US national debt - another government Ponzi scheme

As you may well be aware of, the US government has run a budget deficit for the majority of the last twenty years. This means that the government spends far more each year than they collect in taxes and transfer payments. The budget gap is bridged through borrowing money from investors by selling government debt. Through decades of economic supremacy, the average investor (institutional or otherwise) has come to view the chances of our government defaulting on these debts as trivial. This can be seen in the simple fact that the yield of the shortest term government debt is known as "the risk free rate of interest." This is very good for our government as investors around the world line up to pour their money in the governments cup, even at today's low rates of interest. As a result the government has issued a very large amount of debt: $9,682,116,996,293.84 (as of 9/11/08 from www.treasurydirect.gov). Stripping out debt held by other US governing entities the number drops to $5,526,828,606,295.84, still a ridiculously large figure. Assuming a average rate of interest of 3% (its definitely more), that means the government must pay a net $165,804,858,188 per year to service its debt. This figure is approximately equal to our government's entire budget deficit for 2007.

THIS MEANS THAT THE GOVERNMENT MUST BORROW MONEY TO PAY ITS CURRENT INTEREST LIABILITIES.

This meets the criteria of a Ponzi Scheme, paying early investors with the capital of later investors.

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