Quote:
Originally Posted by woj
they doesn't necessarily need to pay it back...
everyone thinks that "debt" is bad, but imagine you are a real estate investor... each year you borrow 100k to buy a piece of real estate, rent it out, and after all expenses including interest payments, you come out ahead by $10k/year...
in that scenario you could continue borrowing 100k each year forever, letting your debt grow to ridiculous levels, but as long as your income grows 10k/year each time you do it, where is the problem?
of course this assumes that the borrowed funds are actually invested wisely, not pissed away on useless stuff...
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you're talking from the borrower's point of view, what about the lender? with real estate the lender's loan is secured by the land property. if the borrower can't make its payments the lender forecloses. what's China got as security?
Bonds are just more debt and it just keeps adding to the national debt. The answer is that the United States can't pay back the principal if it had to, but due to its place in the world 'it's too big to fail'. for now. While the US does have its special place in the world it should just print the hundreds of billions and pay down the debt to China and other major creditors - let them take that money and invest it elsewhere or buy up more US resources.