How it works

 The latest figure I found available is 30.4 trillion. That is the amount, defined as external debt, the United States currently owes to foreign interests. That's sixty thousand five hundred dollars per capita! It is 102% of our gross domestic product. I went looking for these figures after listening to Congress debating how much money we are going to give away! The figure is in the billions! Yes, we call it aid, relief, and a bunch of other names but it is a gift, given freely with no expectation of return. We are just giving it away! And I have to ask, how much more are we going to borrow, to give away? Would you borrow money to give away? Your neighbor needs a new roof, will you finance that? You won't ask for a return, a simple thanks will suffice, and you pay the loan along with the interest on that loan for fifteen years or so. That's what the United States is doing, and you are the United States! It's your money! 

 The country in second place on that list is China. They owe about 13 trillion, less than half of what we owe. China is also the world's largest creditor holding about 1.3 trillion dollars in notes and securities. Japan holds more notes than China however, at least to the United States it does. It's all a very complicated thing, this debt and world banking. It isn't something I know a great deal about, All I know for sure is, it isn't a good thing to borrow money to give that money away. And that is exactly what we are doing! You have to ask yourself a simple question regarding all of this. What is the security on the loans? We all know you can't borrow money without offering some sort of security. Yes, you can borrow some money, at inflated interest rates, with just your signature, but not much. No that's the thing about loan companies they want some security. Now other countries want security too when they lend money. What is that security? 

 Well, this is a simple explanation I'm certain an "economist" one with a PhD and all that would laugh about, but basically that security is the interest we will pay on loans. You see our government doesn't really borrow money; it issues debt. I know it's confusing double talk in my book. But what it means is the government says it will pay back that debt (a loan in my thinking) using the money we taxpayers invest in securities and stuff like that. The government pays interest to us for "using" that money. It's a delicate balancing act and can come crashing down like it did in 1929. That happens if we want our money, but the government already loaned it out and doesn't have it to give back to you. That happens when you don't pay the interest and principal on your debt because the government spent too much money and can't pay the interest on the money, they borrowed from you. 

 From what little I've read about all this it is a shell game. Just keep moving the money around. The federal government has a debt ceiling that they cannot exceed when issuing debt. Well unless Congress decides that they can raise that ceiling, which they do frequently these days. We borrow money to give away to other nations while we have to borrow more money to help our own citizens! How many billions will the recent hurricane cost? Will any of that money simply be given away? The answer there is no. If the "government" gives you money for relief or any other reason that money was borrowed. It was your money that was borrowed. And the thing there is, you have to pay it back to yourself or you will soon be broke. And that's economics 101. It would take four years of college and a graduate degree to change my mind about that. Then I would call it "issuing debt" instead of borrowing money. Yup, that's the way that works.