What allows the US economy to stay afloat, regarding its mountain of debt?

Question

I am curious as to what final leg(s) we are left standing on? Obviously our economy can be roughly translated as "debt". As our ability to borrow dwindles, so goes our economy.

Obviously our economy was way overheated in the late 90's. So now we are contracting; I saw an article comparing Japan of the late 80's to our economy at its peak, and thought it's not coincidental that roughly the same thing is happening in the US.

Of course our total outstanding national debt sits around $54-55 trillion(!) range.

How can we possibly function in this capacity?

Answer 1

We aren't flourishing. Haven't you noticed? We are heading into a second depression. And a lot of it has to do with this stupid war.

Answer 2

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Answer 3

BILLIONAIRE investment guru Warren Buffett has declared that the US recession has begun."We are in a recession," Mr Buffett said in a TV interview.

"Across the board I am seeing a significant slowdown."

Mr Buffett's analysis is supported by a string of data pointing to a contracting economy.

The latest figures show US manufacturing shrank at its fastest pace in almost five years while construction spending fell the most since 1994.

Scott Anderson, a senior economist at Wells Fargo, said: "The evidence is piling up that the economy is slipping into at least a mild recession.

"With the much higher food and energy prices and restricted credit, there are not a lot of avenues for consumers to continue to spend."

US home-building is in its third year of decline, and the collapse in housing is rippling through the economy as consumers pare spending and factories cut production.

The markets are betting the Federal Reserve will cut its benchmark interest rate by 0.75 percentage point at its March 18 meeting.

Fed chairman Ben Bernanke said last week the central bank, which has lowered the key rate by 2.25 percentage points since September, was ready to continue cutting borrowing costs if needed to stimulate growth.

He warned that risks to the outlook included "the possibilities that the housing market or the labour market may deteriorate more than is currently anticipated and that credit conditions may tighten substantially further".

Shares in Mr Buffett's main listed company, Berkshire Hathaway, rose 29 per cent in 2007 and about 4700 per cent over the past 20 years, six times the rise in the Standard & Poor's 500 Index.

Along with insurance operations and a stock portfolio valued at $75 billion, Berkshire owns businesses ranging from confectionery and residential property to utilities and corporate jet leasing, giving Mr Buffett an insider's perspective on the economy and finance.

In last year's annual letter to shareholders, he said his method was to "be fearful when others are greedy, and be greedy when others are fearful".

Source:

http://www.news.com.au/heraldsun/story/0...