The government is out of money.
Many of you are young. You have no idea. The government of the United States of America is in debt.
How can a government be in debt? Well, how do you get in debt? You use your credit cards and can’t pay them off. The same goes for the United States of America and all the world governments. They use their credit and go in debt.
Is it a giant Uncle Sam credit card? No, it’s not. It’s in many forms, one of which is the Treasury Bond. Buy a U.S. treasury bond and get paid back in a few years with what you bought it for plus a little more for interest.
According to the Fidelity website, “Treasuries are debt obligations issued and backed by the full faith and credit of the U.S. government. Because they are considered to have low credit or default risk, they generally offer lower yields relative to other bonds.”
When you buy a U.S. Treasury Bond you’re loaning the government money. That money helped fund World War II and Vietnam. The Government needs money.
Why does the government need money? Great question. Because the government is like a corporation. It doesn’t do everything by itself. It needs to buy stuff from private people and company to supply bombs, weapons, and stuff like that.
Take Pantex. Near where I live is Pantex. It’s a private company, well a public company you can buy pieces of in the U.S. stock market, that makes bombs and weapons. The United States government has a contract with Pantex to make stuff. Who pays the employees at Pantex? The company. Who pays the company? Congress.
So the Government needs money and to get that money it loans money by selling U.S. Treasury Bonds.
The number one buyer of U.S. treasuries? The Chinese Government.
If we write off the debt, decide not to pay it back, that’s bad news. Very bad news.
Each year we have a problem. It’s called the government shutdown. Congress runs out of money. Happens in the spring. They have to vote to keep going on without enough money to go on without enough money.