The Richest Country In The World Is Now Bankrupt

I think by normal business standards the US debt to gdp does lead to bankruptcy
 
OldShooter said:
You're asking the wrong question. The question is "At what point will the markets decide that the US debt is not safe?" And that is a moving and largely invisible target, influenced heavily by things like the USD's status as the world's reserve currency and the fact that we borrow in our own currency.
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Yes, agreed. However, if I were to ask the question, "At what point will the markets decide that the US debt is not safe?" I suspect I will also hear crickets since nobody can answer that question. It's essentially the same question as "how much debt is too much", just framed a bit differently.

I've often heard that we will get to a point where no one will want to buy US debt anymore. And then I respond with, "Where else will these people go?" and the typical answer is China. Really? People will buy debt from a country that manipulates their currency, banishes leaders of industry, and lies about their financial condition?
 
The fact you are asking "when" means the question no longer is "if" and that's enough to warrant my concern. Default might not happen within my lifetime, but I care about leaving things in some semblance of order for future generations.
 
Qs Laptop said:
Yes, agreed. However, if I were to ask the question, "At what point will the markets decide that the US debt is not safe?" I suspect I will also hear crickets since nobody can answer that question. It's essentially the same question as "how much debt is too much", just framed a bit differently.
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Not all questions have answers. That doesn't mean that they can't be asked.

Qs Laptop said:
I've often heard that we will get to a point where no one will want to buy US debt anymore. And then I respond with, "Where else will these people go?" and the typical answer is China. Really? People will buy debt from a country that manipulates their currency, banishes leaders of industry, and lies about their financial condition?
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Again, that's not the way it works. People will always be willing to buy US debt at some interest rate which they think adequately compensates them for their perception of risk. The worry about risk is probably more a worry about inflation than a worry about default. The US can always print more money and avoid default by handing it out to its creditors. It is probably a combination of increasing interest rates and increasing inflation that will hit a pain point for the voters and the federal government.
 
The US is not bankrupt, not are we close to bankrupt. Just the opposite, we are the wealthiest country in the world. Robert Kiyosaki is poorly informed and appears not to understand finance.

The US household sector has a net worth that exceeds $140T. Over the past 3 years it’s increase is greater than the entire public sector debt. We can clearly pay, and have much more borrowing capacity. I’m not suggesting we increase our debt, but we certainly could if we chose to do so.

Bankruptcy always involves liabilities vs assets, costs vs income. Just looking at the debt is not only silly, it’s meaningless. A family is not bankrupt because they have a mortgage value greater than their yearly income.

The debt would become “not safe” in 2 ways. One, if the US public chose to not pay. Because most of the debt is held by US households, this would be “not paying ourselves”, and the balance sheet would fall equally on both sides (assets and liabilities).

The other way is if the carrying cost gets too high. When the interest rate on debt is greater than the rate of growth of the GDP and tax receipts are not enough to pay the interest cost, lenders will stop lending, or at least demand much greater interest.

Finally, to talk about future entitlements without mentioning future tax receipts is pointless.
 
Wish I had a dime every time some expert says we're on the brink.

Somehow, the worst never happens and my day-to-day life, what I do and where I go hasn't changed in 50 years.

(But now it's time for family cocktail hour)
 
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marko said:
Wish I had a dime every time some expert says we're on the brink.

Somehow, the worst never happens and my day-to-day life, what I do and where I go hasn't changed in 50 years.

(But now it's time for family cocktail hour)
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and I had my ride all ready to Miller's planet
 
Gumby said:
Kiyosaki was hardly the first person in his lane. Anyone remember Robert G. Allen's book "No Money Down" and Robert Casey's "Crisis Investing" back in the early 1980's ? And I'm sure he won't be the last.
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Sort of weird how he's flipped from motivational speaking (where he made a ton o' money by giving talks to Amway members) & later writing Rich Dad Poor Dad to now doom & gloom.
 
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What frustrates me about these "experts" is that rarely does anyone publish their batting average! I remembering seeing a couple of look back articles grading the bold predictions like our Rich Dad is making here and the results were pretty abysmal.

If Morningstar had an experts listing and graded them on accuracy most would be no moat, one star, high expense ratio, no dividend funds that would attract little attention much less investment.
 
MichaelB said:
The US is not bankrupt, not are we close to bankrupt. Just the opposite, we are the wealthiest country in the world. Robert Kiyosaki is poorly informed and appears not to understand finance.

The US household sector has a net worth that exceeds $140T. Over the past 3 years it’s increase is greater than the entire public sector debt. We can clearly pay, and have much more borrowing capacity. I’m not suggesting we increase our debt, but we certainly could if we chose to do so.

Bankruptcy always involves liabilities vs assets, costs vs income. Just looking at the debt is not only silly, it’s meaningless. A family is not bankrupt because they have a mortgage value greater than their yearly income.

The debt would become “not safe” in 2 ways. One, if the US public chose to not pay. Because most of the debt is held by US households, this would be “not paying ourselves”, and the balance sheet would fall equally on both sides (assets and liabilities).

The other way is if the carrying cost gets too high. When the interest rate on debt is greater than the rate of growth of the GDP and tax receipts are not enough to pay the interest cost, lenders will stop lending, or at least demand much greater interest.

Finally, to talk about future entitlements without mentioning future tax receipts is pointless.
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+1 In all of this bankruptcy crazytalk, assets are NEVER considered, nor is income.

And like Michael, I'm not advocating for not getting control over annual budget deficits and the debt, we definitely need to address that potential future problem, but it isn't the flaming crisis that many uninformed people (including many of our Congressional representatives) portray it to be.

And definitely +1 on the last part... income taxes today are very low compared to historical norms.
 
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Qs Laptop said:
Whenever I hear someone expounding on how "we can't continue down this path" or "we're going to be just like Germany in the 1920's" I ask them flat out: "How much debt is too much? What is the actual number where if the national debt reaches "X" amount, we are doomed?

>crickets<
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This is something I’ve always wondered about; as a person living a debt free life as much as possible, what is too much debt for the country? At some point this has to have a seriously negative effect…OTOH, if china own all of our debt, then we own them and have all the leverage to make or break them I suppose…..still concerning we run our country this way, very counter intuitive
 
Alex The Great said:
"In a recent episode of "The Rich Dad Radio Show," financial educator and author Robert Kiyosaki expressed grave concerns about the United States’ financial health. As of Nov. 24, the U.S. national debt had reached $33.8 trillion. Guest speaker Jim Clark, CEO of Republic Monetary Exchange, highlighted that actual liabilities, including entitlements, could be as high as $200 trillion."
https://finance.yahoo.com/news/richest-country-world-now-bankrupt-141245951.html
What do we do then? Kiyosaki recommends gold and real estate.
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Kiyosaki has become way too political for me. He sounds like a nut job to me whenever I listen to his podcasts recently. Stick to FINANCE Bob!
 
Tetto said:
This is something I’ve always wondered about; as a person living a debt free life as much as possible, what is too much debt for the country? At some point this has to have a seriously negative effect…OTOH, if china own all of our debt, then we own them and have all the leverage to make or break them I suppose…..still concerning we run our country this way, very counter intuitive
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As the old saw goes, if you owe the bank $100,000 and can't pay, you have a problem. If you owe the bank $100 million and can't pay, the bank has a problem.
 
VungTau said:
What frustrates me about these "experts" is that rarely does anyone publish their batting average! I remembering seeing a couple of look back articles grading the bold predictions like our Rich Dad is making here and the results were pretty abysmal.

If Morningstar had an experts listing and graded them on accuracy most would be no moat, one star, high expense ratio, no dividend funds that would attract little attention much less investment.
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https://www.tipranks.com/experts/analysts

You need to join to see the full list.
 
Tag sale? The Federal Government owns 28% of the land in the country so I guess they agree :facepalm: Talking about debt without talking about assets and income is meaningless.

Anyhow, I would not choose gold I would rather have bitcoin if I was going to have a shiny collectible. Real estate is fine but hard to get a decent return without high leverage and that combined with tenant laws and my lack of handyman skills gets a no from me. Already have exposure from my home.
 
At the end of the day, spending more than we bring in isnt helping anyone, though. And the fact that no politician will touch it should be a concern for everyone.
 
madatrub said:
At the end of the day, spending more than we bring in isnt helping anyone, though. And the fact that no politician will touch it should be a concern for everyone.
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Someone is lining their pockets, and like it. I'll say no more. :angel:
 
aja8888 said:
Countries don't go bankrupt, they just destroy their currency by printing gobs of money to fuel runaway inflation.
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I agree with this. That’s what’s happening real time in Argentina, Turkey, Lebanon, Venezuela. I’m not sanguine about our own country avoiding the temptation to print our way out of mushrooming debt payments, which is simply the way of all currencies historically.
 
timbervest said:
Didn't Kiyosaki go bankrupt once or twice?
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From Bard:

Robert Kiyosaki, the author of the Rich Dad Poor Dad book series, has filed for bankruptcy for several of his companies. However, he has never filed for personal bankruptcy and maintains a net worth of around $100 million.

Here's a timeline of his bankruptcies:

  • 1992: His company, Rippers, which sold nylon wallets, filed for bankruptcy.
  • 2012: His company, Rich Global LLC, filed for bankruptcy after a legal dispute with Learning Annex, a company that hosted his speaking engagements.
  • 2014: Another one of his companies, Rich Dad Education LLC, filed for bankruptcy.
Despite these bankruptcies, Kiyosaki continues to promote his financial education programs and books. He argues that his bankruptcies were strategic moves that allowed him to restructure his businesses and protect his personal wealth.

Whether or not you agree with Kiyosaki's financial advice or his handling of his companies is a matter of personal opinion. However, it is important to be aware of the facts before making a judgment.

Here are some sources where you can learn more about Robert Kiyosaki and his bankruptcies:

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