What will the U.S. debt lead to?

The problem people are having in getting their heads around what a $13 trillion dollar debt means, with deficits running 30 - 40% of the total federal budget, is that we're in uncharted waters. This is a level of fiscally throwing caution to the wind that the world has never seen before. It's hard to say what might result from this because there's no example to look back on.

There may not be a historically significant example, but I do have a personal annectdote that may apply. Back in my younger days, I liked to play poker with the guys at work. Sometimes we'd get a bit carried away and the pots would get pretty big. We began to exchange "markers" or I.O.U.'s, which we agreed would only be collected upon at the poker table. We didn't want to take anyone's grocery money after all. However, if you had outstanding "markers" you didn't get to leave the table with any cash. You had to pay down what you could before calling it a night.

This went on for a while, and worked out pretty well, until one evening when the pots got really out of hand. I was having a winning night, and many of my colleagues were trying to make all their losses up in one hand. Long story short, I wound up with something like $13 million in "markers". Everyone was having a good laugh and decided that of course, we should just throw these markers out. I said I had no problem with that provided that the $600 or so of markers I had outstanding before that night's game were also thrown out. This caused a big uproar of protest. So I said I'd honor my $600 in markers if those who owed me the $13 million honored theirs. The markers were all thrown out. We dispensed with the marker system and started playing cash only.

The level of U.S. debt is beginning to approach the level of ridiculousness of my $13 million in markers. Other countries are in a similar pickle. In the end we may have to employ a solution similar to the one my poker buddies and I came up with. Clear the books, call it even and start over with a new system. This would cause the most heart ache at the millionaire and billionaire level, so it will be avoided as long as possible. But, it seems we're all playing with funny money already. It's just a matter of time before the major players have to acknowledge it.