How will our government secure the loans required to pay for the actions being taken?

If a Trillion $1,000.00 bills reaches 63 miles then it would follow that if you stacked a trillion $1.00 bills it would reach 63,000 miles. The moon is at an average distance of 238,855 miles from earth. So a trillion one dollar bills would go more than a third of the way to the moon. 3 trillion then, would be a stack of bills all the way to the moon. It’s hard to even produce that much paper. I wonder how many trees that would take. Certainly it sounds environmentally destructive.

It seems to me that we should be concerned about how this money is going to be borrowed, from who and on what terms. Concern for paying back a loan is considerably affected by the loan terms and who the money is borrowed from. If an American citizen considers pursuing a loan, BEFORE deciding if borrowing money is the right strategy, we must evaluate the various lending methods available. We decide, after considering our ability to repay the loan, if the terms of the loan will be reasonable enough to justify taking out the loan. In many cases the terms available, because of conditions that might affect the lending market, are too steep and the option of borrowing is declined by the borrower. As a result, other solutions to whatever dilemma or opportunity that inspired the question of borrowing must be pursued.

“Too steep” meaning that the costs of the loan outweigh the benefit that may come from using the money to the ends that have been proposed or considered.


The definition of secured loans from Wikipedia -

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. The debt is thus secured against the collateral — in the event that the borrower defaults, the creditor takes possession of the asset used as collateral and may sell it to satisfy the debt by regaining the amount originally lent to the borrower. From the creditor's perspective this is a category of debt in which a lender has been granted a portion of the bundle of rights to specified property. The opposite of secured debt/loan is unsecured debt, which is not connected to any specific piece of property and instead the creditor may satisfy the debt against the borrower rather than just the borrower's collateral.

There are two purposes for a loan secured by debt. In the first purpose, by extending the loan through securing the debt, the creditor is relieved of most of the financial risks involved because it allows the creditor to take the property in the event that the debt is not properly repaid. In exchange, this permits the second purpose where the debtors may receive loans on more favorable terms than that available for unsecured debt, or to be extended credit under circumstances when credit under terms of unsecured debt would not be extended at all. The creditor may offer a loan with attractive interest rates and repayment periods for the secured debt.



Let me provide an example

A loan shark might offer terms that include criminally high interest rates. In the event of default on the loan, consequences might include physical mutilation as well as the confiscation of properties far beyond the value of the amount leant.

We see examples of this in movies, but what is easily forgotten, is that this really happens. Maybe not to the masses, but it does happen. The American viewing audience generally perceives those suffering the consequences of not being able to repay the loan as getting their “Just Deserts”. We assume that the terms were known and if that person made the choice to enter into those kinds of dealings, that they made their choice with the consequences in mind and thusly deserve what they get. Americans do not rise up to overcome the evil loan sharks because the actions of those suffering led to their plight, no matter how perilous.

Would it not then, seem important for us to be concerned about the deals we will need to make to acquire the incredible sum that we are borrowing? Why has it not been a major part of the decisions regarding the stimulus package and it’s validity? Shouldn’t that have been discussed first? Who, in the world, has enough extra lying around to loan that kind of money and why? Where did it come from? What exactly does a country, like say the United States, offer as collateral for securing a trillion dollar loan? To what ends could this leverage be applied? If it is possible for a country or entity to build up reserves of capital like this, why are we, who claim to be the most prosperous and powerful nation in the world, in debt?

These are basic, common sense questions that are not exclusive to the rich, or highly educated. Very few Americans reach the age of 18 without learning that loan sharks are dangerous to do business with. They also learn that if choices like those are made, consequences will follow. Has America become so deluded and arrogant that we believe that there are no longer consequences for our actions?

Examples of the consequences to American citizen borrowers for not doing adequate due diligence in regards to loans are can be found in the justifications for the bank bailout, the Stimulus Package and the state of the American economy. Borrowers sometime don’t always effectively evaluate their ability to repay loans and instead borrow simply because there are those who will loan the money. The responsibility of the lender of the lender ends with the lender providing clear terms in writing to the borrower. If the lender provides written terms that include the possible consequences, then the borrower bears the responsibility for accepting the penalties that they have agreed to in the event of default. If the lender chooses to loan money that might not be repaid, then it might be considered that the lender made a strategic choice that leads to the lender benefitting from the act of executing the terms of the loan in the event of default.

It seems to me that borrowing money is a big deal and that choice should not be made lightly. The more money borrowed, the bigger deal it is. So how big of a deal is it to borrow a few trillion?