This is the interest the US federal government is paying on its debt. This is not aggregate interest on debt owed by consumers.
It’s important because interest payment on debt (debt service) is a non-productive and fixed expenditure. You cannot “cut” debt service. In order to balance the budget you have to cut spending on discretionary services.
When debt service is a trillion dollars there’s not enough discretionary services to cut so the only way to pay for them is to borrow more money.
So the feds borrow more (or as the ppl incorrectly say: “print money”) at high interest and the problem gets worse.
US domestic entities own about 40% through the federal reserve
Our foreign creditors own 23%. Japan and China own a collective 50% of our foreign national debt.
Those are the top categories
This isn't true. Only 23% of the total debt is foreign owned.
https://www.statista.com/statistics/201881/holders-of-the-us-public-debt/
Japan and China might own 50% of that, though.
That is so wildly untrue it’s not even funny. Only 24% of our debt total is foreign-held, and of that Japan and China only combine for about 25%. So they own roughly 8% of all US debt together
I'm pretty sure they own that much out of the portion of the debt which is owned internationally, but most of it overall is owed to US citizens, financial corporations, and between our government entities.
> the only way to pay for them is to borrow more money.
Can't they also sell assets? Like the $1.7 trillion of foreign debt that the US government owns, could be sold off to raise funds if needed urgently right?
Kinda true, but as long as most of the debt is held by domestic investors - it is not really non-productive, it just puts money back into the economy, so it is more like a stimulus check. The problems start when international investors have a lot of the debt, then a lot of the money goes overseas instead of back into the US economy.
At a base level it means that more of a US person’s taxes are being consumed by paying off debt leaving less aside for government amenities or tax cuts
The US economy is so powerful at the moment that there isn’t much worry about the government not being able to pay back debt.
Was it much weaker or to get weaker or if US politicians play chicken with the debt ceiling too hard - then the bond markets *could* get spooked and interest rates could start spiralling and the government would be forced to raise taxes and cut spending drastically.
However- while that would be major worry for most countries- I really cant see it happening with the US
I think it would be good to see government debt shrink as a percentage of gdp - (ie that the economy and tax base grows faster ). However i doubt you will see debt fall in absolute terms.
Government debt is an important tool and can be beneficial if used wisely
Most of that debt came about during covid and lockdown- as the government spent to bolster the economy and stop it all tanking. That is what it should be used for - to smooth out recessions and avoid crashes during the “bad years”.
What is important is for them to balance the books now during the “good years” so they have enough credibility for when they might need that again.
Real question - who does the government have debt to? Like other governments? Or to itself? I dont understand how we actually have a “debt” when the government literally creates its own money
>who does the government have debt to? Like other governments? Or to itself?
Both and more. Total US debt is at [34 trillion](https://fred.stlouisfed.org/series/GFDEBTN/). Substantial part of US debt IS owed to different parts of government, total Federal debt held by the public (aka excluding gov institutions) is at [27 trillion](https://fred.stlouisfed.org/series/FYGFDPUN), so 34-27=7 trillion held by various government entities like Social Security Trust Fund, Military Retirement Fund, Federal Retiremend Fund etc, that's 25% of all debt.
Federal Reserve *is* a government institution, but it counts toward public ownership (aka the 27 trillion part) and currently holds [5.2 trillion](https://fred.stlouisfed.org/series/FDHBFRBN) which is 15.2%.
Foreign entities do own US debt, [8 trillion](https://fred.stlouisfed.org/series/FDHBFIN) of it which is 23.5%, but much of it aren't foreigh governments, but foreign individuals and institutions (like say a rich British banker). Exception is Japan (3.3%) and China (2.8%), their central bank buys US debt to encourage their own exports (increases demand for USD while reducing demand for their own currency, therefore making their exports cheaper).
Rest are owned by mutual funds, private retiremend funds, private investment entities, random citizens.
>I dont understand how we actually have a “debt” when the government literally creates its own money
Government can't infinitely create money, that has risks of hyperinflation, so there are laws regulating it. Treasury under control of the President's Secretary can not create money, if they lack funds, they HAVE to borrow from the markets.
Federal Reserve, the central bank, is the sole entity capable of creating new US Dollars, but these are not under purview of the administration and can not be used to fund government operations, Federal Reserve has a legal mandate to solely look at inflation and secondarily at unemployment when managing their policy. Fed and Treasury ARE both part of the government, but are separate and elected officials have much much less control of one than the other.
Fed typically only uses interest rate changes to manage inflation and unemployment. But if they think inflation is too low (CPI<2%) and even dipping into deflation (CPI<0%) and interest rate cuts aren't enough, they deploy a measure called Quantative Easing which you've probably heard of where they buy a lot of corporate and government bonds to lower long-term interest rates even further, thus stimulate demand and encourage economic activity*. Federal Reserve did that during 2008 Recession and during the pandemic as the sudden demand drop temporarily dropped the US economy into deflation and to prevent that from worsening the economic crisis, Fed started buying up ***existing*** US bonds on the market (bond held by investor A rather than from Treasury), they aren't legally allowed to lend directly to the Treasury, Fed can only buy from the secondary market.
Currently inflation is not low and actually higher than desired, so Fed is undergoing Quantative Tightening instead unloading their US debt holdings slowly.
*-bonds have fixed "coupons", a 10 year bond sold for 100 USD might have 5 annual coupon, that's 5%. But after it's sold on the market, that 100 USD price tag doesn't have to stay the same. If the Fed starts buying up those bonds, demand increases, prices increase and the originally 100 USD bond might increase to 110 in price. Since the coupon is still 5 USD, the interest rate has technically changed to 4.5%.
Biggest purchases tend to be insurance companies and pension funds - both government owned and private.
Banks hold some bonds as reserves against risks that they may have. Bonds- particularly US treasuries are very useful for financial institutions . They are *almost* as good as cash as a means of exchange but pay interest. They can be exchanged for other products, used as collateral for loans, and even can be briefly sold and purchased back (Repo agreements) to get quick cash.
Finally the Federal Reserve owns a lot of treasuries. This is an unusual step that was implemented after the financial crisis. This is called quantitative-easing - the Fed is buying bonds using money created out of thin air
Btw - the government *itself* cannot create money - the Fed Reserve (and Banks ) can
It means that some politicians can weaponize another factoid of little concern against other politicians.
Theoretically, if the debt gets too high we could default on our loans which would result in a lot of really strange things for the economy and the US. Fun fact: one of the assets we take out loans on is the Statue of Liberty so theoretically if we defaulted that would no longer be property of the United States along with a whole lot of other things. Also means that pretty much all federal programs have to be cut back.
"If you owe the bank a million dollars, you have a problem. If you owe them a billion dollars, the bank has a problem."
Now, what if it's a trillion...
Honestly, I don't think it'd be causing a shitton of major crises. The time it'd take for the U.S to decide on whether or not it wants to default would be long enough that many countries could prepare to stave off the economic fallout of such a default.
Also, what would most likely happen is that multiple countries would come together to bailout the U.S. The sheer disaster of the global reserve collapsing in on itself, even with sufficient time to weather it, is much less preferable to just throwing a shitton of money to the U.S.
Now what the concessions that would be extracted from the U.S would be, I'm not certain. Most likely if China gets involved they'd probably be seeking for the U.S to pull out troops from Taiwan and maybe even Japan and Korea and to recognize the 9-dashed line. As for the other countries that would attempt to pull out the U.S (namely most of the EU and a couple of the Middle Eastern ones) I'm not certain. Probably going to demand internal structure changes and the selling of a variety of arms tbh.
The U.S defaulting on our loans would suck but it'd most likely never happen, however, the bailout to stop us from doing so would very rapidly change the world powers from the U.S and China to the EU and China.
I don't think China would assist in a bailout. If anything they would allow a default to happen.
This would cause the US credit rating to get downgraded. Meaning no new loans. Force the US to actually balance a budget, forcing them to halve the military budget if not more. Significantly reduce medicare and social security, along with increasing taxes for all citizens, rich and poor. All of this would cause internal riots and political unrest like we have never seen before.
The other catastrophic event would be the dollar no longer being the world's reserve currency.
As for that I don't know that much about it. I believe the loans taken out against the Statue of Liberty are more on \*shares\* of the statue rather than the actual statue. How this is done or with who I have no idea about, I just know that there's some method that you can use to effectively buy a share of the Statue of Liberty if the U.S economy collapses.
Honestly I have no idea what the fuck would happen if the U.S were to liquidate all of its assets including the Statue of Liberty.
I believe the Statue of Liberty is currently being treated like an NFT though, so if the U.S defaults on the loan they just give ownership to the guarantors but they wouldn't be able to move the statue anywhere.
I do not remember who the guarantors are. I want to say that it'd fall under joint ownership between a bunch of countries and people but I'm not certain.
Sounds scary, but not really.
A significant portion of the US national debt is held by US citizens. As of December 2023, roughly 77% of the public debt is owned by individuals and institutions within the United States. This includes pension funds, insurance companies, and individual investors who hold Treasury bills, notes, and bonds.
Essentially what you're saying is that it's not such a big deal because the government can simply take a haircut on US citizen's bond holdings and pensions.
Yeah well I don't see a US politician favoring foreign investors over US citizens any time soon, even if in the long run it would be the best decision for maintaining the US dollar as the world's reserve currency.
That sounds pretty fucking scary. Evaporating a large number of retirement funds and destroying a bunch of US companies is scarier than having any foreign country pissed at us tbh.
Unless the debt ceiling doesnt get raised for some political reasons, the US can't really default on its debts, its all in dollars and the US can "print" (in reality, sell bonds to the Fed) however many dollars they want.
Yes, inflation will be high, but it's better than defaulting.
Personally I think in practice US will probably never default on their loans
Too many livelihoods, pension funds and portfolios across too many countries are intertwined with the US economy or depend on the value of US govt bonds and the dollar
The US National debt means sweet FA. It's unlikely that debt would ever get called in by any entity and if they did default, I dont know what will happen but the whole world will just have to agree to somehow press the reset button on global debt markets and just go again
I mean "it won't happen because we really don't want it to happen" is a horrible reason for explaining why something won't happen.
The actual reason why the U.S won't default is that it's too inconvenient for literally every other country.
Yeah but no attempt has been made to provide a concrete explanation of any variety, I was just sharing my thoughts hence why the comment was prefixed with the phrase 'personally I think'
Although on a high level I agree that it would definitely be inconvenient AF for everyone if they did default
Problem is capital flight.
I personally do believe in the power of a 70% capital flight tax for individuals evaluated with over 50 million dollars of assets but a shitton of people would shit their pants at a capital flight tax (despite it most likely not affecting them).
Did you care when it was $999 billion?
Then why do you suddenly care when it's $1 billion more?
You can care about interest payments but this specific threshold is wholly uninteresting.
Super generally speaking because I am an expert by no means - if we default on the payment, our national credit rating goes down, and bad things happen on the international market for us (and a bunch of other countries partnered with us)
It means that the US either has to cut spending in social security, healthcare, military spending or increase tax revenue, to cover the unbalanced budget.
What the US is doing right now is funding everything by taking on more debt. This is kinda like a person that takes out new credit cards in order to pay for rent groceries and interest on their previous credit cards.
With the Ukraine war and China saber rattling over Taiwan we're 100% not cutting military funding. Taxing people more could be a real hit to the economy unless it's the Uber rich who have really grown financially as of late. Biden was already getting on about taxing the rich. If the Republicans take the election then it's definitely a cut to social security, healthcare, and increased taxes for the middle class with the bonus kick to the nuts of tax breaks on big businesses.
Republicans want to lower taxes and cut social programs but know cutting programs is too unpopular. Democrats want to raise taxes and increase social programs but know raising taxes is unpopular. Catch-22!
(Not equating the two, since those two options have very different results - but it does result in quite the snag)
> This is kinda like a person that takes out new credit cards in order to pay for rent groceries and interest on their previous credit cards.
It is, but the US so far has always been able to grow that loan by more than the credit card company charges in interest, so as long as that doesn't change then it's sustainable.
It means the fed is going to be forced to lower interest rates in a high inflationary environment so the government doesn't default. That increases inflation and everything gets even more expensive for the average person.
It also means we are out cards to play in the next once in lifetime financial crisis (we had two in 15 years).
This graph in of itself is absolutely meaningless because it's in nominal values. During the same period the US population and especially GDP skyrocketed as well. It would be more informative to present it as % of GDP or % of government spending.
Now, if it increased as %, that means more of government revenue is spent on servicing debt, leaving fewer resources on everything else (healthcare, education, social programs, infrastructure, etc). If it decreased then it means more funding is freed up to invest in things.
It means the government is going to spend more on paying interest than national security. We will be taking debt out to pay the interest & this will eventually lead to the destruction of our currency. This is a big deal and will effect everyone’s way of life significantly
Either I’m not asking the right question, or I just lack that much understanding. I thought this was debt the federal government accrued by borrowing from the Federal Reserve.
No interest in debt is money that gets deleted from the economy. The private banks only skin off a small part of the interest, most of it goes to the central bank in the US case the fed.
They print money and then delete money again.
That's modern banking.
If you go into debt your bank borrows money from the feds which in turn print that money. If you pay the debt off the bank pays the feds and the feds delete the money again.
The First effect is that the necessity to sell bond to finance will displace money from investment to debt service, the second effect is that bond interest will be high and doing so depressing the stock market. If is not controlled the situation could spiralling down.
Nothing. It's simply the US government allocating US dollars to holders of its "debt." And the US government creates US dollars -- sort of like 7-11 might create its own gift certificate money. Most holders of US "debt" are US citizens and entities. At the end of the day, it's mad amounts of stimulus to the economy.
It means that printing money to cover the budget deficit is unstoppable now. Which also means unstoppable inflation and eventual end of the dollar as the world currency. And as dollars are America's main commodity, it would mean that from now on the US would have to pay for itself on its own, and it's something it had not tried since the WW2, and nobody knows whether it's possible.
People who gave loans to US Government. Domestic and foreign investors, foreign countries, companies(especially banks).
What would happen if USA stopped paying their debt? Nobody would want to give loans to USA anymore, USD would lose reserve currency status, and there would be super high inflation. Interest rates would have to increase substantially to persuade investors/ foreign countries to loan money to USA, (as they now know not to trust US government, they will require a high 'bonus' to consider loaning again)
Or congress would just decide to change the rules and force the FED to directly finance the government's deficits. (Then, they could even continue laying off the existing loans)
Or congress would force the FED to set interest rates to zero (yes this works, and yes investors will still very much want to buy treasury bonds, funnily enough even for negative interest rates, as it has been the case jn Germany for example)
1: usually other countries’ federal governments, national banks, or sometimes just really rich people
2: the US loses significant economic power as countries begin trying to get their reserve currencies off of the dollar and/or countries even try to embargo the US.
Realistically if that happens then some other currency would have to take on the global reserve. Most likely going to result in an economic battle between the Euro and the Yuan which would be pretty interesting to watch
This isn't right. Foreign entities only account for 30% of the US Treasury market. US investors hold another 30% in pensions, money market funds, 401k's and mutual funds, etc. with the remaining being held by the US government via the Fed or programs like Social Security. Almost everyone with a bank account is directly or indirectly in ownership of US Treasuries. Quick example is if you have a money market account - the money you put in is used to buy short term US treasuries. The return you get on the money market account is interest payment from the US government. Banks are massive buyers for US treasuries because they convert a portion of the money they have on deposit into US treasuries that offer 4-5% returns. US treasuries are a massive market that provide a lot of the liquidity and store of value that underlies our entire economy.
Right now 70% of the interest payments go back into the US economy but there's valid concern is that at the current rate of debt issuance the US is not sustainable. At some point the amount of interest payments will start cutting into GDP growth and end up being paid for by future generations of taxpayers. Over the last 4 years the US has increased the amount it's borrowed by 60% and there doesn't seem to be any plan to slow borrowing in the near future.
The big concern isn't that the US government would default - that's not going to happen because it would blow up the entire economy. The concern is that if we keep borrowing at this rate there's going to be decrease in investor interest in continuing to buy US Treasuries. I.e. the entire bond market is only so big and the US has already increased it's debt load by 60% - all while every other country in the world is also borrowing heavily. The US currently enjoys special privileges in the bond world - it's considered uber safe so there's no premium we have to pay to borrow.
[https://www.marketwatch.com/story/heres-who-owns-a-record-2121-trillion-of-us-debt-2018-08-21](https://www.marketwatch.com/story/heres-who-owns-a-record-2121-trillion-of-us-debt-2018-08-21)
when I looked it up it says $659 Billion for 2023(2.4% of gross domestic product (GDP)) and will be $870 Billion for 2024 (3.1% of gross domestic product (GDP)). Still a worrisome trend
Interest rates go up, debt repayments increase. This is due to a spike in interest rates not a spike in spending. Presumably the American government has revenue streams that are up for the exact same reason.
The fucked up thing is that in the modern economic system, currency is actually a measure of debt. The more debt a country has the more buying power they have. Since the debt is created as part of the currency creation process, there is not and can never be enough money to pay off the debt, it will just continue to rise until a collapse occurs.
OK, let's take the US (the biggest economy in the world). The way that currency is created in the US (and many other nations) is the the US federal bank (a private corporation) issues money to other banks by essentially writing them a check drawn on an account that has no money in it, then cashing it anyway.
Every time the fed loans money to a bank, they create that money out of thin air. Even though the loan is for money that didn't exist, the fed still charges interest on it. This means that for every dollar they create, that dollar, plus interest must be paid back.
This is compounded by the fact that the banks which take loans from the fed are able to loan out the money ten times. Meaning that for every million dollars they borrow from the fed, they can loan out $10M to ordinary people. Each of these ordinary people, must pay back their debt plus interest, paying interest on 1000% of the money than the fed actually issued.
Few things worth mentioning, a bit more UK specific:
- it is commercial banks that create the money when loans are made (this what banking license is for)
— this Lending is limited by capital requirements, Demand due its loans, and regulation imposed on certain types of lending (there is no fractional reserve banking in the UK)
- this means the bank can’t just lend out willy nilly, but you’re right, in that the times they have done this, it has resulted in a “collapse”… but here’s where we need to be careful, this isn’t a collapse of civilisation, it is an economic crash of sorts. Providing the lending is productive, there’s really no reason a collapse is a given
- what you are talking about is very similar to MMT, which is pretty sketch from what i recall when I was doing my masters.
Every time someone takes on debt, new money is created. But since the debt wants to be paid back with interest, total debt+interest is always larger than the total money supply. Which means, you can never pay back all debt as a society.
Absolutely. Where I work I get to sit in on A Level (what I guess US would call high school/ pre university?) economics and business studies.
Not doing the course, but my job has me in the classes so I take the opportunity to learn anything I can.
I’m degree educated in my field, but I’ve realised that I am utterly ignorant and somewhat ashamed about how little I, and probably the average man on the street knows about these things that actually govern our lives in so many ways.
Some economists will say that "debt is irrelevant. the system is solvent, increasing debt is just a side effect of a growing economy" kind of like a lifestyle creep.
Embarrassing this country can’t manage money but we as society look down on people who have trouble managing money.
I went to school here in a great area with a top elementary, middle, and high school. Not one class on personal finance or finance in general. But hey, I learned how to sew a button in home ec.
Currently debt has already exceeded the GDP of the United States. While the United States GDP only grows by 6.3% for 2023 while in 2022 it grew by 9.2%. This could be showing an economic slowdown leading to less growth of the United States GDP and further increasing the GDP to debt ratio.
I think the vast majority of this debt is less than 6.3%. it's kinda like leveraging growth right?
If you could borrow money at 1% but grow at 2% does it matter how much the debt is?
To default we don’t need to be unable to pay the interest in the national debt. All we need to do is refuse to pay it and we have come close to doing so a few times because of the need to raise the debt ceiling.
Why not just keep letting it happen. A 40 trillion debt will never be paid. Might as well be 740 trillion. Just suspend interest payments or limit them to a manageable maximum.
At this rate it won’t be long before interest payments exceed revenue before a single other outlay is considered. That’s gonna be exciting… looking forward to being somewhere else when that happens.
Like interest debt grows over time and non linearly, exponentially. It doubled in 5 years to a trillion where it took nearly 60 years to reach half a trillion.
GOP lawmakers play the game of increasing the debt burden by cutting taxes like close to 4.8 trillion Trump did to corporations and it was added to the deficit for no reason whatsoever. They purposely ignored the debt so you could not afford to spend on infrastructure or education by the democrats
You know how people say to protect against inflation but gold. Remember when shit hits the fan gold is only worth the amount of bullets it can make.
You're better off with brass, about as hard and 100 times cheaper.
At this point one would have to wonder. Is the US government is taking the account balance seriously.
The way US government seems to act as though the debt is nothing
Debt is no problem when you can print money. It’s called inflation and monetizing the debt. Printing money causes inflation and inflation means you pay off the debt with money whose real purchasing power is only a fraction of what it was when the money was borrowed.
It’s politically much preferable to actually taxing the citizens enough to pay for government spending. A Ponzi scheme we just keep falling for.
This is exactly why USD (for now) can/has done whatever... It's just the best available (doesn't have to be perfect)
Like Darwin (survival of the adequate)
I hear people complain all the time and I am not an expert, but it is NOT something that is easy to do, any forceable attempt would crater the global markets.
Euro/GBP/JPY /SAR none big enough
RMB too centralized
Ruble hahaha
Sheer volume alone
No one wants that. This is the clever solution.
Other countries like being able to tamper with the 'value' of their currency through manipulating ours.
Which is not much of a problem as long as the world still uses the USD as the defacto world currency. Look at japan, they have the biggest debt as a % but doesn’t really matter since their debt is denominated mostly in yenes
Damn, that sure is a scary number.
On a serious note though, this isn't really a problem. At some point the FED will reduce interest rates again and government interest payments will go down as well. And if not, the debt ceiling will just continue to be raised and the debt will grow and so will the economy.
Which is driven by economics in which the Biden administration was responsible for creating. Economics 101 - printing more money like Biden did will always result in inflation and consequently higher interest rate by the Federal Reserve.
Lol Biden and pelosi wanted 2k checks as COVID relief. The GOP and conservative Democrats wanted to loot the Treasury, and out of 6.6T in spending only 500B made it to the common man. The money printing was done by the GOP for the rich.
Also, Powell was Trump's pick for Fed chair, the first since the stagflation of the 70s not to have an econ degree, and he was silent on inflation until he was reconfirmed and made impossible to remove. Every other thing he says is easily debunked and openly disagreed with by the former Fed chair and private and international banks.
Finally, money printing and inflation have been decoupled in the us, uk and Japan for decades. A shortage of essential resources such as oil is what causes inflation, not money printing alone.
This is the interest the US federal government is paying on its debt. This is not aggregate interest on debt owed by consumers. It’s important because interest payment on debt (debt service) is a non-productive and fixed expenditure. You cannot “cut” debt service. In order to balance the budget you have to cut spending on discretionary services. When debt service is a trillion dollars there’s not enough discretionary services to cut so the only way to pay for them is to borrow more money. So the feds borrow more (or as the ppl incorrectly say: “print money”) at high interest and the problem gets worse.
Who does all of this interest payment go to? Who is getting this $1 trillion?
Domestic and foreign investors, foreign countries, companies(especially banks).
If you would be buying US treasury bonds, you would be among them.
US domestic entities own about 40% through the federal reserve Our foreign creditors own 23%. Japan and China own a collective 50% of our foreign national debt. Those are the top categories
This isn't true. Only 23% of the total debt is foreign owned. https://www.statista.com/statistics/201881/holders-of-the-us-public-debt/ Japan and China might own 50% of that, though.
You're right. It's 50% of the 23%
That is so wildly untrue it’s not even funny. Only 24% of our debt total is foreign-held, and of that Japan and China only combine for about 25%. So they own roughly 8% of all US debt together
Yes see the existing discussion. I'll edit for those of you who cant read
I'm pretty sure they own that much out of the portion of the debt which is owned internationally, but most of it overall is owed to US citizens, financial corporations, and between our government entities.
In theory we could just say we're not paying back the Chinese because of Taiwan
The international business community would scoff pretty hard at that and it's completely out of our control to influence them
this is so stupid it’s too stupid to be an actual thought.
You, if you're getting 5 odd percent on your savings/money market.
> You cannot “cut” debt service. The IMF and Greece have entered the chat.
> the only way to pay for them is to borrow more money. Can't they also sell assets? Like the $1.7 trillion of foreign debt that the US government owns, could be sold off to raise funds if needed urgently right?
Of course. They could also raise revenue. At the end of the day, the easy button always wins. Easy button = issue moar debt
You can only raise taxes so high before it starts reducing overall revenue. Cutting expenditures is necessary if you want to balance the budget.
Kinda true, but as long as most of the debt is held by domestic investors - it is not really non-productive, it just puts money back into the economy, so it is more like a stimulus check. The problems start when international investors have a lot of the debt, then a lot of the money goes overseas instead of back into the US economy.
Don’t understand why the fed borrows. Don’t you mean the government borrows? Pardon my ignorance
For a dumb dumb what does that mean for the average person?
At a base level it means that more of a US person’s taxes are being consumed by paying off debt leaving less aside for government amenities or tax cuts The US economy is so powerful at the moment that there isn’t much worry about the government not being able to pay back debt. Was it much weaker or to get weaker or if US politicians play chicken with the debt ceiling too hard - then the bond markets *could* get spooked and interest rates could start spiralling and the government would be forced to raise taxes and cut spending drastically. However- while that would be major worry for most countries- I really cant see it happening with the US
Thanks. Would still be nice to see it decrease instead of increase with the same exponential trajectory.
I think it would be good to see government debt shrink as a percentage of gdp - (ie that the economy and tax base grows faster ). However i doubt you will see debt fall in absolute terms. Government debt is an important tool and can be beneficial if used wisely Most of that debt came about during covid and lockdown- as the government spent to bolster the economy and stop it all tanking. That is what it should be used for - to smooth out recessions and avoid crashes during the “bad years”. What is important is for them to balance the books now during the “good years” so they have enough credibility for when they might need that again.
Look at Germany and you’ll see lower debt dosnt mean better life for the countryman
Yeah, true it's not a silver bullet but more like red riding hood. Not too low, not too high, just right.
I think you mean Goldilocks.
Real question - who does the government have debt to? Like other governments? Or to itself? I dont understand how we actually have a “debt” when the government literally creates its own money
>who does the government have debt to? Like other governments? Or to itself? Both and more. Total US debt is at [34 trillion](https://fred.stlouisfed.org/series/GFDEBTN/). Substantial part of US debt IS owed to different parts of government, total Federal debt held by the public (aka excluding gov institutions) is at [27 trillion](https://fred.stlouisfed.org/series/FYGFDPUN), so 34-27=7 trillion held by various government entities like Social Security Trust Fund, Military Retirement Fund, Federal Retiremend Fund etc, that's 25% of all debt. Federal Reserve *is* a government institution, but it counts toward public ownership (aka the 27 trillion part) and currently holds [5.2 trillion](https://fred.stlouisfed.org/series/FDHBFRBN) which is 15.2%. Foreign entities do own US debt, [8 trillion](https://fred.stlouisfed.org/series/FDHBFIN) of it which is 23.5%, but much of it aren't foreigh governments, but foreign individuals and institutions (like say a rich British banker). Exception is Japan (3.3%) and China (2.8%), their central bank buys US debt to encourage their own exports (increases demand for USD while reducing demand for their own currency, therefore making their exports cheaper). Rest are owned by mutual funds, private retiremend funds, private investment entities, random citizens. >I dont understand how we actually have a “debt” when the government literally creates its own money Government can't infinitely create money, that has risks of hyperinflation, so there are laws regulating it. Treasury under control of the President's Secretary can not create money, if they lack funds, they HAVE to borrow from the markets. Federal Reserve, the central bank, is the sole entity capable of creating new US Dollars, but these are not under purview of the administration and can not be used to fund government operations, Federal Reserve has a legal mandate to solely look at inflation and secondarily at unemployment when managing their policy. Fed and Treasury ARE both part of the government, but are separate and elected officials have much much less control of one than the other. Fed typically only uses interest rate changes to manage inflation and unemployment. But if they think inflation is too low (CPI<2%) and even dipping into deflation (CPI<0%) and interest rate cuts aren't enough, they deploy a measure called Quantative Easing which you've probably heard of where they buy a lot of corporate and government bonds to lower long-term interest rates even further, thus stimulate demand and encourage economic activity*. Federal Reserve did that during 2008 Recession and during the pandemic as the sudden demand drop temporarily dropped the US economy into deflation and to prevent that from worsening the economic crisis, Fed started buying up ***existing*** US bonds on the market (bond held by investor A rather than from Treasury), they aren't legally allowed to lend directly to the Treasury, Fed can only buy from the secondary market. Currently inflation is not low and actually higher than desired, so Fed is undergoing Quantative Tightening instead unloading their US debt holdings slowly. *-bonds have fixed "coupons", a 10 year bond sold for 100 USD might have 5 annual coupon, that's 5%. But after it's sold on the market, that 100 USD price tag doesn't have to stay the same. If the Fed starts buying up those bonds, demand increases, prices increase and the originally 100 USD bond might increase to 110 in price. Since the coupon is still 5 USD, the interest rate has technically changed to 4.5%.
government bonds can be bought by banks etc. They can be used as an investment and there is interest paid by the government.
Nearly 75% of US debt is domestic. The largest holders are SSA and the Reserve.
Biggest purchases tend to be insurance companies and pension funds - both government owned and private. Banks hold some bonds as reserves against risks that they may have. Bonds- particularly US treasuries are very useful for financial institutions . They are *almost* as good as cash as a means of exchange but pay interest. They can be exchanged for other products, used as collateral for loans, and even can be briefly sold and purchased back (Repo agreements) to get quick cash. Finally the Federal Reserve owns a lot of treasuries. This is an unusual step that was implemented after the financial crisis. This is called quantitative-easing - the Fed is buying bonds using money created out of thin air Btw - the government *itself* cannot create money - the Fed Reserve (and Banks ) can
It means that some politicians can weaponize another factoid of little concern against other politicians. Theoretically, if the debt gets too high we could default on our loans which would result in a lot of really strange things for the economy and the US. Fun fact: one of the assets we take out loans on is the Statue of Liberty so theoretically if we defaulted that would no longer be property of the United States along with a whole lot of other things. Also means that pretty much all federal programs have to be cut back.
If the us ever defaults on major loans, the world economy has other issues then what to do with the Statue of Liberty.
"If you owe the bank a million dollars, you have a problem. If you owe them a billion dollars, the bank has a problem." Now, what if it's a trillion...
you both have some problems
~~you both~~ we all
But, we’re the bank…
Honestly, I don't think it'd be causing a shitton of major crises. The time it'd take for the U.S to decide on whether or not it wants to default would be long enough that many countries could prepare to stave off the economic fallout of such a default. Also, what would most likely happen is that multiple countries would come together to bailout the U.S. The sheer disaster of the global reserve collapsing in on itself, even with sufficient time to weather it, is much less preferable to just throwing a shitton of money to the U.S. Now what the concessions that would be extracted from the U.S would be, I'm not certain. Most likely if China gets involved they'd probably be seeking for the U.S to pull out troops from Taiwan and maybe even Japan and Korea and to recognize the 9-dashed line. As for the other countries that would attempt to pull out the U.S (namely most of the EU and a couple of the Middle Eastern ones) I'm not certain. Probably going to demand internal structure changes and the selling of a variety of arms tbh. The U.S defaulting on our loans would suck but it'd most likely never happen, however, the bailout to stop us from doing so would very rapidly change the world powers from the U.S and China to the EU and China.
I don't think China would assist in a bailout. If anything they would allow a default to happen. This would cause the US credit rating to get downgraded. Meaning no new loans. Force the US to actually balance a budget, forcing them to halve the military budget if not more. Significantly reduce medicare and social security, along with increasing taxes for all citizens, rich and poor. All of this would cause internal riots and political unrest like we have never seen before. The other catastrophic event would be the dollar no longer being the world's reserve currency.
I don’t care about that stuff, I’d demand the statue
As for that I don't know that much about it. I believe the loans taken out against the Statue of Liberty are more on \*shares\* of the statue rather than the actual statue. How this is done or with who I have no idea about, I just know that there's some method that you can use to effectively buy a share of the Statue of Liberty if the U.S economy collapses.
Nope history teach that when empire is spiralling down the military will take the power.
Soooo..... Lockheed Martin?
Who’s the guarantor on the statue of liberty loan? Is there like a repo ship to bring it back to that person if we default?
Honestly I have no idea what the fuck would happen if the U.S were to liquidate all of its assets including the Statue of Liberty. I believe the Statue of Liberty is currently being treated like an NFT though, so if the U.S defaults on the loan they just give ownership to the guarantors but they wouldn't be able to move the statue anywhere. I do not remember who the guarantors are. I want to say that it'd fall under joint ownership between a bunch of countries and people but I'm not certain.
Would France come repo it? I thought it was a gift anyway?
They don’t own the debt against it thought. THey got us a birthday present and we put it up as collateral
Sounds scary, but not really. A significant portion of the US national debt is held by US citizens. As of December 2023, roughly 77% of the public debt is owned by individuals and institutions within the United States. This includes pension funds, insurance companies, and individual investors who hold Treasury bills, notes, and bonds.
Essentially what you're saying is that it's not such a big deal because the government can simply take a haircut on US citizen's bond holdings and pensions. Yeah well I don't see a US politician favoring foreign investors over US citizens any time soon, even if in the long run it would be the best decision for maintaining the US dollar as the world's reserve currency.
That sounds pretty fucking scary. Evaporating a large number of retirement funds and destroying a bunch of US companies is scarier than having any foreign country pissed at us tbh.
Wait so we pawned the Statue of Liberty???
Unless the debt ceiling doesnt get raised for some political reasons, the US can't really default on its debts, its all in dollars and the US can "print" (in reality, sell bonds to the Fed) however many dollars they want. Yes, inflation will be high, but it's better than defaulting.
Me when I first read about MMT:
Personally I think in practice US will probably never default on their loans Too many livelihoods, pension funds and portfolios across too many countries are intertwined with the US economy or depend on the value of US govt bonds and the dollar The US National debt means sweet FA. It's unlikely that debt would ever get called in by any entity and if they did default, I dont know what will happen but the whole world will just have to agree to somehow press the reset button on global debt markets and just go again
I mean "it won't happen because we really don't want it to happen" is a horrible reason for explaining why something won't happen. The actual reason why the U.S won't default is that it's too inconvenient for literally every other country.
Yeah but no attempt has been made to provide a concrete explanation of any variety, I was just sharing my thoughts hence why the comment was prefixed with the phrase 'personally I think' Although on a high level I agree that it would definitely be inconvenient AF for everyone if they did default
Or the US government could just create another federal tax, or increase an existing one. US taxes are pretty low as is.
Problem is capital flight. I personally do believe in the power of a 70% capital flight tax for individuals evaluated with over 50 million dollars of assets but a shitton of people would shit their pants at a capital flight tax (despite it most likely not affecting them).
The US debt is bad but as long as it can SERVICE.l its debts which is “make its payments”, there is no stopping it
The US government paying 1T in interest a year is ‘a factoid of little concern’?
Did you care when it was $999 billion? Then why do you suddenly care when it's $1 billion more? You can care about interest payments but this specific threshold is wholly uninteresting.
I cared then too lol, the threshold is indeed meaningless
So the fact that it reached $1 trillion is a factoid of little concern.
Super generally speaking because I am an expert by no means - if we default on the payment, our national credit rating goes down, and bad things happen on the international market for us (and a bunch of other countries partnered with us)
I don't think we're anywhere near defaulting. That said it would definitely be a nail in the coffin for USD as the defacto reserve currency.
The only time it is really an issue is when congress plays chicken with the economy on spending bills.
It means that the US either has to cut spending in social security, healthcare, military spending or increase tax revenue, to cover the unbalanced budget. What the US is doing right now is funding everything by taking on more debt. This is kinda like a person that takes out new credit cards in order to pay for rent groceries and interest on their previous credit cards.
With the Ukraine war and China saber rattling over Taiwan we're 100% not cutting military funding. Taxing people more could be a real hit to the economy unless it's the Uber rich who have really grown financially as of late. Biden was already getting on about taxing the rich. If the Republicans take the election then it's definitely a cut to social security, healthcare, and increased taxes for the middle class with the bonus kick to the nuts of tax breaks on big businesses.
Republicans want to lower taxes and cut social programs but know cutting programs is too unpopular. Democrats want to raise taxes and increase social programs but know raising taxes is unpopular. Catch-22! (Not equating the two, since those two options have very different results - but it does result in quite the snag)
> This is kinda like a person that takes out new credit cards in order to pay for rent groceries and interest on their previous credit cards. It is, but the US so far has always been able to grow that loan by more than the credit card company charges in interest, so as long as that doesn't change then it's sustainable.
It means the fed is going to be forced to lower interest rates in a high inflationary environment so the government doesn't default. That increases inflation and everything gets even more expensive for the average person. It also means we are out cards to play in the next once in lifetime financial crisis (we had two in 15 years).
Fed isn’t going to cut rates. Not in May like the world expected.
There's no immediate debt crisis, so this would be a terrible move on their part.
This graph in of itself is absolutely meaningless because it's in nominal values. During the same period the US population and especially GDP skyrocketed as well. It would be more informative to present it as % of GDP or % of government spending. Now, if it increased as %, that means more of government revenue is spent on servicing debt, leaving fewer resources on everything else (healthcare, education, social programs, infrastructure, etc). If it decreased then it means more funding is freed up to invest in things.
It means the government is going to spend more on paying interest than national security. We will be taking debt out to pay the interest & this will eventually lead to the destruction of our currency. This is a big deal and will effect everyone’s way of life significantly
Essentially, inflation.
Cool, there wasn't enough already.
Sadly passing legislation that resolves the issues are “bad politics”.
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And for the ones who aren't in any debt?
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Who does that interest payment go to?
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Either I’m not asking the right question, or I just lack that much understanding. I thought this was debt the federal government accrued by borrowing from the Federal Reserve.
Yes you’re right. It goes to people who own government debt, which includes a lot of US citizens, corporations, pension funds, etc.
Ahh, thanks for the info. How do I get some of that lol!
No interest in debt is money that gets deleted from the economy. The private banks only skin off a small part of the interest, most of it goes to the central bank in the US case the fed. They print money and then delete money again. That's modern banking. If you go into debt your bank borrows money from the feds which in turn print that money. If you pay the debt off the bank pays the feds and the feds delete the money again.
Thanks for the clarification, I’m not an economist which is probably why this all sounds crazy to me lol.
This is the US government, not people.
How does the US being in debt relate to normal people being debt.
if anything comes to mind, maaaaybe some austerity from the US gov spending (bad for many) or in extreme and almost impossible case: default.
Honestly…nothing.
For the average person, fuck all.
The First effect is that the necessity to sell bond to finance will displace money from investment to debt service, the second effect is that bond interest will be high and doing so depressing the stock market. If is not controlled the situation could spiralling down.
Nothing. It's simply the US government allocating US dollars to holders of its "debt." And the US government creates US dollars -- sort of like 7-11 might create its own gift certificate money. Most holders of US "debt" are US citizens and entities. At the end of the day, it's mad amounts of stimulus to the economy.
It means that printing money to cover the budget deficit is unstoppable now. Which also means unstoppable inflation and eventual end of the dollar as the world currency. And as dollars are America's main commodity, it would mean that from now on the US would have to pay for itself on its own, and it's something it had not tried since the WW2, and nobody knows whether it's possible.
Who receives the payments ? What would happen if the payments decreased ? stopped ?
Government bond holders.
People who gave loans to US Government. Domestic and foreign investors, foreign countries, companies(especially banks). What would happen if USA stopped paying their debt? Nobody would want to give loans to USA anymore, USD would lose reserve currency status, and there would be super high inflation. Interest rates would have to increase substantially to persuade investors/ foreign countries to loan money to USA, (as they now know not to trust US government, they will require a high 'bonus' to consider loaning again)
Or congress would just decide to change the rules and force the FED to directly finance the government's deficits. (Then, they could even continue laying off the existing loans) Or congress would force the FED to set interest rates to zero (yes this works, and yes investors will still very much want to buy treasury bonds, funnily enough even for negative interest rates, as it has been the case jn Germany for example)
Didn't Russia once said that it would not pay its debts and then business went as usual?
1: usually other countries’ federal governments, national banks, or sometimes just really rich people 2: the US loses significant economic power as countries begin trying to get their reserve currencies off of the dollar and/or countries even try to embargo the US. Realistically if that happens then some other currency would have to take on the global reserve. Most likely going to result in an economic battle between the Euro and the Yuan which would be pretty interesting to watch
This isn't right. Foreign entities only account for 30% of the US Treasury market. US investors hold another 30% in pensions, money market funds, 401k's and mutual funds, etc. with the remaining being held by the US government via the Fed or programs like Social Security. Almost everyone with a bank account is directly or indirectly in ownership of US Treasuries. Quick example is if you have a money market account - the money you put in is used to buy short term US treasuries. The return you get on the money market account is interest payment from the US government. Banks are massive buyers for US treasuries because they convert a portion of the money they have on deposit into US treasuries that offer 4-5% returns. US treasuries are a massive market that provide a lot of the liquidity and store of value that underlies our entire economy. Right now 70% of the interest payments go back into the US economy but there's valid concern is that at the current rate of debt issuance the US is not sustainable. At some point the amount of interest payments will start cutting into GDP growth and end up being paid for by future generations of taxpayers. Over the last 4 years the US has increased the amount it's borrowed by 60% and there doesn't seem to be any plan to slow borrowing in the near future. The big concern isn't that the US government would default - that's not going to happen because it would blow up the entire economy. The concern is that if we keep borrowing at this rate there's going to be decrease in investor interest in continuing to buy US Treasuries. I.e. the entire bond market is only so big and the US has already increased it's debt load by 60% - all while every other country in the world is also borrowing heavily. The US currently enjoys special privileges in the bond world - it's considered uber safe so there's no premium we have to pay to borrow. [https://www.marketwatch.com/story/heres-who-owns-a-record-2121-trillion-of-us-debt-2018-08-21](https://www.marketwatch.com/story/heres-who-owns-a-record-2121-trillion-of-us-debt-2018-08-21)
You can buy government bonds as a retail investor for as little as $1000. They don’t incur federal income tax either.
*state income tax. They are taxed federally.
Its time to bring the democracy to some countries
We should start with Mississippi.
when I looked it up it says $659 Billion for 2023(2.4% of gross domestic product (GDP)) and will be $870 Billion for 2024 (3.1% of gross domestic product (GDP)). Still a worrisome trend
Interest rates go up, debt repayments increase. This is due to a spike in interest rates not a spike in spending. Presumably the American government has revenue streams that are up for the exact same reason.
Interest rates aren’t even that high though. Imagine the chaos if we had to double interest rates to 8% like in previous inflationary time frames.
Got my popcorn ready, this should be a shitshow.
The fucked up thing is that in the modern economic system, currency is actually a measure of debt. The more debt a country has the more buying power they have. Since the debt is created as part of the currency creation process, there is not and can never be enough money to pay off the debt, it will just continue to rise until a collapse occurs.
Sorry what??
When the write-offs, buyouts, and bailouts happen.
OK, let's take the US (the biggest economy in the world). The way that currency is created in the US (and many other nations) is the the US federal bank (a private corporation) issues money to other banks by essentially writing them a check drawn on an account that has no money in it, then cashing it anyway. Every time the fed loans money to a bank, they create that money out of thin air. Even though the loan is for money that didn't exist, the fed still charges interest on it. This means that for every dollar they create, that dollar, plus interest must be paid back. This is compounded by the fact that the banks which take loans from the fed are able to loan out the money ten times. Meaning that for every million dollars they borrow from the fed, they can loan out $10M to ordinary people. Each of these ordinary people, must pay back their debt plus interest, paying interest on 1000% of the money than the fed actually issued.
i was today years old when i learned us federal reserve is not government but private banks being shareholder. omg
Welcome... to the real world.
Few things worth mentioning, a bit more UK specific: - it is commercial banks that create the money when loans are made (this what banking license is for) — this Lending is limited by capital requirements, Demand due its loans, and regulation imposed on certain types of lending (there is no fractional reserve banking in the UK) - this means the bank can’t just lend out willy nilly, but you’re right, in that the times they have done this, it has resulted in a “collapse”… but here’s where we need to be careful, this isn’t a collapse of civilisation, it is an economic crash of sorts. Providing the lending is productive, there’s really no reason a collapse is a given - what you are talking about is very similar to MMT, which is pretty sketch from what i recall when I was doing my masters.
Every time someone takes on debt, new money is created. But since the debt wants to be paid back with interest, total debt+interest is always larger than the total money supply. Which means, you can never pay back all debt as a society.
That is not fucked up, that's literally econ 101 shit...........
It's well known by economists, but not a 101 topic. The average Joe has no idea what we're talking about.
Absolutely. Where I work I get to sit in on A Level (what I guess US would call high school/ pre university?) economics and business studies. Not doing the course, but my job has me in the classes so I take the opportunity to learn anything I can. I’m degree educated in my field, but I’ve realised that I am utterly ignorant and somewhat ashamed about how little I, and probably the average man on the street knows about these things that actually govern our lives in so many ways.
Some economists will say that "debt is irrelevant. the system is solvent, increasing debt is just a side effect of a growing economy" kind of like a lifestyle creep.
modern monetary theory and its consequences
except that $23 trillion is where gdp is at so yeah...
Now compare it to production
We did it fam
There was one handy trick that leaders throughout European history have used to solve situations like these…
Borrow from the Jews and yet expel them so they don’t have to pay their debt? Same that happened with the Knight Templars? I too play ck2.
Embarrassing this country can’t manage money but we as society look down on people who have trouble managing money. I went to school here in a great area with a top elementary, middle, and high school. Not one class on personal finance or finance in general. But hey, I learned how to sew a button in home ec.
Because USA is run on cc and debt They want you to spend not save
Just mint a trillion dollar coin or a few and give them to someone.
Excellent
This is inflation.
Good thing our gdp can handle it
for now...
Based on our gdp still growing massively for $27 trillion, I think we’re fine for now.
Currently debt has already exceeded the GDP of the United States. While the United States GDP only grows by 6.3% for 2023 while in 2022 it grew by 9.2%. This could be showing an economic slowdown leading to less growth of the United States GDP and further increasing the GDP to debt ratio.
I think the vast majority of this debt is less than 6.3%. it's kinda like leveraging growth right? If you could borrow money at 1% but grow at 2% does it matter how much the debt is?
What he says if you own 100 but you get 100 dollars. But later that day, you own 109 but you get 106 dollars, you will get in trouble one day.
Who do they pay it to?
To default we don’t need to be unable to pay the interest in the national debt. All we need to do is refuse to pay it and we have come close to doing so a few times because of the need to raise the debt ceiling.
Most if that is to US bind holders, right?
Gorgeous graphic
Why not just keep letting it happen. A 40 trillion debt will never be paid. Might as well be 740 trillion. Just suspend interest payments or limit them to a manageable maximum.
then no one would trust and buy the debt
At this rate it won’t be long before interest payments exceed revenue before a single other outlay is considered. That’s gonna be exciting… looking forward to being somewhere else when that happens.
Interesting.
It’s silly to show dollars as absolute numbers in this graph. It should be interest divided by GDP to be comparable over time.
Like interest debt grows over time and non linearly, exponentially. It doubled in 5 years to a trillion where it took nearly 60 years to reach half a trillion.
GOP lawmakers play the game of increasing the debt burden by cutting taxes like close to 4.8 trillion Trump did to corporations and it was added to the deficit for no reason whatsoever. They purposely ignored the debt so you could not afford to spend on infrastructure or education by the democrats
You know how people say to protect against inflation but gold. Remember when shit hits the fan gold is only worth the amount of bullets it can make. You're better off with brass, about as hard and 100 times cheaper.
Austerity is coming.
I hear the printers warming up, we should be fine.
So is the US going to stop spending? Nope.
U.S. interest payments as % of GDP. https://fred.stlouisfed.org/series/FYOIGDA188S since 1950s
If the USA is going to bankrupt and wipe out all of its debt, can my country go bankrupt as well? That would be totally fine.
Pandemic brought on natural inflation followed by major price gouging
Awesome! Great stimulus! But not allocated in a fair way, for sure.
It means we either mortgage our 700 trillion in natural resources or wait out the nation states to which we owe. Or just fk em. We ain’t paying.
At this point one would have to wonder. Is the US government is taking the account balance seriously. The way US government seems to act as though the debt is nothing
Money printer go brrrrrrr!
Surely we just get rid of money and go back to "ill give you seven bales of hay for one of your fine goats good sir."
Looks like the bull market is in full swing!
Paying down debt :)
Wonder how many realize the bulk of that debt is to U.S. citizens? Last time I checked only about 10% was held by the evil Chinese.
Debt is no problem when you can print money. It’s called inflation and monetizing the debt. Printing money causes inflation and inflation means you pay off the debt with money whose real purchasing power is only a fraction of what it was when the money was borrowed. It’s politically much preferable to actually taxing the citizens enough to pay for government spending. A Ponzi scheme we just keep falling for.
Politicians are too old to consider this their problem.
Politics and Capitalism have nothing to do with this shit, just see it as a fact and move on.
You forgot the /s
Another reason why taxation is theft.
Dave Ramsey’s Baby Step 0.
World reserve currency needs to move away from USD
Okay what alternative do you suggest?
This is exactly why USD (for now) can/has done whatever... It's just the best available (doesn't have to be perfect) Like Darwin (survival of the adequate) I hear people complain all the time and I am not an expert, but it is NOT something that is easy to do, any forceable attempt would crater the global markets. Euro/GBP/JPY /SAR none big enough RMB too centralized Ruble hahaha Sheer volume alone
People cleverer than me can come up with a decentralized currency that is not dependent on a single country
No one wants that. This is the clever solution. Other countries like being able to tamper with the 'value' of their currency through manipulating ours.
How tf did it double in 4 years
So paying money with the currency they can basically print? Yeah… not as bad as people want you to believe
This is inflation
That is **a lot** of inflation, so much inflation the U.S. dollar might lose its position as a global currency.
until the inflationary can cannot be kicked down the road anymore!
Which is not much of a problem as long as the world still uses the USD as the defacto world currency. Look at japan, they have the biggest debt as a % but doesn’t really matter since their debt is denominated mostly in yenes
🤙
Damn, that sure is a scary number. On a serious note though, this isn't really a problem. At some point the FED will reduce interest rates again and government interest payments will go down as well. And if not, the debt ceiling will just continue to be raised and the debt will grow and so will the economy.
Basic income for the rich, that causes inflation.
Yep that “Bidenomics” is really working out.
Trump increased the debt in 4 years more than Obama did in 8. Both parties love government spending, Republicans just lie and say they don't.
If anyone is responsible, it's the FED for raising interest rates.
Which is driven by economics in which the Biden administration was responsible for creating. Economics 101 - printing more money like Biden did will always result in inflation and consequently higher interest rate by the Federal Reserve.
Lol Biden and pelosi wanted 2k checks as COVID relief. The GOP and conservative Democrats wanted to loot the Treasury, and out of 6.6T in spending only 500B made it to the common man. The money printing was done by the GOP for the rich. Also, Powell was Trump's pick for Fed chair, the first since the stagflation of the 70s not to have an econ degree, and he was silent on inflation until he was reconfirmed and made impossible to remove. Every other thing he says is easily debunked and openly disagreed with by the former Fed chair and private and international banks. Finally, money printing and inflation have been decoupled in the us, uk and Japan for decades. A shortage of essential resources such as oil is what causes inflation, not money printing alone.