http://news.bbc.co.uk/2/hi/business/8160282.stm

So... if i'm reading this right... the US government could be on the hook for as much as 23 trillion?  Really?

1 billion people could have a 23,000 paycheck for that amount

That is crazy!

For the first time I think we're getting a worst case scenerio which isn't sugar coated ...

When you consider that there were some banks that were lending out 20 to 40 times the value of their bank reserve it becomes clear that on a per-household basis the ammount of money that is at risk (because it doesn't really exist) is huge.

23 trillion is a $23,000,000,000,000. That is a lot of money to be on the hook for....there goes their credit rating

Chump change

I think we should just borrow our way out of this debt. Think anyone will give us a 23 trillion loan? I mean, come on. We are the US after all, so we are good for it.

*sighs* gets out cheque book

"Now seeing as you have no collateral, I'll have to break your legs in advance"

The shit will hit the fan if the costs go so high.

Here is why the shit hits the fan:

If the US gov borrows that much, it will have to pay back the debt with interest. $24 trillion debt with, let's say, 4% interest (reasonable for treasury bonds) means paying almost a trillion dollars in interest every year.

The US federal budget in 2008 was around 3 trillion. So we're talking about a situation where around 33% of the budget will go to paying interest (not counting the already existing debt).

However, if borrowing goes that high, interest rates will probably go even higher (supply and demand), and we could be seeing half or more of the US budget directed to paying the interest on that debt.