I'm also grabbing this from DTB's post about the National Debt declining during the Clinton years. Explains who holds our debt quite well--but I'm sure Tenzig won't be able to figure it out...
Mason: Real estate developer Douglas Durst, the clock's owner, says he didn't plan on the debt reaching ten trillion. So, you figure you'll run out of space how soon?
Durst: Within two years.
Mason: The U.S. is in hock as deep as any nation in history. Who holds our I.O.U.S? Well, more than a quarter of our debt is now owed to foreign countries. Japan is our biggest foreign creditor. We've borrowed $673 billion from the Japanese. The Chinese are now number two.
Economist: Well, in a very real sense the Chinese central bank has financed our efforts in Iraq and Afghanistan.
Mason: The bill for the war in Iraq exceeds $260 billion almost as much as we now owe the Chinese government.
Jim Grant: We are all at the mercy of the world's faith in us. The collateral for the dollar is the world's idea of America.
Mason: Jim Grant is the editor of "Grant's Interest Rate Observer." If they lose faith in us, we're in trouble.
Grant: Economists use a technical term?we would be cooked.
Mason: Here's why, if our foreign investors decided to move their money elsewhere we'd have to offer them higher interest rates. That would drive up our own interest rates, make it more expensive to buy homes and pay the mortgage and ultimately make us all poorer.
Economist: You do the math, it just doesn't work and something has got to change.
Mason: Of course, that's what everyone said when the debt clock was first unveiled in 1989 and we owed a mere two trillion. In the Clinton years, when our debt actually began to shrink the clock was turned off and covered up. Did you think you'd have to turn it back on again one day?
Durst: I was sure that something would happen but I never thought it would be like this.
Mason: So Durst is planning to build a bigger clock. Today if we were all billed for the national debt, we'd each owe nearly $28,000. Bob? You can send your check in whenever you like.
Schieffer: We know the Chinese, for example, loan us money.
Mason: Yes.
Schieffer: Because that's one way we can then buy their products. Does anybody ever think that someday they might actually call in that note?
Mason: No one would ever call in the money... the loans, of course, because the U.S. economy would effectively collapse for a time and nobody wants that to happen. What everybody's afraid of is that China, Japan may start investing in India or other countries. Those would become more attractive and we look less attractive and all of a sudden you see what happens.
Schieffer: There you are. Thank you very much, Anthony
