CloudedVision

Each country will still be giving out loans and "You owe us this" notices to each other, even if the debt gets paid off.

If it does, i'll eat my hat.

In my opinion, the US national debt is the strongest foreign policy tool – short of military intervention – in the US arsenal.

If a debtor owes the bank, a company or an individual say $10,000; it is the creditor not the debtor that should be worried.

The US debt is made up of trillions of little debt vouchers, 2.61"wide and 6.14" long, signed by the US Secretary of the Treasury, called dollar bills. Whoever is in the possession of such a dollar bill is owed the value of one dollar by the US Treasury.

The biggest creditor of the US is China, followed by Japan, Russia and Saudi Arabia.

You have no doubt heard this little story before.

A new widow, unaccustomed to the workings of the financial world, receives a second notification from her bank manager informing her that her account is overdrawn. She is quite irritated by the second request for cash. "Just last week I sent the bank manager a big check" she remarks to a friend.

Now there is method in this madness.

Unlike the widow in the story above, the US Treasury can send a check to make the debt go away. It is done by printing new money and putting it into circulation, i.e. devaluing the US Dollar. This will leave the creditors holding pieces of paper that are then of less value. To prevent their stock of bills to lose value, the creditors will have to buy up these bills and take them out of circulation, thereby revaluing the Dollar and effectively lending the US more cash.

And of course the more bills the creditors hold, the more are they dependent on the US economy.

President Obama is trying to do the same with the housing market.

A house has no intrinsic value, except for the bricks and mortar (in some US circumstances, timber and paint). When a house owner defaults on the mortgage, the bank does not want the house (especially if the value of the property is worth less than the present value), they want their money back. If they put the house on the market and get less than the debt due – if they can sell it at all - they will have made a loss. So subsidizing a new mortgage makes perfect sense. The home-owner still has the house, the bank will get their monthly payments (all be it, a little less per month but over a longer period of time) and profit – and the beauty of it is that the Chinese, Japanese, Russians and Saudis are paying for it!

[SIZE=1]Edit: [/SIZE][SIZE=1]Writing the above just gave me an idea to write an article about the value of a web-page.[/SIZE]