obviously yes. But I don't see it going "broke" (running out of money) as even remotely possible. Inflating away the debt is the much likelier scenario.

Kameo · December 21, 2009 12:40PM

<< How would you know if the US government was broke? >>

If I were broke, I would continually borrow money to support myself. But I'm not the government.

ProofCollection · December 21, 2009 2:37PM

<< If your question is whether the U.S. government is in bad shape fiscally, the answer is obviously yes. But I don't see it going "broke" (running out of money) as even remotely possible. Inflating away the debt is the much likelier scenario. >>

I guess my question wasn't that clear.

If I asked, how would you know if you're too drunk to drive?" the answer would be something like, "I'm slurring my words, I can't walk straight, I blow over a .008 in the breathalyzer, etc.

Would you know the government is broke because they issue a press release and tell you?
Would you know the governmnet is broke becuase they issue IOU's instead of tax refunds?
etc. etc.

HalfStrike · December 21, 2009 4:51PM

Most people will probably know when they go bankrupt along with them.

"St. Petersburg was a shock. There was a sense of despair that hung in the winter air. There were old women standing around in spontaneous open-air flea markets trying to sell toys that probably belonged to their grandchildren, to buy something to eat. Middle-class people could be seen digging around in the trash. Everyone's savings were wiped out by hyperinflation. I arrived with a large stack of one-dollar bills. Everything was one dollar, or a thousand rubles, which was about five times the average monthly salary. I handed out lots of these silly thousand-ruble notes: "Here, I just want to make sure you have enough." People would recoil in shock: "That's a lot of money!" "No, it isn't. Be sure to spend it right away." However, all the lights were on, there was heat in many of the homes, and the trains ran on time. "

gsa1fan · December 21, 2009 8:58PM

When every country in the world quits turning to the US for a free handout.

moonshine · December 22, 2009 12:13AM

when Chinese jack-booted thugs start wanting to collect their IOU's and wandering the streets in an attempt to collect on what the US government owes them.

... and no, there will be no press release, and no IOU's --- you will just wake up one day and realize you are screwed

cohodk · December 22, 2009 12:57AM

You are broke when you no longer have the ability to repay your debts. The USA is a LONG WAY from that point as there are many ways to decrease spending and increase income. However this depends on the actions of the Legistature, which I do believe is broken.

ProofCollection · December 22, 2009 1:04AM

<< You are broke when you no longer have the ability to repay your debts. The USA is a LONG WAY from that point as there are many ways to decrease spending and increase income. However this depends on the actions of the Legistature, which I do believe is broken. >>

Why does everyone keep avoiding the question? How will you know when the US is broke?

gecko109 · December 22, 2009 1:11AM

<< 

<< You are broke when you no longer have the ability to repay your debts. The USA is a LONG WAY from that point as there are many ways to decrease spending and increase income. However this depends on the actions of the Legistature, which I do believe is broken. >>

Why does everyone keep avoiding the question? How will you know when the US is broke? >>

Please name a single solitary country that has ever gone "broke". Any country in the history of mankind would be fine. Your question makes zero sense. As long as a country exports even 1 cent worth of rice, its technically not "broke" as it still produces revenue. "Broke" by definition means zero assets and zero revenue. How could the U.S. ever have zero assets?

gsa1fan · December 22, 2009 1:25AM

When we cease to be a country.

HalfStrike · December 22, 2009 1:48AM

I am pretty sure the Soviet Union went bankrupt, so they are the example not to emulate.

cohodk · December 22, 2009 2:03AM

<< 

<< You are broke when you no longer have the ability to repay your debts. The USA is a LONG WAY from that point as there are many ways to decrease spending and increase income. However this depends on the actions of the Legistature, which I do believe is broken. >>

Why does everyone keep avoiding the question? How will you know when the US is broke? >>

When it files bankrupcty. Earlier clues will be when debt is not repaid on a timely basis.

Bear · December 22, 2009 7:12AM

The Government is not broke, because the Office of Printing

still has plenty of ink and paper left. I also am not broke because

I still have a lot of checks in my checkbook left.

Gemineye · December 22, 2009 8:06AM

<< How would you know if the US government was broke? >>

...Your kidding...!!!...I send them a check evey quarter...!!!

adamlaneus · December 22, 2009 8:44AM

In order to understand what happens when a 'government goes broke', read up...

National Bankruptcy

To take a current example, consider what is happening in Iceland today.

Musky1011 · December 22, 2009 10:53AM

When you owe more than you actually have---you are broke

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