Also, I'm not sure if they could even ask for the money back since the contract probably stipulates the time the U.S. has to repay (i.e. 50 year loans or something).
If you have gov't debt in your 401k, then convert it to something else. Gov't debt tends to pay lower interest, in part because of a tax benefit. Since your 401k is tax deferred, you don't get the tax benefit, just the low interest.hamster143 said:If you have any money in your 401k - chances are, the U.S. government owes money to you.
Yes.DrClapeyron said:Is it perpetual?
Was that intended to be serious? It isn't like the US is declining to pay her debt - no one has to ask. The US rasises money by doing things like selling bonds, which have a set lifespan and payback. The US always pays them back and they are considered among the safest investments around. Think about it - if they didn't get paid back, people would stop buying them!I think it will continue to be very large because the US is top dog. How many nations are likely to ask the US for their money back, and what could they possibly do to warrant the US to pay up?
Huh?People seem to like our money, so why not share?
Gov't debt pays lower interest because it is guarnateed. Often there is an equation (such as 110-age) used to calculate the appropriate stock/bond ratio (%) in a portfolio. The older you get, the less risk you can handle, so the more bonds you should hold. Here's some discussion on it: http://www.mymoneyblog.com/archives...step-1-deciding-on-the-stocksbonds-ratio.htmljimmysnyder said:If you have gov't debt in your 401k, then convert it to something else. Gov't debt tends to pay lower interest, in part because of a tax benefit.
And because the interest they pay is tax advantaged. I didn't say don't own gov't debt, just not in your 401k.russ_watters said:Gov't debt pays lower interest because it is guarnateed.
Sorry, I missed that part. I was only saying that they shouldn't.russ_watters said:...And I was saying that a very large fraction of people do own government debt in their 401k's!
jimmysnyder said:Sorry, I missed that part. I was only saying that they shouldn't.
Do you deny that US gov't debt has a tax benefit and this is part of the reason that they pay a lower interest rate than corporate bonds? If you buy this debt, do so outside of your 401k.hamster143 said:That is arguable. Higher-interest commercial bonds have higher interest because they have higher risk of default.
You don't pay federal income tax on the interest paid by tbonds, tbills, etc. The gov't can sell them at a lower interest rate that way. It's ok to buy bonds for your 401k, just not gov't bonds. It's ok to buy gov't bonds, just not in your 401k.russ_watters said:I'm actually not sure what tax benefit you are talking about (the whole point of having a 401k as opposed to another type of investment instrument is in the tax benefit!), but either way, every 401k for an older person needs to have a large guaranteed, fixed-income component. It is right to have that in a 401k, not wrong.
jimmysnyder said:You don't pay federal income tax on the interest paid by tbonds, tbills, etc. The gov't can sell them at a lower interest rate that way. It's ok to buy bonds for your 401k, just not gov't bonds. It's ok to buy gov't bonds, just not in your 401k.
I took the liberty of emphasizing the word some.hamster143 said:And some of the 0.35% represents risk that Microsoft might be having financial troubles in 2019, with the potential downside of up to -100%.
hamster143 said:According to
http://en.wikipedia.org/wiki/List_of_countries_by_external_debt
the United States are #18 in the world by external debt per capita, behind most of Europe, and #26 by the ratio of external debt to GDP.
Alan Simpson is one of my favorite Washington personalities. I would have like to see him as president. Simpson has a wonderful sense of humor.A new federal commission will consider raising Americans' retirement age and increasing taxes to attack a record U.S. budget deficit, the co-chairmen of the panel said Thursday.
"The great thing the president has told us [is that] everything's on the table," said Erskine Bowles, President Clinton's former chief of staff. "If we don't do something about it [the deficit], it will gobble this budget up."
Bowles and former Sen. Alan Simpson told NPR's Melissa Block that they will consider cutting beloved entitlement programs — including Medicaid, Medicare and Social Security — and all other measures as they take over the leadership of the National Commission on Fiscal Responsibility and Reform, a bipartisan panel charged with finding ways to lower the deficit.
Simpson, a Republican from Wyoming, had a blunt message for anyone who would stand in the way of the commission's work: "Get onboard, or forget your own grandchildren."
. . . .
Simpson, 78, represented Wyoming in the U.S. Senate from 1979 to 1997. His stellar reputation propelled him into the post of Republican whip, but he is known for being independent and working on a bipartisan level. In recent years, he has taught at the Harvard Kennedy School of Government and served on the bipartisan Iraq Study Group.
Bowles, 64, president of the University of North Carolina system, announced several days ago that he would be leaving. He was appointed by President Clinton to serve as director of the Small Business Administration in 1993. Later, as White House chief of staff, he helped broker a deal with Republican leaders that led to budget surpluses in the late 1990s.
The 18-member deficit panel, called the National Commission on Fiscal Responsibility and Reform, will consist of 12 members of Congress who are selected by the leadership of each party. The other six members will be appointed by Obama, with no more than four from a single party.
. . . .
hamster143 said:According to
http://en.wikipedia.org/wiki/List_of_countries_by_external_debt
the United States are #18 in the world by external debt per capita, behind most of Europe, and #26 by the ratio of external debt to GDP.
The nonpartisan agency said yesterday the deficit will remain above 4 percent of the nation’s gross domestic product for the foreseeable future while the publicly held debt will zoom to $20.3 trillion, amounting to 90 percent of GDP by 2020. By then, interest payments on the debt will have quadrupled to more than $900 billion annually, the report said.
calculusrocks said:From Bloomberg:
GDP is gross-domestic product. It measures the output of the US. The problem is more than just debt. The problem is spending.
edward said:Ironically government spending is added to the GDP. Debt % to GDP wold look really bad if government spending wasn't considered.
Hmm not all of it. Only spending where the govt actually buys something - road, fighter jet - is added to GDP. If the govt just cuts you a check (welfare, SS, unemployment) then no it doesn't add to GDP, not unless or until you in turn spend the govt check it.edward said:Ironically government spending is added to the GDP. Debt % to GDP wold look really bad if government spending wasn't considered.
Don't forget - the fundamentals of the economy are strong. :rofl:PARKERSBURG, W.Va. – The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration.
It's time to start cashing them in.
For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year.
Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.
. . .
Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn't be worse. The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come.
Social Security's shortfall will not affect current benefits. As long as the IOUs last, benefits will keep flowing. But experts say it is a warning sign that the program's finances are deteriorating. Social Security is projected to drain its trust funds by 2037 unless Congress acts, and there's concern that the looming crisis will lead to reduced benefits.
. . .
Astronuc said:I wonder if anyone in Washington DC saw this coming.
Perhaps that's giving them too much credit. It presupposes competence.CRGreathouse said:Oh, they saw it coming.
Either way, that appears to be the case.They just didn't care.
CRGreathouse said:Oh, they saw it coming. They just didn't care.
President Bush spent a great deal of time and effort attempting to fix the Social Security problem.CRGreathouse said:Oh, they saw it coming. They just didn't care.
Don't forget - the fundamentals of the economy are strong.
Nebula815 said:President Bush knew there was risk of a real-estate crash, that was one reason he tried to reign in Fannie and Freddie multiple times, but the Democrats killed it every attempt; it was one of the things Barack Obama voted against even as a Senator.
As for Social Security, SS was projected to remain solvent far longer, but because of this recession, tax revenues have plummeted, which thus blew a hole into the projections (yet again why it is ludicrous to claim they can project how to pay for this healthcare bill).
They are, but our captain is doing the equivalent of turning the ship towards the storm and then gunning it to full-throttle.
calculusrocks said:It was difficult for Bush to make inroads here, because so many from both parties received http://www.opensecrets.org/news/2008/09/update-fannie-mae-and-freddie.html" , two of the main culprits of the housing collapse
mheslep said:President Bush spent a great deal of time and effort attempting to fix the Social Security problem.
Well Congress writes the laws, but big ideas matter, especially when they come from the executive.CRGreathouse said:The President doesn't matter. Congress matters -- it's the one that gets to decide how SS funding is handled.
The US National Debt is the total amount of money owed by the US government to its creditors. This includes both domestic and foreign debt. The responsibility for the debt lies with the US government, specifically the executive branch, which is responsible for creating and implementing the federal budget.
The US National Debt has been growing for decades due to a combination of factors, including government spending, tax policies, and economic downturns. The debt also includes the accumulation of interest on previous debt, which can significantly increase the overall amount owed.
Technically, yes, the US National Debt can be paid off. However, it would require a significant amount of fiscal discipline and a strong economy. It would also likely require a combination of spending cuts and tax increases to generate enough revenue to pay off the debt.
A large US National Debt can have several consequences, including a burden on future generations, higher interest rates, and a weaker economy. It can also limit the government's ability to respond to economic downturns and other crises.
Addressing the US National Debt requires a combination of fiscal responsibility, economic growth, and strategic budget planning. This could include measures such as reducing government spending, increasing taxes, and implementing policies to promote economic growth. It may also involve addressing underlying issues such as healthcare costs and entitlement programs.