Who Owns The National Debt?

Our national debt continues to grow by the minute. This is very bad news and everyone seems to understand that. The question many have is, who owns all this debt? Let’s take a look.

As of January 17, 2011, the national debt has exceeded a staggering $14 trillion dollar. Well, at least as far as the recorded number is concerned. The truth is the debt is much, much higher, but the government doesn’t want us to know that. As a result, it doesn’t count the money it owes on social security, Medicare and the Prescription Plan entitlement programs. When counted, the real figure is between $80 and $100 trillion depending on how you calculate it.

Okay, so who owns all this debt we owe? China, right? Well, yes and no. The biggest holder of United States national debt is actually…us. Individuals, investment companies and the Federal Reserve own upwards of 42 percent of all the debt. This is by far the biggest ownership position.

The second biggest holder of debt is Social Security. Huh? Yes, our beloved government is such a scam that it actually borrows from itself. You will hear that Social Security is running out of money. This is true, but not because the program is terrible. No, the problem is the government has been borrowing from it for decades and not repaying what it owes. The sum is now in excess of 2 trillion dollars. That’s a lot of retirement money!

What about foreign countries? We keep hearing all this bluster about China. Well, China is the biggest foreign debt holder of the United States, but it “only” holds 7.5 percent of our national debt or a little over a trillion dollars. As a matter of comparison, Japan holds about 6.5 percent, so China is not the huge threat some paint it to be.

None of this means much, however, given the financial situation of the country. Simply put, we cannot keep printing money out of thin air and spending it like drunken fraternity brothers. The bill will come due and many think it will be soon. When it does, interest rates will go through the roof and all hell will break loose.

2020 Becomes D-Day In National Debt Discussion

The national debt discussion for the United States is one that has always been answered by simply putting off the issue for later generations to consider. Well, that all changes in 2020.

The movie 2012 was definitely a guy flick if you know what I mean, which is to say I laughed, I cried, it became part of me. Okay, it was pretty bad, but the effects were great. The movie did not try to focus on one end of the world scheme, but tried to hit nearly all of them. This is much like what the country faces in 2020.

2020 will be the year we hit the 80 percent figure. Huh? The total cost of Medicare, Social Security and paying the interest on the national debt will total 80 percent of the total budget. It is a huge percentage. Think about it. This 80 percent does not include the cost of a military, education, infrastructure…pretty much any other government program.

Our current tax intake is $2.5 trillion a year. Let’s say it bumps up to $3 trillion by 2020. 80 percent of that figure would be 2.4 trillion, leaving us just $600 billion for everything else. The military budget for 2009 alone was $533 billion with another $100 billion for oversees costs.

Houston, we have a problem.

Ah, things will be better than that right? Not really. Actually, this is a fairly rosy estimate based on the economy recovering quickly and people getting back to work fast. If things take longer than planned, then the above figures will look infinitely worse because unemployed people don’t pay much in taxes.

Sooner or later, we are going to have to face up to this problem. We’ve tried the later approach and now are being faced with the “sooner” deadline. Spending must be cut dramatically and, I hate to say, taxes must be raised. Otherwise, we’ll be officially bankrupt before we know it.

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