The U.S. National Debt: What is it, where did it come from, and how does it work?
"It is measured in US dollars.  The US cannot just print the money because that would cause inflation.  Remember that money is really just a convenient placeholder for the barter system.  Creating more money regardless of whether there is more value in the economy (work, resources, etc.) is a very bad idea, and doing so has collapsed the economies of many countries. Debt increasing means that the US owes other countries more money.  So yes, they are receiving more money from other countries, but the US has to pay it all back with interest eventually. The US government spends more money than it receives in taxes.  To decrease the debt, spending needs to decrease and/or taxes need to increase. Many countries lend to the US.  One of the biggest is China.  These countries do so because of interest -- the US pays back more money than it gets lent, so the lending countries make a profit. If China suddenly called in all its debt to the US, this would severely damage the world economy.  China's biggest trading partner is the US, so it has no interest in harming the US this way; it would harm itself.  Additionally, the US would probably refuse to pay it (not to mention that it can't), and then China would lose all the money it ""invested"" in the US.  It would benefit no one." "For political reasons, almost all governments (including the US) spend more money than they get from taxes etc.  There are a number of things a government can do to cover the difference: Most governments opt for selling bonds.  The ""National Debt"" of a country can be thought of as being the sum of all the ""Bonds"" that are still paying interest, and that the Government hasn't Redeemed. It can all go horribly wrong.  If the Government gets into a situation where it cannot pay the interest, or it cannot Redeem the Bonds it has promised to, then it may have to break its promise (""Default"" on its payments).  This makes the owners of the Bonds unhappy and means potential buyers of future Bond sales are less likely to want to buy the Governments new Bonds - effectively meaning the Government has to promise to pay more interest in the future.  Recent examples of this include Argentina; and may include Greece soon. The US is in the fortunate position that not many people believe it will Default.  Therefore the new Bonds it sells (which it does on a regular basis) are still in demand, even though its interest payments, and promises to Redeem Bonds are huge."
"The Ponzi/Madoff schemes were closed loops, so the only source of the so-called ""interest"" on the money was the contributions of future investors. The economy is more like a living thing, and the availability of capital allows people to develop new ways to do things in a more productive way. Agriculture is a great example -- for most of human history the overwhelming majority of human labor was dedicated to producing food. Now that proportion is dramatically smaller -- the descendants of farmers 100 years ago are doctors and computer programmers... professions that could not exist. Fractional reserve banking makes the economy more efficient by putting capital that would otherwise be hoarded in circulation. Money is a medium of exchange, so the more it turns over, the better it is. Genoa and Britain pioneered this concept centuries ago, and were able to defeat larger rivals in large part because of the economic advantages that the practice brought to bear.  That's not to say that banking doesn't come with its warts as well. I'd suggest reading ""A Free Nation Deep in Debt"", which does a good job of explaining how we got to where we are today." "Are most big US based financial institutions and banks in such a close relationship with USCIS (United States Citizenship And Immigration Services) so they can easily request the information about market traders? Yes. They must be in order to enforce the laws required by the sanctions. What online broker would you suggest that probably won't focus on that dual citizenship matter? ""Dual"" citizenship isn't actually relevant here. Nearly anyone in the world can invest in US banks except for those few countries that the US has imposed sanctions against. Since you are a citizen of one of those countries, you are ineligible to participate. The fact that you are also a US citizen isn't relevant in this case. I believe the reasoning behind this is that the US doesn't encourage dual citizenship: The U.S. Government does not encourage dual nationality. While recognizing the existence of dual nationality and permitting Americans to have other nationalities, the U.S. Government also recognizes the problems which it may cause. Claims of other countries upon U.S. dual-nationals often place them in situations where their obligations to one country are in conflict with the laws of the other. In addition, their dual nationality may hamper efforts of the U.S. Government to provide consular protection to them when they are abroad, especially when they are in the country of their second nationality. If I had to guess, I'd say the thinking there is that if you (and enough other people that are citizens of that country) want to participate in something in the US that sanctions forbid, you (collectively) could try to persuade that country's government to change its actions so that the sanctions are lifted. Alternatively, you could renounce your citizenship in the other country. Either of those actions would help further the cause that the US perceives to be correct. What it basically boils down to is that even though you are a US citizen, your rights can be limited due to having another citizenship in a country that is not favorable in the current political climate. Thus there are pros and cons to having dual citizenship." Personal finances are not intuitive for everyone, and it can be a challenge to know what to do when you haven't been taught.  Congratulations on recognizing that you need to make a change. The first step that I would recommend is what you've already done: Assemble your bank statements so you can get an accurate picture of what money you currently have.  Keep organized folders so you can find your bank statements when you need them. In addition to the bank statements for your checking and savings accounts, you also need to assess any debt that you have.  Have you taken out any loans that need to be paid back?  Do you have any credit card debt?  Make a list of all your debts, and make sure that you have folders for these statements as well. Hopefully, you don't have any debts.  But if you are like most people, you owe money to someone, and you may even owe more money than you currently have in your bank accounts.  If you have debts, fixing this problem will be one of your goals. No matter what your debt is, you need to make sure that from now on, you don't spend more money than you take in as income.  To do this, you need to make a budget. A budget is a plan for spending your money.  To get started with a budget, make a list of all the income you will receive this month.  Add it up, and write that amount at the top of a page.  Next, you want to make a list of all the expenses you will have this month.  Some of these expenses are more or less fixed: rent, utility bills, etc.  Write those down first.  Some of the expenses you have more control over, such as food and entertainment.  Give yourself some money to spend on each of these.  You may also have some larger expenses that will happen in the future, such as a tuition or insurance payment.  Allocate some money to those, so that by the time that payment comes around, you will have saved enough to pay for those expenses. If you find that you don't have enough income to cover all of your expenses in a month, you need to either reduce your expenses somewhere or increase your income until your budget is at a point where you have money left over at the end of each month. After you've gotten to this point, the next step is figuring out what to do with that extra money left over.  This is where your goals come into play.  If you have debt, I recommend that one of your first goals is to eliminate that debt as fast as possible.  If you have no money saved, you should make one of your goals saving some money as an emergency fund.  See the question Oversimplify it for me: the correct order of investing for some ideas on what order you should place your goals. Doing the budget and tracking all of your spending on paper is possible, but many people find that using the right software to help you do this is much easier.  I have written before on choosing budgeting software.  All of the budgeting software packages I mentioned in that post are from the U.S., but many of them can successfully be used in Europe.  YNAB, the program I use, even has an unofficial German users community that you might find useful. One of the things that budgeting software will help you with is the process of reconciling your bank statements.  This is where you go through the bank statement each month and compare it to your own record of spending transactions in your budget.  If there are any transactions that appear in the statement that you don't have recorded, you need to figure out why.  Either it is an expense that you forgot to record, or it is a charge that you did not make.  Record it if it is legitimate, or dispute the expense if it is fraudulent. For more information, look around at some of the questions tagged budget.  I also recommend the book The Total Money Makeover by Dave Ramsey, which will provide more help in making a budget and getting out of debt. &gt; But their strategy is not debt spending to increase demand.  They deficit spend.  They increase prosperity and thus demand.  They do it consistently and repeatedly.  Claims that it's effects are unintentional don't hold up. Starve the beast is political cover.  What they are doing is pushing profits up for the rich by cutting their taxes.  Why has as many answers as there are politicians pursuing these policies, but the deficit spending is fairly obviously designed to make the economy appear to be doing better.  The interesting side effect is, that they *are* making the economy do better.   &gt; Deficit spending does drive demand short term. But as this debt rises so does the rent seeking cost of that debt.  This is not where rent seeking occurs. The net cost of national debt is negative.   &gt; Most such debt spending is a complete waste.  Only if you don't understand that people having money is a prerequisite for people spending money.   &gt; Your tax rate is not determined by how much money the government takes from you.  The government gives you more income than it takes from you in taxes.  Every bit of cut spending removes income from the population.  Since we all work for each other and one person's income becomes another's relatively quickly, it's an appropriate approximation to average that income out over the population and when you do that you quickly see that government taxes and spending have a net positive effect on how much money we have.  This is why we can dump so much into defense spending and still have a viable economy and why removing that spending would do more harm than good.    Our economic trouble has nothing to do with efficiency and how much work needs to be done, and everything to do with how much money people have to spend.  Government taking on more debt thus creating more money and handing it to it's population makes that problem better and thus the economy gains strength.  Fixing the core problem that is causing the population to run out of money is a harder task, but piling on the debt in the meantime alleviates the symptoms. When coming to that conclusion, you only consider half of the facts. Yes, all money is debt.  But what you miss is that there are other values and assets out there, not just money. These actually match each other to some degree. If the value of all these other assets grow at the same pace as the money supply, then there will be a balance.  If one grows faster than the other, there will be inflation or deflation. At least there should be, which is the problem not understood. "The sad part about this, IMHO, is that almost all of this new debt is ""bad debt"".  Meaning it hasn't really gone into productive endeavors. Just stock buy-backs and such.  So it has had minimal positive effects but is likely to be a drag on future growth for decades." The government won't, as I understand it, it keeps the debt from spiraling out of control. It also promotes spending which keeps our economy from recession (which is a natural occurrence and is needed to shed dead weight). This boosted economy can only last so long, it will eventually keel over dead, again as I understand it - when is a matter for speculation. "I think a big part of the issue is ignorance. For instance, the US govt cannot default on its loans, yet you keep hearing people speak as if it could. The US govt also does not have to borrow to pay for anything, it creates its own money whenever it wants. These 2 facts often evade many people, and they feel the US govt should act like a household, business, or a state govt. This disconnect leads to a lot of confusion, and things like ""fiscal crisis"". Just remember Rahm Emanuel - don't let a crisis go to waste.  Disclaimer: this is not to say the US should create money whenever it wants without thought. However, the simple fact is it can. For those interested in more, check out Modern Monetary Theory (MMT). Its economic study in a world not based on gold standard, or convertible currency (fiat currency)."