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Talk:Debate: 2009 US economic stimulus

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User comment on costs of adding to debt

What does $800,000,000,000 of debt cost? This is the key questions that is being ignored because it is so difficult to answer. Few things are clear, but these are: 1) Our government IS like a company - there are several effects from lending, 2) Not having debt is inefficient due to the low cost of debt (i.e., the cost of a small amount of debt is low and is outweighed by the benefit of spending/tax cuts - thus the positive results of budget deficits in our early years and the positive effects on the value of companies of issuing small amounts of debt), 3) Having too much debt will result in severe consequences (i.e., default or massive inflation from printing money), 4) Our value maximizing level of debt is limited by our lenders (despite the incorrect general assumption that Asian countries fund our debt, the truth is that the baby boomers funded a much larger portion of our debt through the Social Security tax and are going to want it back in the form of social security payments over the next several years (about 40% of our debt is funded by loans from other US government bodies, namely the Social Security system and printed money).

The cost of the debt relies upon the answer to the following question.

What happens when the US government prints $10,000,000,000,000 to pay off our debt (i.e. when those that are owed social security over the next 15 years stop loaning us the money)?

I think the answer is clear, but would like to debate. My assessment is that your currency is no longer regarded as the risk free currency of the world, everyone sells the dollar, the price of food and commodities go through the roof and we see what a real financial collapse is like.

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