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<DIV>Kohath,</DIV>
<DIV> </DIV>
<DIV>Answers interspersed:<BR></DIV>
<DIV> </DIV>
<DIV>> How is it that the richest nation in the world (USA) can be in
debt. </DIV>
<DIV> </DIV>
<DIV>How it "can" be in debt:</DIV>
<DIV>a/ Borrowing more money than the surpluses it currently generates or used
to generate after paying its bills.</DIV>
<DIV>b/ Borrowing if the cost of borrowing is cheaper than the benefits it gives
up by using its own capital to "produce" stuff. In this case USA would loan its
capital to other countries (or companies) at an interest rate higher than what
it pays on its own debt.</DIV>
<DIV> </DIV>
<DIV>>That<BR>> does not make sense. I have heard that the national
debt is $17,000+ for<BR>> every person in the USA. How is that? I
have not signed any documents<BR>> stating that I would take out this loan
and go in debt to whomever it is we<BR>> owe. </DIV>
<DIV> </DIV>
<DIV>You/we have appointed (voted) your Representative to the Congress and a
President, who has appointed a Treasury Secy, who has, on your / our
behalf, signed such documents. That is how govts and democracies work.</DIV>
<DIV> </DIV>
<DIV>> It is interesting that the peoples of the richest nation in the
world<BR>> must work 7 months out of the year to pay the interest on this
"debt" that<BR>> we are told continually that we owe (could that be
considered brainwashing)?<BR></DIV>
<DIV>Consider the following data (source: US Treasury) on annual interest
payments for the Public portion of the debt:</DIV>
<DIV> </DIV>
<DIV>1998 interest payout: $363,824 million.</DIV>
<DIV>1998 population: 275 million (US Census Bureau est)</DIV>
<DIV>Thus 1998 Interest payment per capita = $1,323.</DIV>
<DIV>Assuming 2 out of 3 people counted by the Census do NOT have a
job (seniors, kids), this interest is paid by 181.5 million people, averaging
$2,005 per person per year.</DIV>
<DIV> </DIV>
<DIV>As you can calculate from the attached gif, the interest payout is
growing at a compounded annualized growth rate of 5.4%, while the average
paycheck is being raised by 3.2% per annum.</DIV>
<DIV> </DIV>
<DIV>In other words, we as individuals are growing our earning power slower
than the interest expense on our national debt grows; and thus the Treasury
has to issue more debt to pay off existing interest obligations. </DIV>
<DIV> </DIV>
<DIV>In all this, we are NOT EVEN TOUCHING the principal amount owed (current
figure = $5.7 Trillion or $5,640,294,174,290.65 for the numerically
curious).</DIV>
<DIV> </DIV>
<DIV>Thus in years (like now) when we as a country earn more than we spend (net
surplus) we need to pay down some of the debt (or interest owed on it) because
NOT ALL YEARS are created equal and at some point in financial time there
is some parity between what we earn, what we can grow that earning by, and what
we owe and what that burden grows by.</DIV>
<DIV> </DIV>
<DIV>> Does anyone out there know to whom this massive debt that we
supposedly owe<BR>> is to. I would like to know who is reaping the
benefits on my hard work!<BR></DIV>
<DIV>Nobody is. This is very low interest (6.45 %) for the quality of the US
balance sheet.</DIV>
<DIV> </DIV>
<DIV>Better balance sheets (at country level) are having to pay higher interest
rates because perceptions of risk of repayment are adverse to the actual ability
to repay.</DIV>
<DIV> </DIV>
<DIV>> no one ever says whom<BR>> this debt is owed to?<BR></DIV>
<DIV>You can buy this info from the government, or reference it at the library
through a monthly publication as follows:</DIV>
<DIV> </DIV>
<DIV>Publication title "Treasury Bulletin"</DIV>
<DIV>Table OFS 1: Distribution of Federal Securities by Class of Investors and
Type of Issues.</DIV>
<DIV>Table OFS 2: Estimated Ownership of Public Debt Securities by Private
Investors.</DIV>
<DIV> </DIV>
<DIV>As to the qualitative comments in your query, all I will say is this:</DIV>
<DIV> </DIV>
<DIV>If the balance sheet of the USA was presented to any banker that just stuck
to government appointed rules and capital adequacy norms of lending applicable
to corporate loans or private individual loans, the banker would not loan the US
Government any money in this state of affairs.</DIV>
<DIV> </DIV>
<DIV>Regards</DIV>
<DIV>Gitanshu</DIV></BODY></HTML>
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