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Ask Dave

Can The Government Go Bankrupt?

The government is a disaster with money. But can they hit the ultimate low and go bankrupt?

QUESTION: Susan asks if it’s possible for the government to go bankrupt.

ANSWER: Technically yes, but it’s so close to impossible that I wouldn’t worry. They just suck all the blood out of us. They just become bureaucratic vampires. However, there is one thing that needs to be pointed out about the national debt. When the government takes $100 billion and uses it to help Fannie Mae or AIG, where do you think they got that money. They borrowed it by way of government bonds. People in the marketplace buy those bonds. If they are buying government bonds, they aren’t buying other kinds. When the government does things that way, they are sucking money out of the economy.