Why is the richest country on the plane in debt?

Question

Seriously! Why is the USA in so much debt but some how we are still the richest country? This has been bugging me ever since the war started when I was like 8!

Answer 1

I'll tell you:

The oil companies figured out they own the US. What, 4,000+ Americans died and about 28,000 were wounded in a war for what?

OIL.

So when the oil companies figured out they owned the most powerful nation in the world, they milked it for all it was worth. And here we are today.

Answer 2

America still produces a massive amount of wealth.  Right now we are borrowing against future earnings to pay for the cost of the war right now.  The idea is, when the war is over, we will start paying off the loans

Now, that being said, being the worlds biggest debtor isn't a good position to be in.  We used to be the worlds biggest creditor.  Hopefully we can regain control of our spending, get the budget balanced, and regain our financial stability under a new administration.

Answer 3

You missed the bit out about asking why it's so far in debt when it spends virtually nil (say, in comparison to say most European nations) on social programs and medicine. Yet the USA has almost 60 million citizens with no health care, a stratospheric level of homelessness, and and an economy that is so far down the toilet it's not funny.

How many people still think the wars in Iraq & Afghanistan are still necessary? $3 trillion & counting....just think what that money could have bought for the American people.

Answer 4

Anybody can be reach if somebody will keep loaning them money to buy anything they want.  The problem comes when that somebody wants his money back.

Answer 5

Must be that it really is not the richest, eh? when you go bankrupt nobody calls you rich even if you once were. Net indebted economy, get it?

Millions of people still living in houses what are in the process of being foreclosed. The salesmen and mortgage bankers have left the scene of the crime and handed off the bad loans to the taxpayers. Pretty slick, eh? Get the picture?

Answer 6

Put simply, money is debt. Our economic system relies on debt since our economy is speculative. In that sense, economic growth is entirely dependent on ever increasing debt.

In the case of the United States, Congress finally surrendered the power to create currency in 1913 when the Federal Reserve Act was passed. It is important to appreciate that the Federal Reserve is neither federal nor a reserve and that its name was chosen in order to deceive. It is not federal because it is a private company run for the profit of its shareholders as is the case with any private business. It is not a reserve because the currency it creates is backed by nothing other than the integrity of government, expressed in income tax against the work of citizens.

Instead of creating debt free money as the Colonies had done in the form of Colonial Scrip, money is now created by the issuance of government bonds which are "sold" to the central bank (the Fed) which then issues the corresponding credit into the economy. This operation is done with interest attached, meaning that every dollar issued by the Fed is in fact worth one dollar plus a percentage of debt. In order to repay this debt to the central bank, more money must be created. Since this money can only come from the central bank and since money created in this fashion always includes interest and therefore debt, the cycle has to be perpetually repeated. Of course, this guarantees massive and ever increasing profits for the shareholders of the central banks, but it also ensures that the debt can never be repaid. To eliminate the debt would be to eliminate the money supply.

It may seem counter-intuitive, but your question is valid precisely because it exposes this obvious paradox.

It is also worth noting that most countries in the world trade in dollars. This is important because it provides a kind of magic cheque book. Imagine writing as many cheques as you like and knowing they will never be cashed. The fact Saddam chose to switch his oil trading from dollars to euros was a major factor in the decision to invade (that and the perceived need to establish a military presence around the largest oil reserves outside Saudi). Trading in dollars means every country has to maintain a reserve of dollars, which of course means that the US can maintain massive foreign debts and not risk foreign countries choosing to exchange their dollars and demand repayment. By moving to oil trading in euros, Iraq and others devalued the dollar by removing this obstacle to selling dollars. From that perspective, the illegal invasion of Iraq was little more than a public beating by a neighbourhood loan shark.

I hope that goes some way towards answering your question.