Liberty on Tap since 1984
On a daily basis, I hear many talking about the Interest we pay on our US Government Debt. However, there is one thought that always occurs to me. What about paying the Principal?
In Banking, there is on old adage, "a rolling loan has no loss". This has been used to describe a single payment loan (borrow money for a term of one-year) and when the loan matures, just "roll" the interest that is due on the loan into a new loan. With this strategy, one can never pay off their debt because it continues to compound (what I call the Snowball Affect).
Our Outstanding Debt reached a milestone today, $13 Trillion Dollars! For this to make any sense to me, I have to see the numbers, so here is what $13 Trillion looks like, ($13,000,000,000,000.00). For the principal of the matter, I assumed the following assumptions to pay out our debt:
Given the above criteria, the US would have a Monthly Payment of $54.8 Billion Dollars ($54,808,524,384.33) for the next thirty years. The Total Payments made would be $19.7 Trillion Dollars ($19,731,068,778,538.50) with the original $13 Trllion in Principal Payments and $6.7 Trillion in Interest Payments.
The above assumes there are no additional borrowings (no future debt) and that all unfunded liabilities (Social Security, Medicare, etc.) are paid for by other means.
I am attaching a PDF File if you have any Interest in seeing what it looks like to pay off the Principal.