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I hope the data reported will be impartially selected, honestly gathered, clearly explained, and perfectly accurate. Perhaps they could start with inspiration from the Concord Coalition's National Debt Counter.

Good luck with that, this is the government we're talking about...

What's funny about your cynicism is that the referenced website in the summary IS ALREADY depending on government data to function. The cited example is an example of an instance where the government is already living up to the promise you just scoffed at as impossible.

http://www.treasurydirect.gov/NP/BPDLogin?application=np

Nonetheless national debt did shrink as a percent of GDP under his tenure. Oh, and when we state something as a matter of fact, please cite data sources. Historical Debt (U.S. Treasury). Debt as percent of GDP.

Please provide some references to back this up. And then have it out with the folks at Wikipedia, because http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms [wikipedia.org] says Clinton brought the debt down, by quite a bit.

Nice reference. Note that it lists debt as a fraction of GDP.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm shows the national debt (in dollars) for each year from 1950 to 1999.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm shows the national debt (in dollars) for each year since 1999.

Clinton gets the credit for 1993-2000. Note that every one of those years had a higher number than the year before. Note that the last time the Debt actually decreased was a two year period when Eisenhower was President (1956-1957).

Note, of course, that inflation isn't factored in to the numbers from the Treasury.

Please provide some references to back this up. And then have it out with the folks at Wikipedia, because http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms [wikipedia.org] says Clinton brought the debt down, by quite a bit.

Nice reference. Note that it lists debt as a fraction of GDP.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm shows the national debt (in dollars) for each year from 1950 to 1999.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm shows the national debt (in dollars) for each year since 1999.

Clinton gets the credit for 1993-2000. Note that every one of those years had a higher number than the year before. Note that the last time the Debt actually decreased was a two year period when Eisenhower was President (1956-1957).

Note, of course, that inflation isn't factored in to the numbers from the Treasury.

Your graphic hardly tells the whole picture. Intragovernmental holdings increased more during the last 50 years than publicly held debt decreased. What that means is that the total debt increased every one of those years.

Check for yourself:
http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm

The only way to arrive at the numbers referenced by that graphic is to use faulty Enron-ic accounting practices (aka Congressional accounting standards) that if followed by any publicly traded company would result in a major fines and jail time.

A statement issued by the administration on December 28, 2000, ignoring that we were in a recession at the time, the dotcom bubble was collapsing, Enron was about to go down, 9/11 would happen 9 months later, etc.

The economy, and with it, the budget since it was based on projections that never happened in reality, would have been screwed up whether Clinton had served 4 terms instead of two. And the truth of the matter is, despite accounting tricks showing a surplus for the final years of the Clinton Administration with a Republican Congress, the national debt continued to increase the entire time he was in office.

Republicans cost FAR more. Do some research: U.S. government debt. During the administration of George W. Bush, 5 trillion dollars of debt was added to U.S. government debt.

I have always believed that the vast majority of today's financial instruments have been invented out of thin air for no reason other than to ultimately ensure the employment of bankers and brokers.

Actually, many of them have a good basis in logic, but are used beyond their original purpose.

For example.... I see absolutely no reason why a single account could not offer all those features.

Part of the reason there are individual companies that separated items like brokerages and commercial banking is historical structure created in the Great Depression, known as the Glass Steagall Act

Other responders to your post have pointed out various specific details, e.g. reason for commercial paper, but let me cover a more general point of view on why so many different products exist: Risk.

The issue, however, is that risk doesn't come in only one form. There are different types of risk:
- Default Risk (if a company goes bankrupt, you don't get back your principal)
- Inflation
- Interest rate risk (if interest rates change, then the value of underlying loans change)
- Tax Rate Risk (different tax rates due to different income or time)
- Counterparty Risk (risk of entering into a contract, but the other party failing to fulfill the contract)
- Secured nature of the debt (recovery in case of default)
- Opportunity cost (cost of not doing an alternative with the money)
- etc.

Looking at various products we can see how they are different. An IRA vs. a Roth IRA actually transfers the Tax Rate Risk onto the government (you pay a known tax rate, and the unknown benefit or penalty due to the future difference is absorbed by the government)

A TIPS (Treasury Inflation Protected Security) vs. a normal Bond issued by the government transfers inflation risk onto the government (presumably the normal bond is accounting for perceived inflation in the offering price, but the TIPS accounts for real inflation, thus allowing one to eliminate the risk of the perception of future inflation being incorrect.

We can see today that today's 4 week Treasury Bill Auction resulted in zero yield (give money to the government for 4 weeks, no interest). This presumably would mean the return one could get in a non-FDIC insured bank account (over the current $250K limit) is entirely bankruptcy risk premium.

Also there are organizations that do market clearing of bonds and stocks that absorb counterparty risk. Part of the problem with credit default swaps was that the holders of those products actually bear the counterparty risk, as they are not regulated like other products. (When combined with a lack of market data on quantity and concentration of the risks around default of bonds, this led to one of the underlying issues in the problems we have right now)

Lastly, there are also "positive" values that are priced into different financial products, such as recovery in case of default. That's why secured loans of [statistically] appreciating assets (e.g. home mortgage) are lower rates than loans on depreciating assets (e.g. automobile) and those are lower than unsecured personal loans. Same reason bonds will maintain value longer than preferred stock.

As a specific example of what is good (and bad), look for a moment at interest rate swaps. They actually serve a valuable purpose, in allowing an investor (or the loaning company) to convert a variable-rate instrument into a fixed-rate one (or vice versa). This is valuable to companies to be able to "lock-in" lower interest rates when rates fall, for example. What is risky is when someone speculates on interest rate swaps without having an underlying asset. This results in significant leverage that can be wiped out very quickly if interest rates (i

This isn't really a response to parent. I just saw a lot about federal spending in this thread, and as it happens, I was looking over the numbers for the FY 2007 actual budget the other day.

Following are the top 15 federal expenses which accounted for ~83% of the 2007 budget (all numbers are millions USD, my annotations in [braces]):

If you want a better idea, see here (XLS). Also, the top 34 expenses in that spreadsheet comprised 98.07% of that budget. From looking over all this I basically figured out that most of our top expenses come out of one of three categories:

• Military
• Social welfare of some kind
• Paying interest on our national debt

Now I'm the kind of guy who just loves to rant about how much we waste on the drug war, miniluv, etc. But if you look at the numbers, you see that law enforcement, and even education and highways barely stacks up to these three categories.

If you want to know more about the national debt, first go to the oracle and learn about bills, bonds, and notes. Then you can look here and here for more info on it.

Oh, and /. needs <table>.

I'd have to say it's you who are playing tricks to try to justify an obscure point of view nobody cares about.

It depends on how you look at the year. If you look at calendar year say january thru december in 2000 the debt did decrease by about 100 billion. However if you look at fiscal year, from 10/1/99 until 9/30/00, the debt only increased by a mere 10 billion or so, which was substantially less than the fiscal year prior so you can clearly see a trend.

The US Treasury has a pretty good database of this information to play with, and it also breaks down how much is owed to private individuals and how much to social security, which is the accounting tricks you are referring to that is clearly not there.

http://www.treasurydirect.gov/NP/BPDLogin?application=np

Unfortunately the money has to come from somewhere. Shortly after WWII (which cost us $238B after inflation it would be about $5T) the highest tax bracket was in the 90% range. People got houses under the new FHA and VA loans, and new companies were created (though not as many as after the top marginal tax rate was reduced by the Johnson administration which Kennedy had been pushing for). Companies didn't move overseas to more favorable countries then, though I would concede that moving overseas would probably have been more of an involved process than it is today and that economic situations of the world were obviously different.

The current Iraq war, so far, has cost us $500B and the highest tax bracket pays something like 35%. That money has to come from somewhere, and unfortunately neither party is willing to actually decrease our deficit in any sort of substantial way, so now we're stuck with a national debt that is almost insurmountable.

We currently owe over $10T which comes out to about $37,747.83 per person in the US (population of 305,363,780 though this number keeps changing). That number also includes children. The average household size is 3.2 (I'll round it to 2 parents and one child). Now the amount to each tax payer (203,575,853 of them) owes is $49,121.74. The problem with that number is that it doesn't account for the people that are in retirement and not contributing to the tax system. According to the same population website, there were 37,191,004 people 65 and older in the year 2006 (we'll have to assume that they are all retired, though that's not entirely the case). Now the amount each tax payer owes is $60,101.63

The madness needs to stop someday. This whole "credit crisis" is all due to everyone living beyond their means (individuals, corporations, and government). We need someone to actually do the tough job of cutting spending so that we can all live within our means. We probably even need to cut back even more than that so that we can repay our debts. It is unfortunate that we live in an unjust world, and so the people who have lived within their means (like me, and probably many people on here) are hit with this credit issue just as hard as the people who were reckless with their money.

I will also state that tax cuts generally do contribute to the growth of the economy, but only as long as the burden of debt interest is under control. If we continue borrowing the amounts of money we are today, and our creditors decide that we cannot pay it back and stop lending to us, then no matter how good our economy is at the time it will decline sharply due to the lack of money in the market. One way to defend against that is to print more money, but that devalues the dollar and makes international trade more and more difficult which also affects the economy negatively.

So, with all that said, who has the most money? Rich people of course. What do they typically do with their money? Try to make more money, which is usually through investments, which help other large companies. Those large companies then probably employ more people. Is it fair to ask the plumber/electrician/factory worker to pay his/her share of the national debt when that amount is so much more of a percent of their savings than

You're confusing two issues. One is the easy money policies and low short-term interest rates manipulated by the Federal Reserve; the other is the ability of Congress (through the Treasury) to borrow money from the market to finance deficits by selling long-term bonds. You are correct about the problems created by easy credit in the past 25 years, but this is unrelated to the federal debt or annual budget defecits. Easy credit was fueled by the Federal Reserve's policy of its target rate for short-term borrowing, which is directly tied to major banks' prime rates and the interest rates of many products like credit cards (cards with a "variable" rate) and adjustable rate mortgages. The Federal Reserve can influence overnight and other short-term rates in the private sector, but has very little power over the long end of the yield curve (5 to 30 years). Prevailing interest rates that were too low to compensate for the actual risks involved were a major cause of the private sector problems that have developed in the past year but are not really related to the fact that the federal government has been spending more than it has been collecting in taxes.

The free market effectively dictates what interest rate the government pays on its debt. Since the debt has grown for the past eight years, this indicates that this debt is long-term and thus its rates are effectively out of the hands of the Federal Reserve. Here are the results of a recent auction for 10-year Treasury notes. Even though the nominal interest rate was 3.5%, the Treasury was forced to accept less than full face value in principal for this auction so that the effective interest rate was about 3.72% (median out of a range bids of 3.64% to 3.79% that were filled). This would suggest that if the Treasury wanted to sell another similar quantity of notes at full face value immediately after this auction (before any new information on credit risk of these notes entered the market), the Treasury would have to set the nominal rate to 3.72% or perhaps slightly higher. If the U.S. Treasury was no longered considered the standard for a risk-free investment, debt auctions would either reflect a much higher interest rate to account for the risk or simply fail due to the lack of bids that the Treasury wanted to accept. The debt accumulated in the past 8 years is of concern because it's not clear how much more Treasury debt the market is willing to finance at the favorable rates the U.S. government has enjoyed for years. If the market forces long-term interest rates up, then the government would have to pay a much steeper price for continued deficit spending.

Some municipalities and even states like California have either already encountered this problem or are bracing for the onset of this problem. The reason why California asked the U.S. Treasury for loans recently is because the state feared it would not be able to sell new debt to the market without having to offer dramatically higher rates that the state was unwilling or unable to pay. While California was able to avoid having to take out a federal loan (their debt auction succeeded and yielded reasonable rates), it still needs to be concerned about having to finance any new deficits. For a state or a municipality, the federal government can conceivably be a lender of last resort. There is no such entity for the federal government; it's the biggest player in the world so there's no bigger potential savior it can approach to save it. So if the market's appetite for Treasury debt fades, the U.S. government is going to have some very tough decisions to make and a very short time to make them lest the government default on its debt obligations and trigger a unprecedented shock to the world's financial system.

Stating that Clinton didn't balance the budget is stating a truth denying the greater truth that whether he hit the 0 or not, the graph shows clearly that Carter and Clinton reduced the rate of change of debt substantially and even if he never hit it, he approached 0, whereas Ford, Reagan, Bush I and Bush II have more or less linear rate of change in inflation adjusted debt, and that rate is about twice as much as the democratic presidents.

I never said they didn't. I simply corrected OP when he made the erroneous statement that Clinton had in fact balanced the budget. Clinton never balanced the budget. Period. It didn't happen. There never was the balanced budget or a budget surplus as reported by the American media. If your debt is continuing to rise... then by definition, you have a deficit, not a surplus. This is a very simple concept. The last time this nation had a real budget surplus was over 50 years ago in 1957. That is the simple, unadulterated fact.

Great idea for a DIY fan!

According to how much the debt increased lately if you wrote values from $0 to $10,000 around the frame of your fan, you'd need to make the fan run at about 1,300 - 1,500 rpm to represent the rate at which the debt is increasing.

Be careful though, on some days it can hit an average of 6,900 rpm (like on the 30th of October). That would suck if the public debt made your fan fly apart!

If we hand over a $700 billion check to the banks, they continue to operate and the economy *might* bounce back a little quicker. But--and here's the rub--that $700 billion comes from taxpayers like you and me. So we still take a hit. And who does this $700 billion go to? Rich Wall Street types so they can continue doing their business and keeping the profits in the end.

Actually, regardless of where it goes, it doesn't come from taxpayers. Our taxes won't raise. THe money won't get paid back by us - if it doesn't get paid by the businesses borrowing it, then it's just tacked onto the debt.

And in case you hadn't noticed, nobody's been paying the national debt for a very long time - even during the years of the vaunted budget surpluses, the national debt was getting bigger.

(See here: http://www.treasurydirect.gov/NP/BPDLogin?application=np)

I believe Gore would have focused on reducing national debt, not increasing it.

Then he would have done something that Clinton often claims but never achieved: reduction in debt. Never happened. The "balanced budgets" were all a myth, only existing on paper. The national debt continued to grow every year.

From http://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm:
I bonds are currently 4.84% through October 31, 2008.

Interest earnings are exempt from State and local income taxes, but are subject to State and local estate, inheritance, gift, and other excise taxes.

So that raises the effective interest rate a bit if you are in a state with income taxes.

From http://swz.salary.com/salarywizard/layouthtmls/swzl_statetaxrate_CA.html
If your income range is $40,346 and over, your tax rate on every dollar of income earned is 9.3%.

So if my calculation is correct, that makes an effective APY of about 5.34%. Of course, I-bond rates vary over time, but I am under the impression this is one of the highest rate, lowest risk investments you can make.

(Though I realize there's a flaw. Nowadays you can only buy $5K/year of them. It used to be $30K/year.)

Something like 60 trillion.. lol. When did that happen? It was only 9.5 trillion year end as of 2007. According to the US treasury the current debt is $9,650,327,577,961.59 or 9.6 trillion as of 8/28/2008. So in about a week, we have jumped 50.4 trillion dollars?

You do realize that the GDP is more or less the marker against the ability to pay the debt off don't you? And do you know that accurately accurately quoting the national debt actually helps in gaining the perspective neccesary to make an informed comment about it.

You compare the two because the one measure the commerce capabilities of the nation with also measures your abilities to tax if necessary. Our GDP is about 13 times larger then most all other industrialized countries. This means that even though out dollar figure is higher, we are actually in better shape then those other countries. Until the Iraq and Afghanistan wars, which is off budget for obvious reasons, the debt was in better shape but that is the fault of congress which has increases spending knowing they has to flip the bill for the wars. Also something that isn't widely discussed is that almost half of our debt (about 2/5ths) is in intragovernmental holdings. This means we owe ourselves the money. We could drop around 4.6 trillion by defaulting to the government and shorting assets the government already holds. Of course that would deflate the value of the dollar so we continue to pretend to pay it back.

As far as the bank (and most country's laws) is concerned, when your account is accessed using the security checks (question/answers) you instructed them to accept YOU DID IT. So you can claim all you want that someone hacked your account but they've got solid reason to believe that you did something you've now come to regret. TS.

A bank is only interested in providing better security for online account access to the degree that it gets you to use the cheaper-for-the-bank online account tools instead of an expensive teller or ATM. That's why chip-and-pin solutions were deployed in the UK and Europe after slow Point-Of-Sale adoption by consumers there relative to the US (which still hasn't received them).

Its also why the Treasury Department upgraded online access controls (http://www.treasurydirect.gov/indiv/help/TDTutorial/tutorial.htm/) for the "TreasuryDirect" accounts (which cost the Treasury Department less to administer than their older "Legacy TreasuryDirect" accounts) after the inital deployment saw such low uptake/conversion rates.

I use fake information and pay cash for medical care, so this problem doesn't affect me.

I tried to explain this methodology to my friends who all say I'm a paranoid moron, but then I guess they really believe laws protect you before the problem happens, rather than just theoretically "punish" the offender later.

I started several years ago being secretive of my medical procedures and using an alternative to the "health insurance" or "national healthcare" scams being pulled on Americans. It is obvious that, at some point, those who demand someone else pay for their health issues will have enough voting power to force a national healthcare agenda, which will immediately lead to rationing or denial of care, because it simply isn't affordable.

As I have no interest in paying insurance companies for nothing, nor having insurance companies or a government medical bureaucracy denying me care because of something that happened 15 years earlier that lowers my "score" of who should get care or not.

Of course I'm Mr. Paranoid because that would NEVER OCCUR.

I've always hated insurance companies. Basically they take advantage of how scared you are, take your premiums, invest it for big profits, and deny you as much as they can or give you some crap level of care. This, of course, is all based on the idea that if you don't have insurance, you will immediately get killed by a rabid ebola virus with AIDS and Down's syndrome which can only be cured with Lorenzo's Oil which, of course, they don't cover, but your heirs will find that out for themselves.

My method was pretty simple.

I analyzed about what I wanted to spend per year on glasses, dentistry, checkups, etc. I increased this amount by 50% should something above and beyond occur, such as a cavity, broken arm, etc.

I divided that amount by my income increments (paychecks, etc).

Every paycheck increment, I would have that portion directed into Treasury Notes or I Bonds, accessible for free at http://treasurydirect.gov/

If I need medical care, and it costs more than I have on hand (which it rarely does), I simply withdrawl the appropriate amount

When getting medical care, I always pay cash, and I don't use real information. I request a random number for the social security information citing "identity theft" as a reason. The rare time they have a problem with me not giving them tons of identification for health care, I just go somewhere else, as it's not as if I HAVE to go to an IN NETWORK doctor. I've found most doctors not only love that I pay in actual cash, but I get a much higher level of care, at a cheaper cost, than "insured" patients.

If I don't have any bizarre medical care requirements for a given year, which like most people I don't, I keep all the money, not end up losing it all to the insurance company. That gives me that much more building my "insurance" for health care. If I desperately need the money for something else, it's all mine, and has been generating investment interest.

By putting away a little bit of a paycheck each time, I now have thousands of dollars for whatever level of health care I want, and it covers ANYTHING I want. Cat needs a sex change? Here's the money. Need hooker massage therapy in Thailand? Here's your money honey. Me insure you long time.

But you go ahead and put your faith in government, insurance companies, and employer plans that drain your potential paycheck. That's a MUCH better option. Why make medical decisions between yourself and your doctor? A politician pandering to you will make the best medical choice. An insurance company interested in it's own stock price will certainly know which medications you require. Give into your fears that a healthy 20-something needs alzheimers and smoking cessation treatment programs whether you want to pay for it or not through the health plan that they decide you need.

Keep filling our the forms listing every known or suspected medical problem you have, because future employers, politicians, and beurocrats would never use that info against you in any way as part of your "permanent record" and "Health Score".

$1,000,000,000 in licensing * = 478,5000,000 in interest over the next x years.

About 2.5 weeks of interest payments to service the debt.

Hilarious stuff, well, maybe not. Until you get to the bottom of the page, where you come to this little gem:

How do you make a contribution to reduce the debt?

Make your check payable to the Bureau of the Public Debt, and in the memo section, notate that it is a Gift to reduce the Debt Held by the Public. Mail your check to:

Attn Dept G
Bureau Of the Public Debt
P. O. Box 2188
Parkersburg, WV 26106-2188

There will be no asteroid mission. There will be no lunar base.

FFS, read what the original post was about. It was some jerk-off saying that nobody should comment on Bush's leadership if they weren't American citizens.

Also, the US did NOT have a mandate from the UN. Quite the contrary.So go f*ck yourself back. Oh, sorry, you already did. fortunately, China and Japan won't fund your Iran ambitions ... http://www.bloomberg.com/apps/news?pid=20601087&si d=aNgW4Fu_8.tI&refer=home

Nobody asked you to go to Iraq - quite the contrary, world opinion was that sanctions and inspections were working. Iraqis want you out - NOW. And forget about Iran ... you haven't got the money to go to war - the US is broke, and the countries that hold half your debt (China, Japan) are slowly selling it off because your dollar is going down the tubes.

Current statutory debt limit: 8.965 trillion. Current debt: 9,009,410,075,859.67. Source - the treasury department : http://www.treasurydirect.gov/NP/BPDLogin?applicat ion=np The US government has been "more than broke" since August 13th. Then again,. its been morally bankrupt since before it first took office.

We're not mad at the American people - its not like people actually voted Bush into office ....

Is http://www.antiwar.com/casualties/ this worth it? These soldiers died because you have a criminal for a commander-in-chief. They deserved better leadership.

But do you really think the current debt of 8.9 billion dollars , largely Bush's responsibility, are an improvement?

Didn't think so. Apples to apples, my friend.

People's money gets more valuable if they hold onto it, so nobody spends any more money than they can avoid.

How is that different from now? I for one avoid spending money that I don't have to! I do agree that inflation gives an impetus to spend/invest money, as just holding on to money reduces its value. But the effect would be quite minimal. If deflation was for example 3% per annum, would that really affect spending?

Hypothetical Consumer A wants a candy bar that costs 1$. By holding off his purchase by a year, he'll be able to buy the candy bar for 97 cents, saving 3 cents. Would it be worth it to hold off on buying a candy bar for a year? I doubt it, but maybe there are some who think so.

Hypothetical Consumer B is planning on buying a 100 000$ house. By holding off on his purchase for a year, he'll be able to buy the house for 97 000$, saving 3000$. Is being without the house for a year worth 3000$? Again, maybe for some people, but I think the majority would ignore the small savings.

Now, some might point out that now buying a house is a bad investment, because your house is losing 3% of it's value annually. However, this is false, as the value of the house is not variable, it's the amount of dollars you get in exchange that changes. You have to keep in mind that also other things have gone down 3% in price, so you'll still get the same amount of purchasing power for your house. The same is true in reverse, if the price of your house only goes up as much as inflation, your house hasn't gained any value. This of course doesn't take in consideration other effects that might affect the value of a house, outside of inflation/deflation.

Also, debt becomes very expensive.

I already touched that issue in the post you responded to. There is nothing that says interest rates have to be above zero. If for example deflation was 3% per annum, lenders might borrow money to people at a rate of -2%. This would give the lenders a margin of one percentage point, and would make the issue you mention moot.

Oh, and commodity-based standards become really fucking stupid if you end up having a bunch of bonus commodity. If there's a gold rush (there was!), your gold standard has become hyperinflation. If there's a silver rush that devalues silver all to hell (there was!), your silver standard becomes hyperinflation.

As of 2001, it was estimated that all the gold ever mined totaled 145 000 tonnes. According to wikipedia, about 370 tonnes were mined in the first five years of the California Gold Rush, which equals 0.25% of the world's gold supply. Assuming a similar gold rush today, it would inflate a gold standard based currency by a yearly average of 0.05% for the first five years. To call that hyperinflation is absurd.

At least with paper money, you can stop printing money (or even start burning money) or print less, or print more, depending on economic growth.

The problem is, that the ones with most to gain from inflation, are also the ones with the keys to the printing press. The US government operates on huge budget deficits, and holds a mind-boggling 8.8 trillion dollars in debt. This is why proponents of a gold standard talk of a inflation tax. The government inflates the money supply to their own gain, redistributing purchasing power from citizens to itself. The government would have to be crazy to start burning dollars, the public debt would go from a big problem to US bankruptcy!

Oh yeah, one other thing. A gold standard is just as fiat as fiat currency. After all, if you mandate that everyone uses gold as currency, there's more demand for gold, pushing the price of gold up. And this gets even worse with a fixed p

"...at a time when interest rates have been ramped up by the Federal Reserve (who are only now starting to talk about slowing this rate hike campaign)?"

Contrary to popular belief, the Fed has very little latitude in setting interest rates because interest rates are market driven. The government finances a portion of its debts through borrowing (issuing bonds) and must consequently pay whatever the lowest bidder offers. See: How Treasury Auctions Work

If your timeline is only a year or two, low risk is usually what's recommended. If you're young and saving for retirement, then risker is fine, since if something goes wrong, you've got plenty of time for things to work out.

One of the best low-risk investments is directly in US Treasury Notes/Bills/Bonds, and it's really easy to do. Any US individual can go right to the Treasury Direct web site, set up an account linked to your checking account, and purchase 4-week notes to 30-year bonds. This site is run directly by the US Treasury, and does not involve third party brokers. Rates are running right about 5% right now depending on the term.

Anybody can participate in the weekly US Treasury auctions, and it's pretty simple. I'm surprised that more individuals don't use this.

Immediate access and high yield are conflicting requirements. For immediate access with reasonable yield and limited downside risk, it is hard to beat a savings account. Stay away from the stock and real estate markets unless you are investing for 5+ years. One option for short to mid-term (6 month - 3 years) investing is a ladder of US Treasury Bills. You can set up an account at TreasuryDirect, tied directly to your bank account and run everything electronically:
http://www.treasurydirect.gov/indiv/indiv.htm

Yields on recent T-bills are 5% for 1 mon, 5.1% for 3 mon and 5.265% for 6 month. You can set them to automatically rollover (reinvest) when they mature, or if you decide you need the cash, cancel the rollover. You can also buy 2, 5 and 10 year T-notes, but the yield is no better than the T-bills, so why bother? Note that returns on treasuries are state tax, but not federal, deductible.

So, you get reasonable liquidity, some tax leverage, better than savings account rates, and easy managability. As others have suggested, compare the return you can get with that on your loan, factoring in tax effects. You may be better off paying off loans first.

Check out I bonds: http://www.treasurydirect.gov/indiv/products/ibond s_glance.htm They guarantee a rate of return above the inflation rate, currently ~2.5% above inflation. It's not risky, and liquid in an emergency.

I am a rising junior in college and decided to take out loans to cover all my costs so I could graduate with money in the bank.

You have cash but you're still taking out student loans? You could graduate debt free, something most college age people only dream about these days. Interest is what on student loans these days? 8%? Has to be close. Unless you're making more than 8% on the cash you have in the bank, it doesn't make much sense to borrow.

Still, there's no reason to have cash sitting around while you're thinking. Go to http://www.treasurydirect.gov/ and open yourself an individual account to buy T-bills. You can buy 4 and 12 week T-bills and make close to 5% with very little risk. Unless you think our government might default, not out of the realm of possibility. They take the money right out of your account and put it back in, with interest, when your bills mature. If you bought a $1,000.00 4 week T-Bill they'd take $995.00 out of your account (the numbers are just an example) and put $1,000.00 back in 30 days later. You buy in increments of 1,000 dollars. I stagger my purchases so I have t-bills maturing every month. That way if I lost my day job my maturing t-bills would roll in like a paycheck for a few months. It also cuts down on impulse purchases when you have to wait a couple months to get the cash together.

The exact discount rate on the face value is determined by auction. You don't get to participate in the auction but the gov gives you the discount rate of the last auction.

Personally, I'd rather be debt free than sitting on a wad of cash barely keeping pace with inflation. That's pretty much up to you, though. Good luck.

This loan money is money you're going to need to repay in a fairly short time, right? The stock market is volatile. When you need the money a year or two years from now, the stock market could be way up from where it is now. It could also be down--possibly by 25% or more. And that's just the market indices. If you invest in individual stocks, rather than index funds or other diversified mutual funds, your investment's value could fluctuate even more.

Better options:

• A high-interest savings account
• A money-market fund at a major brokerage (keep in mind that these are not FDIC-insured)
• Six-month Treasury bills or a two-year Treasury note. You can buy them directly from the government at Treasury Direct
• Pay back the loan

Finally: have you thought about the ethics of using your student loans in this way? Were the loans given to you in order to help you pay for your expenses as a student? Do you think it's okay to ask someone to loan you money for one thing and then use that money for something else? Isn't that a form of lying?

Yeah, I bonds are about the best "risk-free" return you can get... though they are indexed for inflation, so if inflation goes down, so does you interst rate. On the other hand, if it goes up, so does your interest rate. You can buy them at TreasuryDirect.gov

Some clarifications - geeks tend to not take Economics or sleep through them...

T-Bill refers to short term US Treasury instruments of a duration less than a year. T-bills are sold at a discount, do not earn interest, and pay off at face value.
T-Notes have a maturity of from 2-10 years. T-Notes pay interest every six months.
T-Bonds (> 10 years) have not been sold for a long time, but recently it was announced that two sales of 30 year bonds will happen in 2006.
http://www.treasurydirect.gov/indiv/research/indep th/res_indepth.htm

As others have pointed out, the US Treasury has no obligation to buy back the debt prior to its maturity (no more than your mortgage company can demand you pay off the mortgage today).

If China (or any other entity) tried to flood the secondary markets with debt, several things would happen:

The price of the traded debt would initially drop. This would increase the yield to maturity to the purchaser. It would raise interest rates. This would cause money to move out of other currencies into the US Dollar, increase the value of the US Dollar against the Euro, for instance.

Most exchanges have daily limits on trading ranges - if the strategy actually caused a panic, trading stops for the day. The US and other forces would have overnight to develop a strategy to counter the attack.

Futures and Options markets would likely interpret that the action would fail in the long run, and the cash market would be offset with futures and options contracts based on the presumption that the market will restablize at the "normal" levels. One of the benefits of the futures and options markets are they allow arbitrage against irrational market behavior in the cash market.

If China was able to liquidate their holdings in US debt, they are still holding US Dollars, which are basiscally just another form of US debt (Federal Reserve note). After taking a beating on selling their Treasury Notes, now they have to flood the currency markets to turn the dollars into some other currency with stability. Let's say they dump dollars like mad and buy Euros. European interest rates plummet, and European money floods to the US to buy up the now low priced, high interest US Treasuries.

Playing this game is like trying to raise the ocean level by putting your dinghy into the water. The markets are inherently self-correcting.

You want to destroy the US? Undermine our common culture, our national identity, our manufacturing infrastructure, our education system and our faith in representative government.

Perception of US Debt having value is based on the belief that Americans in the future will have the ability and desire to pay the taxes from their productive activities necessary to finance the debt. It's that simple.

Almost all the US Federal Government debt is in the form of bonds. Who holds these bonds? Your grandmother. Your company. Me.

Most, in fact close to all of the US Federal Governments loans come from Treasury Bonds.

How this works: Every time I get a pay check some of it goes into my 401k, some goes into my IRA. However, I also buy a Treasury Bond. There is an fact a Bureau of the Public Debt.

It goes like this. I have $25 burning a hole in my pocket. Uncle same needs $25 to put a man on the moon but won't have the extra cash coming in from taxes that he needs. I buy a bond, in this case a Series EE from TreasuryDirect, that is deducted from my checking and mailed to me. Now, the General Accounting Office has $25 more dollars. They do not write $25 in the black. The face value of this bond is not $25 but in fact $50. The loan period would be 17 years. So they would actually write -$25. (This is a tecnicallity as they would actually put the mature value, the bond reaches face after 17 years but I can hold it and acrue intrest for up to 30 years). Point is that for the next 17 years they will be showing a debt to me.

There are many differnt types of bonds, War Bonds, Public Works Bonds, Treasury Bonds, etc etc.

Almost all public debt is bonds held by companies and citizens. The Insurance Industry loves bonds. They hold more than half of public bonds, because public bonds are long term, safe, guaranteed money makers.

It may not be the best thing for the government to spend uncontrollably, but that is not to say that it hurts the American people. You want some of your taxes back? Charge Uncle Sam interest.

This is a greatly simplified explination of public debt. The important thing to remember is that the government typically borrows the extra money it needs from the citizens who MAKE MONEY off this arrangment.

Open your own account with the Treasury. Loaning Uncle Sam money is a great way to save for the future.

5 - 7 years to recover your investment isn't that great a return. Why not live in a piece of shit house, put the few thousand you saved in http://www.treasurydirect.gov/ ? Wouldn't the interest you earn pay for the increased bills ? And if you move, you get to take your investment with you, and you don't run the risk of it burning down or blowing away.