# Is the United States bankrupt? **URL:** \ **Category:** Great Debates\ **Created:** [December 17, 2008, 7:53pm UTC](https://boards.straightdope.com/t/is-the-united-states-bankrupt/477620 "2008-12-17T19:53:31Z")\ **Posts on this page:** 7\ **Page:** 3
**Author:** ![sailor](https://avatars.discourse-cdn.com/v4/letter/s/a587f6/32.png) [@sailor](https://boards.straightdope.com/u/sailor)\ **Post date:** [December 19, 2008, 12:44pm UTC](https://boards.straightdope.com/t/is-the-united-states-bankrupt/477620/41 "2008-12-19T12:44:27Z")
> [@gravitycrash](#): > > Some people are overestimating China’s strength. Yes their GDP is huge, so is their population. They have a little way to go before they overtake the US, Western Europe or Japan and South Korea. ```auto GDP - 2007 List by the International Monetary Fund — World 54,584,918 — European Union 16,905,620 1 United States 13,807,550 2 Japan 4,381,576 3 Germany 3,320,913 4 China (PRC) 3,280,224 5 United Kingdom 2,804,437 6 France 2,593,779 7 Italy 2,104,666 8 Spain 1,439,983 9 Canada 1,436,086 10 Brazil 1,313,590 ``` > [@gravitycrash](#): > > Maybe they just choose not to start an aircraft building company because of the huge start up cost. See any Chinese cars on the road? You could have said similar things about Europe or Japan right after WWII. The future is not best guessed by looking at a static picture of the present but by taking into account all relevant information. In the early 70s people laughed at Japanese cars. Who’s laughing now? > [@gravitycrash](#): > > Does anybody see any technology that comes out of China? Yes, there is already some technology coming out of China and it is growing and I get tired of looking up the same things over and over. You can search my past posts. China’s mobile phone market is larger than that of the USA. By number of suscriber lines the top two telephone companies are Chinese and the USA does not have one among the top ten. Chinese communications companies are growing much faster than American ones. Ever heard of [Huawei](http://www.huawei.com/)? They kicking serious ass and giving us a headache. > [@gravitycrash](#): > > Yes, China has some impressive city skylines but buildings have been made for at least 3000 years. It is not new technology. Hell they buy most of their military equipment from Russia. You could have said that about Japan 40 years ago and people did say it. I remember when Japanese cameras were already as good or better as German ones but snobs were still saying Japanese were crap. I remember when Japanese audio equipment was already as good or better than German equipment but snobs were still saying Japanese were inferior. I remember when people derided Japanese cars and implied Japan could never compete with Detroit. Remember all that? What happened? Who’s laughing now? Of course China has a long way to go but the point is that they are on the right track and if the trend continues China will soon be a very powerful economy and we need to engage them and get ready for it. Putting our heads in the sand and denying it could happen is silly. It most likely will happen soon and the sooner we get used to the idea the better. > [@gravitycrash](#): > > They still have a way to go. If they want to dump our T-bills I say go for it. They really do not want to do it. It is better to have America by the balls. That’s the point. ---
**Author:** ![Muffin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/muffin/32/4341_2.png) [@Muffin](https://boards.straightdope.com/u/Muffin)\ **Post date:** [December 19, 2008, 1:51pm UTC](https://boards.straightdope.com/t/is-the-united-states-bankrupt/477620/42 "2008-12-19T13:51:25Z")
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**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [December 20, 2008, 12:30am UTC](https://boards.straightdope.com/t/is-the-united-states-bankrupt/477620/43 "2008-12-20T00:30:06Z")
> [@sailor](#): > > To say that, if push came to shove, China would be willing to lose Z million dollars in military expenses in order to prevail in a dispute with the USA but that it would not be willing to take Z million dollars in financial losses for the same purpose just makes no sense. I’m not sure I understand your point of view on this particular argument. Military spending and deliberately letting your economy lose an equal amount is definitely not the same thing in public perception, which I believe one of your responses went out of its way to state. Military spending produces something tangible in a conflict it’s possible to win. Under your particular scenario for financial losses, the money is going in a more visibly direct way out of the pockets of citizens and powerful businesspeople in a conflict where they’re guaranteed to be, in the short term, a loser. I don’t see the equivalency here. In strict monetary terms, you’re right, but the process, results, and perceptions seem entirely different to me. ---
**Author:** ![clairobscur](https://avatars.discourse-cdn.com/v4/letter/c/839c29/32.png) [@clairobscur](https://boards.straightdope.com/u/clairobscur)\ **Post date:** [December 20, 2008, 12:54am UTC](https://boards.straightdope.com/t/is-the-united-states-bankrupt/477620/44 "2008-12-20T00:54:33Z")
Since it’s directly related, I’m going to mention something I read today (sorry for the poor translation) “Currently, China […] keeps playing its role as America’s banker. The Chinese central bank even increased its purchases of American bonds. […]. However, [the government’s paper “China daily”] warned Wednesday that China did not intend to fund forever American economy” ---
**Author:** ![vinniepaz](https://avatars.discourse-cdn.com/v4/letter/v/b4bc9f/32.png) [@vinniepaz](https://boards.straightdope.com/u/vinniepaz)\ **Post date:** [December 20, 2008, 2:38am UTC](https://boards.straightdope.com/t/is-the-united-states-bankrupt/477620/45 "2008-12-20T02:38:20Z")
> [@sailor](#): > > Not to pick on you personally but the problem with these threads is that we end up discussing basic concepts which are needed to understand the overall discussion and in the end we just get bogged down in minor things and the thread ends up being a mish-mash of jumbled things at different levels. And any explanations are lost for the next thread which just gets jumbled up the same way. People who have no understanding of how debt is issued and works are expressing opinions on the entire American economy. It just gets frustrating. It is not only on this topic but even in GQ you see people speaking above their level of knowledge and understanding and I find it frustrating. Again, this is not meant as referring to you but on the thread as a whole. After all you are asking a question and there is nothing wrong with that. It is not any individual post but that there are just several levels of discussion going on simultaneously and it just makes the discussion a mess. > > It would take several pages to explain in detail how the debt works so it would be impossible to do it in just a post or two. In any case it would make no difference because most people would not read it and would just continue to post what’s on their mind. People want simple solutions to complex problems. The moment it requires some study and understanding people tune off. And that is a great part of the problem with politics: people do not care about spending any time thinking; they want soundbites, simple solutions to complex problems. How does it feel, being the smartest person on the planet? ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [December 20, 2008, 2:43am UTC](https://boards.straightdope.com/t/is-the-united-states-bankrupt/477620/46 "2008-12-20T02:43:08Z")
> [@vinniepaz](#): > > How does it feel, being the smartest person on the planet? He’s not. I am. ---
**Author:** ![sailor](https://avatars.discourse-cdn.com/v4/letter/s/a587f6/32.png) [@sailor](https://boards.straightdope.com/u/sailor)\ **Post date:** [December 20, 2008, 8:49am UTC](https://boards.straightdope.com/t/is-the-united-states-bankrupt/477620/47 "2008-12-20T08:49:43Z")
This article is from 2.5 years ago and things have only gotten worse since then. It already pointed out the risk of a meltdown of the financial system but, of course, that could never happen. Or so we thought. > [@](#): > > [The Looming Dangers of American Debt](http://www.thetrumpet.com/index.php?page=article&id=2265) - June 7, 2006 > > According to Brad Setser, director of research at Roubini Global Economics, “The irony is that the three countries in the world adding to reserves the fastest and thus buying the most U.S. debt now are China, Saudi Arabia and Russia, none of them democracies. … We are increasingly counting on a group of creditors who are not our closest friends but have a bigger and bigger stake in America,” he says. > > So America’s debt is growing, and a greater amount is in less reliable hands. > > This creates two problems. > > First, the value of the dollar is increasingly dependent upon foreigners. This makes the U.S. vulnerable to coercion and blackmail. > . . . . . > But what if, at some point, our debtors did want to influence American policy? In a potential conflict between China and Taiwan, would China stand idly by, holding $321 billion in U.S. debt, if the United States was to interfere to protect democratic Taiwan? Would Taiwan simply hold its $68.9 billion if China attacked it and America did not come to its aid? > > What if China and Taiwan were to peacefully reunite? Together they would control $389.9 billion worth of U.S. debt. Since China also controls Hong Kong, you can add in an additional $46.6 billion worth of U.S. debt, for a grand total of $436.5 billion. > > That is a huge chunk of potential economic or political influence. So much influence that if China even “reduces its Treasury purchases, the U.S. would run into difficulties” financing its debts, says the Nikkei Weekly. That same publication says Chinese leaders have boasted that because China is such an important lender to America, “Beijing is holding a dagger to Washington’s throat” > > The second problem with having foreigners hold so much U.S. debt is the risk that foreigners may choose to stop accumulating it and start spending it. As with any person, the more money you have, the greater the pull to spend. If foreign nations begin to spend their dollars, the increased supply of U.S. greenbacks in circulation would probably drive the value of the dollar down, making American possessions less expensive relative to assets in other currencies. Consequently, American corporations and businesses could increasingly become targets of foreign acquisitions. > > There are signs that some of America’s top corporations are already being snapped up. [Previous page](https://boards.straightdope.com/t/is-the-united-states-bankrupt/477620.md?page=2)