Quote Originally Posted by maladroit
i understand people living on borrowed money won't be paying it back
What exactly are you saying? Social Security holds roughly 21%, federal agencies hold another 24%, 9% is held by the federal reserve, and another 14% is held by the private sector leaving 25% to be held by foreigners. Who e

thanks to the trade and budget deficits, increasingly it will be chinese, japanese, british, and arabs too...the more they are owed, the more control they have over us monetary policy
As one of the main opponents to deficit financing, i would have at least expected you to point out its most dangerous aspect. US debt is for the most part, simple redistribution of income from taxpayers to bondholders, in which the taxpayer and the bondholder are the same person. This means that interest payments have virtually no direct opportunity cost.

Yet when government debt grows, it takes from the potential pool of private investment that could be used to upgrade factories, train new skills, etc... This simple example of "crowding out" is by far the most dangerous aspect of higher debt. This will eventually lead to lower productivity.

The second most alarming aspect of debt service is the fact that we must repay external debt with the exports of real goods and services...

It is silly to worry about foreign nations controlling our debt service policies when the two examples above are much more troublesome...