Who exactly do we owe money to?

[Slateman]

So lately I've been hearing about how we have this huge national debt.

I gotta ask, who exactly did we borrow money from?

[Kurd Cudins]

The national debt does not refer to "borrowed money". It refers to the difference in the total spending of OUR OWN government. Our debt has arisen from the government spending more money than it has brought in.The main revenue resource is taxes. In essence, GW has spent more money than he's brought in from taxes(very simplified). If our government were a business, it would have gone bankrupt a long time ago.

[Riggo-toni]

The money is borrowed from the issuance of government bonds. The money is owed to whoever holds US savings bolds, which means a significant portion of such debt is held by foreign investors. Any money the gov't spends is paid for by us either in the form of taxes, higher interest rates, and inflation.

[DjTj]

The money is borrowed from the issuance of government bonds. The money is owed to whoever holds US savings bolds, which means a significant portion of such debt is held by foreign investors. Any money the gov't spends is paid for by us either in the form of taxes, higher interest rates, and inflation.

Here's the Treasury's website teaching kids about savings bonds:

http://www.publicdebt.treas.gov/sav/savbond.htm

[DeanCollins]

A significant amount of the debt was borrowed (stolen) from the social security funds, which in turn will cause a huge shortfall when the majority of the "baby boomers", the largest generation ever (in which I belong ) retire and draw social security. Of course GW and friends are all weathy from robbing said treasury and don't need SS (they got thiers, yours, and mine off the top), so thier hope is to end it all together by bankrupting it. right wing response in

4,3,2......

[Destino]

The national debt does not refer to "borrowed money". It refers to the difference in the total spending of OUR OWN government. Our debt has arisen from the government spending more money than it has brought in.The main revenue resource is taxes. In essence, GW has spent more money than he's brought in from taxes(very simplified). If our government were a business, it would have gone bankrupt a long time ago.

No, you are thinking deficit.

In order for the government to spend more then it collects (deficit spending) it has to borrow money. It does this by issuing bonds that people can buy which earn interest. When the time is up the government then pays them back… thus increasing spending and requiring more bonds in order to finance that debt. The total some of all outstanding debt is the national debt every year we engage in deficit spending this debt increases. People don’t really worry about it because it works – but I don’t think anyone would argue that it will work forever, at some point you have to pay it down.

[panel]

It ain't just Bonds,

Foreign countries buy up HUGE amounts of our debt. China for example just keeps on buying up our debt, so we owe them big.

[Kurd Cudins]

No, you are thinking deficit.

In order for the government to spend more then it collects (deficit spending) it has to borrow money. It does this by issuing bonds that people can buy which earn interest. When the time is up the government then pays them back… thus increasing spending and requiring more bonds in order to finance that debt. The total some of all outstanding debt is the national debt every year we engage in deficit spending this debt increases. People don’t really worry about it because it works – but I don’t think anyone would argue that it will work forever, at some point you have to pay it down.

This is largely semantics.

[DjTj]

The national debt does not refer to "borrowed money". It refers to the difference in the total spending of OUR OWN government. Our debt has arisen from the government spending more money than it has brought in.The main revenue resource is taxes. In essence, GW has spent more money than he's brought in from taxes(very simplified). If our government were a business, it would have gone bankrupt a long time ago.

This is largely semantics.

Actually it's not just semantics. The government actually does bring in enough revenue to pay for all its spending - a lot of it just comes through the sale of bonds.

A lot of companies operate this way without going into bankruptcy. In fact, most businesses probably started by borrowing money upfront and paying it back later. Amazon.com was carrying huge debt for a long time, and most big asset companies like airlines or shipping operate with a lot of debt. If you have a mortgage or student loans, you're also operating your personal finances with debt. There's nothing inherently wrong with debt as long as it's manageable debt.

...of course, sometimes things go horribly wrong e.g. Enron, eToys, United Airlines, etc. so it would probably be a good idea for the U.S. Treasury to keeps its debt under control. However, as long as the economy keeps growing, it's not actually that bad to run a deficit most of the time.

What we can't do is have the debt grow a lot faster than our tax revenue ... and that's been a little bit of a problem lately.