US Debt

So today Dom asked me this question on Twitter, which is the last question at the bottom of the list. I was so bewildered and I had him ask again. I was stunned because no countries do that. The government can't say, "Oh hey guys, I borrowed too much money from other countries and I can't pay them back. Can everyone give me $300?" The economy doesn't really work that way. I don't think any economy would work that way, especially when it comes to money, because if it did, it would set many hardworking people back and just cause the government to be more careless with spending. As it is, the US government isn't responsible with spending at all, but I'm getting ahead of myself. You gotta understand how taxes work and how the US treasury works, so I'll write about it here:

Taxes are what working people basically pay the government to make the country better. At the end of every financial year, the taxman comes and says, "Hey give me your money," and people will try their best to lie about how much money they are supposed to give Taxes are used to build schools, roads, and hospitals and help the government fulfill his or her promises.

All US taxes go to this state department called the Treasury, which is basically where a group of smartly dressed people help the President manage the money of the US. Unfortunately, the US has been giving too much money to bail out banks, which increases debt. The wars in Iraq and Afghanistan also made debt accumulate (they cost USD$1.4trillion ), making things worse.

Also, the US can actually borrow money from the people using this thing called Treasure Securities. They are bonds and people actually lend money to the US to fund their projects but I can't go into that now because it would take another post to complete.

Basically the US didn't regulate banking and say, "No, you can't have people who can't afford a mortgage take out loans," and so they have to give money to the banks and bail them out. This doesn't help the banks at all because there are no regulations, and so the banks keep lending people money and the government has to bail them out when people can't pay the banks back.

I seriously think that the US government has to set limits and say, "Okay, if this dude has a crap credit rating, we cannot give him a loan because he cannot afford to pay it back with interest." Then maybe the endless stream of borrowing will stop.

And unfortunately, we are very much capitalist, and Singapore can't 'share' money with the US because we have our needs. We are also a small country and there is no way we can solve all the financial problems of such a big country. We cannot loan anyone money because it will contribute to this unceasing borrowing cycle that a lot of countries cannot get out of.

Besides, Singapore is also hit by the crisis, but the government has saved enough money to bolster some businesses that are operating at a loss so that they can get through the crisis (More on that later).