U.S. Government shuts down.

[kandrathe]

What are you referring to when you say "pay that back"? You don't have to pay back printed money, although you do have to accept it as payment for taxes.

If you're referring to the debt, that's a different issue. The US debt has to be paid back on its schedule - bonds come due, and they are paid. Most of those bills are 1-year obligations, but some are 3, 5, 10 or 30 year. The average maturity for a US bond is about 5 years, up by almost a year since the crisis.

Most of the debt, however, is "rolled over" - that is to say, an equal number of new 1-year bonds are sold to replace the old ones cashed in (plus some new ones to cover the deficit). That way, the "quantity" of the debt stays close to the same, although the interest paid might change.

Each year, new debt has to be financed at the market rate. Right now, that rate is hilariously cheap. (Yes, that's right, the government can borrow money for 1 year at an interest rate of 1/10th of a % interest. That is not a typo.) The nightmare scenario that Kandrathe describes, wherein interest rates rise, is mostly about refinancing this rolled-over debt. During the crisis, this has worked in favour of the government budget, lowering borrowing costs on short-term debt to practically zero. But if it were to ever go up sharply, in response to inflation, economic growth, or the threat of default, it might require extra taxation to finance. I don't think this is a big problem, but it apparently keeps some people up at night.

I think my issue with it is that it keeps the government(s) hands in our pockets to the range of about 20-50% of earnings overall. Factoring in government burden to our cost of living, I feel it keeps people from saving money, and induces them to be living pay check to pay check. This is a barrier to entrepreneurship and growth of the private economy.

Another question for you... Private industry over the past decade or three, through the application of technology and process efficiencies has had record increases in productivity (more work, less workers). Why has government gone the opposite direction? We are spending more on government (40% of GDP) as if the same productivity curve did not apply to them.